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

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

Work and Pensions Committee

Youth unemployment and the Future Jobs Fund

Wednesday 10 November 2010

RT HON CHRIS GRAYLING MP, MARK FISHER, JULIA SWEENEY and CLAIRE BURTON

Evidence heard in Public Questions 104 - 198

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Oral Evidence

Taken before the

Work and Pensions Committee

on Wednesday 10 November 2010

Members present:

Miss Anne Begg (Chair)

Harriett Baldwin

Karen Bradley

Alex Cunningham

Richard Graham

Kate Green

Mr Oliver Heald

Glenda Jackson

Stephen Lloyd

Teresa Pearce

________________

Examination of Witnesses

Witnesses: Rt Hon Chris Grayling MP, Minister for Employment, Department for Work and Pensions, Mark Fisher, Director, Jobseekers and Skills, Department for Work and Pensions, Julia Sweeney, Deputy Director, Jobseekers and Skills, Department for Work and Pensions, and Claire Burton, Head of BIS/DfE Apprenticeships Unit, Department for Business, Innovation and Skills, gave evidence.

Q104 Chair: Welcome Minister. Thank you very much for appearing before us this morning. Can you introduce the people you have brought along with you?

Chris Grayling: I will indeed; I will go from my right to left. Mark Fisher is from our employment policy division and has an overview of most of our employment-related activities. Claire Burton is from BIS and she is responsible for apprenticeships. Julia Sweeney on my left is also from the DWP and she was most integrally involved with establishing and developing the Future Jobs Fund. I hope that gives you a portfolio of experience that will enable you to address all the issues before us this morning.

Q105 Chair: From the past and the future-we hope it will. Thanks very much for coming along this morning and welcome to you all.

In the Department’s written evidence, it states that it’s too early to understand the impact of the Future Jobs Fund and whether it has had a severe impact on the entry to employment for the individuals who took part. It is also the case that you as a Department have to finalise the evaluation arrangements. When will that evaluation take place? What criteria will be used to assess the effectiveness of the programme?

Chris Grayling: The evaluation is due to take place next year. Let’s be clear: the Future Jobs Fund at the moment is continuing. The decision we took back in the early summer was not to axe the Future Jobs Fund on the spot, but along with all of the employment programmes the Department is currently operating, to wind those down for the end of this financial year before we move into the Work Programme. What we have done is started to do some very initial evaluation of the Future Jobs Fund. We published the limited evidence we have so far on the Department’s website yesterday afternoon; that evidence suggests, effectively, that around 50% of those who enter the Future Jobs Fund are back on benefits after seven months. We are very happy to provide details of all the information we have for the Committee,

That has masked a couple of things. First of all, in some cases individual employers have extended the period of the Future Jobs Fund job beyond the six months, so it’s not a true reflection of whether people have actually left the Future Jobs Fund job or whether they have got a permanent position, but the total is 50%. Now, by comparison, for people who entered a permanent job at the same time, around 35% are back on benefits after seven months. Those are the first indicative figures that we have about the outcomes of the Future Jobs Fund. To me, that reinforces some of the concerns I have about the overall cost of the project, and confirms to me the decision that we took earlier in the summer.

Q106 Chair: But the obvious question is still: why take that decision before any evaluation had been carried out?

Chris Grayling: A lot of the decisions we have taken in the last few months have been based on value for money. If you look at the cost of the Future Jobs Fund, and if you take that 50% figure as a best case-the number of job outcomes, or the number of people off benefits, will in reality be lower than that-it implies a cost to the taxpayer per permanent job outcome of £13,000. If you look at what was being achieved by the New Deal for Young People, the cost per job outcome was £3,500. We are dealing here with a very, very expensive programme.

Another thing that is worth saying is that although intermediate labour market activities of this kind certainly potentially have a place at the most difficult time of an economic downturn, even those who advocate this in some of the international organisations that analyse these things would say that these are only ever really appropriate as temporary measures to deal with short-term issues. The view we took when we started was certainly not to stop the Future Jobs Fund in its tracks. We have continued to have young people placed in Future Jobs Fund jobs throughout the course of this year; that will continue for a short while longer. The Future Jobs Fund will then, along with the New Deals and the Flexible New Deal, be replaced next year by the Work Programme.

Q107 Chair: But there is a gap between when the Future Jobs Fund stops taking new people on and when the Work Programme comes in-that could be anything up to six months.

Chris Grayling: Shouldn’t be. The funding is there. At the moment the Future Jobs Fund is still in numbers terms behind where it was originally anticipated to be; about 20,000 fewer jobs have been created at this point than was in the original tracking for the fund. The funding is there to continue placing people for the next few months. Those jobs in some cases will be able to continue through the start of the next financial year. Yes, referrals will stop in a later part of this year, but that’s the case for a number of other programmes, and those people will instead be referred to the Work Programme.

Q108 Chair: The Department decided not to commission an independent evaluation. Why not?

Chris Grayling: To me there is a simple question. One of the things I have been worried about since taking office is there is a danger in financially straitened times that we spend vast amounts of money evaluating things that we are no longer going to do. We’ll certainly publish all the information that we acquire about the Future Jobs Fund. We will publish performance figures. We will publish-and indeed we have done-the latest figures on progress for the fund. However, there is a question about how much money we spend at a time when budgets are pretty tight on evaluating things we are not going to carry on doing. Mark, is there something you want to add to that?

Mark Fisher: No, that’s absolutely right.

Chair: We have questions about value for money and we will tease all those kind of things out later.

Q109 Harriett Baldwin: Some of the evidence we have taken from employers highlighted some of the points in the design of the scheme that they thought could have made it more effective. One of the suggestions was to provide some sort of incentive for employers to help people who had been on the Future Jobs Fund to find permanent employment, and I wondered if that’s something that had been thought of in terms of designing the scheme.

Chris Grayling: I don’t know about the original design. Julia, you might like to pick up on the original thought about designing the scheme.

Julia Sweeney: The design of the Future Jobs Fund was developed collaboratively with design partners, so those who were delivering were very much involved in helping us decide how best to administer it. There was a balance to be struck between allowing the space and capacity for innovation that we thought was very important to harness partnership capability and to provide interesting and dynamic experiences for young people, and using a financial model that would drive outcomes. We settled on a grant mechanism to deliver the former-the capacity for innovation and quality delivery for young people-and partners came together in new configurations, new partnerships were formed, and we saw some more capacity coming into the Welfare to Work delivery as a result, which we will see the benefits of afterwards.

One of the constraints of the grant mechanism is that you cannot put contractual incentive mechanisms into it. We did design a grant mechanism that had very dynamic reporting, so we know each month what’s happening with our delivery partners, we know what they are achieving and we have good quality management capacity through the work we do through my team and the work we do with Jobcentre Plus to make sure that young people are getting appropriate and well-designed opportunities. I think striking that balance has enabled partnerships to deliver on quality and support, and given the space to innovate.

Q110 Harriett Baldwin: There was also feedback from some of the employers that there hadn’t been a central system for tracking how people got on after they came to the end of their Future Job, but it sounds as though you have got some data coming together.

Chris Grayling: We are certainly trying to track that and we will do more to understand the impact of schemes like this. I think the key point is that actually, at the stage we are now, there is relatively little data available-and there would have been at the time the employers were giving evidence-to understand the impact simply because it’s a six-month programme. Go back six months from now and give us a bit of time to collect the data for the aftermath; you’re talking about February-March time. That was really at the time when very few of the jobs were up and running. When we took office back in May there were, I think, fewer than 10,000 placements that had actually been made, even though the commitments had been made to some of the providers to provide around 100,000 jobs, and those 100,000 will be fulfilled.

Q111 Harriett Baldwin: So the tracking is there. It is now just a question of gathering that data.

Chris Grayling: Particularly, from our point of view, what we want to understand with any programme that we do-what we are most fundamentally concerned about-is: does this actually get people in sustainable employment? We have the ability to look at the individual cases that have been referred, making comparison with, for example, tax and NI records, and to understand whether somebody is, firstly, on benefits and, secondly, whether they are in permanent employment. We will certainly do that kind of evaluation internally.

Q112 Glenda Jackson: Just to go back to what you said earlier, Minister, which had to do with the number of people who after six months were back on benefit. I think you said 34% of people had a permanent job but then were also back on benefit. I was interested to hear that you are going to do some tracking, but do you have any information as to why that happened? Why did so many people after six months go on to benefit?

Chris Grayling: First of all, if you look at the group of people who are almost the comparative group-the ones who would go into employment anyway-that is a fairly typical pattern. A lot of people will be going into short-term employment or the employment may not have been successful. Also, in the case of young people under the age of 24, sometimes there are very good reasons why they are going into employment on a temporary basis. They may, for example, be doing a job for a few months before going on to education. The figures give an indication of those who are going into employment and are then returning to benefits subsequently because they have been on a short-term contract, for example.

The 50% figure is purely the percentage of those who have entered the Future Jobs Fund so far, and this is only one or two months’ figures. What percentage do we find back on benefits after seven months once the Future Jobs Fund is over? Now the Future Jobs Fund, at its core, is a six-month exercise, so you would expect a significant proportion to be back on benefits because it terminates. The question will be: how does that vary? How many of those people are actually in sustainable employment? The judgment that we made, and I think these figures confirm it, is if you look at the relative cost of the Future Jobs Fund by comparison with other programmes like the New Deal for Young People, it is a lot more expensive. Therefore, in order to be justifiable, it would have to deliver a quantum more in terms of performance than other programmes, and I don’t think the evidence is there that it does.

Q113 Glenda Jackson: Forgive me if I have misinterpreted, but does that mean you’re presenting the Future Jobs Fund as some kind of buffer? You gave the example of temporary employment before people go into education. Was your reading of the Future Jobs Fund that it essentially had no real purpose in creating permanent employment for these young people? Is that buffer going to be taken away with your new scheme? Those young people are simply going to be left to drift for six months, or perhaps longer, if the next step you are presupposing is that they will go into further education.

Chris Grayling: There were two reasons for anxiety about the Future Jobs Fund: one was the value-for-money question; the other was the nature of what was being created. Now I happen to believe that the best and only really sustainable way of building employment for young people now is to create employment for them in the private sector. We are at a time when we know the public sector is under pressure, and there will be less public sector employment in the future. An awful lot of what the Future Jobs Fund was doing-for structural reasons, among others-was diverting people into employment in and around the public sector.

Now my view is that the investment the Government have made in apprenticeships is a much better way forward for those young people in creating genuine long-term sustainable employment. An apprenticeship is a job that leads to something permanent, whereas the Future Jobs Fund potentially is a job in and around a local authority for six months and then nothing else. You asked the question about whether we end up with those young people being parked-absolutely not. The mandatory point for entering the Future Jobs Fund was 10 months. Under the coalition agreement, the reference point for a young person to enter the Work Programme will be six months. Although we are looking quite carefully at exactly how we move different groups, particularly some of the harder-to-help groups, into the Work Programme, we are certainly not looking at leaving them parked for months and months when otherwise they would have been on the Flexible New Deal or on the Future Jobs Fund.

Q114 Glenda Jackson: So essentially you are saying that the reason that they went back on benefit so quickly was because of the huge cuts in public sector jobs.

Chris Grayling: No, because it was a six-month contract. That is all the Future Jobs Fund is: it’s a six-month job placement with no guarantee of work at the end of it. What has happened simply is that a large number of people who have gone on to the Future Jobs Fund have ended up back on benefits at the end of it

Q115 Harriett Baldwin: I just wanted to pick up on the point you made earlier, Minister, that 20,000 fewer jobs have been created than was originally planned. Could you just explain the reasons behind that?

Chris Grayling: From the start, back late last year, the Future Jobs Fund has always been behind the curve. There were some operational problems getting things established, and I’ll ask Julia to detail some of those in a moment. There were a number of reasons linked to the speed of the introduction of the programme. Issues around at the time-post office issues for example-meant that it was always behind the curve, and that really hasn’t changed throughout the year. It has always been slightly behind where it was originally estimated to be. We still think that the programme will deliver the 100,000 placements that we talked about when we made the changes back in the early summer, but it has always, dating back through the last Administration, been slower to take off than it was originally intended to be.

Q116 Harriett Baldwin: So it’s just a time lag ? I n absolute terms, you still expect to see the same number-

Chris Grayling: In absolute terms there is no reason for it to be 20,000 fewer. Julia, do you want to just say a word about the initial operating issues?

Julia Sweeney: I think it is worth remembering that, at the point the Future Jobs Fund was introduced, the Department was developing a very broad range of additional support for jobseekers to put more capacity and more support into the system as unemployment climbed really very fast. We developed a portfolio of support for young people, and it is worth remembering that the Future Jobs Fund was one of a series of support measures to consolidate the offer for young people. Policy development was really very quick, actually, but implementation was slower than we expected.

There were a number of reasons for that. At the point we introduced the Future Jobs Fund there was a postal strike-a very practical difficulty in terms of getting grant letters back and forth to participating partners. This was a new relationship with the Department for a lot of delivery partners and it took their legal teams longer that we planned for to look through the grant letter and accept the terms and conditions of the grant-it was quite a complicated arrangement. Frankly, we underestimated how long the recruitment process took for a lot of participating organisations. Many used their mainstream recruitment systems, which took up to three months, particularly if there were CRB checks involved. Snagging some of those early delivery problems became quite an issue. As a result, the pace of job development and job filling was slower than we expected.

I think now, though, we are very much on track to deliver the number of jobs that we have committed to delivering, and that looks to be the right number based on the demand from Jobcentre Plus and young people receiving Jobcentre Plus support. Unemployment for young people didn’t grow as high as we expected, and actually the numbers claiming JSA started to fall more quickly that the Treasury expected. Given that this is calibrated to the needs of long-term unemployed young people, the number of jobs we now have to deliver to the end of this operational year looks about right from a delivery perspective

Q117 Chair: We’re just coming on to questions about value for money, but can I just clear up what you’re saying, Minister? Are you saying that because these young people were only ever in jobs for six months and it was quite expensive, it wasn’t worth doing at all?

Chris Grayling: No, all I am saying is we have looked at the figures to see how many of the young people who start the Future Jobs Fund are back on benefits after seven months. The answer is around 50%, and the substantial reason for that is these are six-month placements in an environment where there is certainly by no means necessarily a job to lead on from the Future Jobs Fund placement. One of the issues we inevitably judge in assessing whether a programme is effective or not is what is the cost of that programme per successful job outcome. Now, even if you assume that every single one of those 50% is in a permanent job, which actually won’t be the case, you still have a cost per job placement for the programme of around £13,000, which is something like four times the level of the New Deal for Young People.

Chair: But it was on a backdrop of an economic crisis and rising youth unemployment, and I suppose that has to be dealt with. I’ll let Oliver ask these questions.

Q118 Mr Heald: Professor Paul Gregg, who has designed numerous programmes for the Department, told us that, certainly in normal times, the most economic and effective way of helping young people is to provide help with job search. Do you agree with that?

Chris Grayling: Yes, I think that’s right. I think it is a combination of job search, initially through Jobcentre Plus for those who are struggling to get into employment through the Work Programme, which will provide enhanced support to the longer-term unemployed among young people, as well as to other age groups, to get into work; I think that is absolutely right. It’s that extra investment of time and support when somebody is struggling. That is very much our approach for the next few years, and the Work Programme is designed to deliver that.

Q119 Mr Heald: Tony Hawkhead from Groundwork, who has been involved in intermediate labour market solutions for many years, said that a programme like Future Jobs Fund would not be cost-effective for those close to the labour market, but that it was a successful intervention for those who were very far from the labour market. Do you agree with that approach? If you’re going to do it, this is really something for the long-term unemployed with barriers to employment, rather than somebody who has just been out of work for a while.

Chris Grayling: It is absolutely clear to me that giving people who have been out of work for a long period of time access to work experience, in whatever shape or form, is the right thing to do. I don’t think I necessarily agree that that applies purely to the longer-term unemployed; I think shorter periods of work experience are very relevant to newer jobseekers. That is one of the reasons why we are really stepping up the work we do through Jobcentre Plus in and around work experience, where there will be a proactive effort for the first time to secure work experience opportunities, for young people in particular. I think longer-term labour market interventions are something that some of the Work Programme providers might very well chose to do.

What I don’t want to do is impose a "one size fits all" on them. In some cases we know that a relatively short period, even for the longer term unemployed, can make a big difference. For example, look at the scheme run by Marks and Spencer to give long-term unemployed people a taste of working life in the store; I’ve talked to some of the young people who have been through that process and they will all say to you that this is a transforming experience-they never really quite believed they could do this.

We should remember that there is an awful lot of talk around about benefit scroungers; I never use that language myself. I think the biggest issue is around people who don’t have the self-confidence, and who have either grown up in an environment where they are a long way from the workplace or, because of long-term welfare dependency, are a million miles away from the workplace. I think that labour market experience is an absolutely vital part of bringing those people back closer to the opportunity of getting a job, and what I expect to happen with the Work Programme is that providers will form partnerships with organisations that can deliver that kind of experience to them. It won’t be on a "one size fits all" basis for a programme like the Future Jobs Fund, but I expect them to negotiate arrangements of this kind on a localised basis.

Q120 Mr Heald: During the last Parliament we did meet some of the Marks and Spencer scheme people and it was very heartening to see quite how successful that had been. Just continuing with this theme of value for money, one of the points that some people have made to us is that you can’t just compare the costs of New Deal for Young People with this programme because, of course, while the person is on the New Deal for Young People they, still receive their benefits, so you have to factor that into the equation. In doing that, do you still take the view that Future Jobs Fund is an expensive intervention?

Chris Grayling: Yes. Over the six-month period, on the lower rate of JSA for a young person you are talking about £1,250-odd as being the corresponding AME saving of having somebody on the Future Jobs Fund. So yes, the net cost of the Future Jobs Fund would then reduce to a little over £5,000. We know that a 50% outcome rate is optimistic; some of those people are still in Future Jobs Fund jobs because they have been extended through local arrangements. In terms of ongoing long-term employment, even if you assume that 50% is right, you would still have cost per placement-per job outcome-of more than £10,000, which is three times the New Deal for Young People rate.

Q121 Mr Heald: Finally, do you think we should really look at Future Jobs Fund as an emergency measure that was taken in the depth of the recession to try to ensure that some young people didn’t have a long experience of unemployment, but not really something for other times?

Chris Grayling: I think that’s right. I think it was there partly for the reason you described. I think it was partly there for political reasons as well. We certainly took the decision that this wasn’t something that should be axed on the spot. We thought that, in the current climate, it was sensible to sustain it though the course of this year. Look at the nature of the labour market now. I don’t underestimate the challenge we face given the changes in the public sector, but it is nonetheless the case that the private sector grew employment opportunities at a record rate over the course of the summer quarter.

One of the frustrations I have-and I think one of the real signposts for the importance of the Work Programme and what we do in future-is that, if you look across the country, you are seeing very big increases in private sector employment but very little change in claimant count unemployment. I think that’s the big challenge we have to overcome; that’s to my mind the key purpose of the Work Programme. We can’t go through year after year after year when jobs are created, as they were over the past decade, but the number of people on out-of-work benefits in total barely changes.

Glenda Jackson: Could I just-

Chair: No hold on Glenda; Kate first, then Teresa and then you.

Q122 Kate Green: May I just ask a few questions? The first is just pursing a little more this line of discussion about the relative cost of the Future Jobs Fund. I think we understand that it is expensive relative to other interventions. It was suggested by a couple of the witnesses whom we have seen so far that while that kind of intervention was perhaps too heavy duty for young people who could have got into work more cost-effectively, it would continue to be necessary for young people who were furthest from the labour market or would be particularly unlikely to access jobs because of low levels of qualifications and a very poor school experience and so on. That’s going to drive up the unit cost of that kind of intervention if we need to continue that kind of model for a very vulnerable group of young people. What’s your response to that?

Chris Grayling: One of the things that will be different about the Work Programme to the kind of core employment programmes that the DWP has run before-not in relation to the Future Jobs Fund, but the New Deals and the Flexible New Deal and so forth-is that the pricing of the Work Programme will have a differential structure based on the scale of challenge that an individual represents. It is something that the Australians have done, for example. That is in recognition that the task of helping somebody who has lost their job and has been out of work for 15 months, but has a previous employment record, is much less of a challenge than dealing with someone who has been on incapacity benefit for 10 years, or a 23-year-old who has grown up in a workless household and has never been off benefits and so forth. So there will be a graduated structure that reflects different levels of need; I think that is extremely important.

In terms of sustainability, one of my concerns about the Future Jobs Fund is that in many ways the name is inappropriate. "Future Jobs Fund" implies something going on for the future; actually it is a six-month placement. By way of contrast, I am very much of the view that we should be putting our effort into apprenticeships. We have created 50,000 additional apprenticeships for the current year. We have a substantial apprenticeship programme that grows going forward. If you are looking at where you try and help those young people who are struggling to establish a future, I would see the Work Programme as really trying to get those young people work-ready, and apprenticeships as being a route for them to get into long-term sustainable employment. I am very excited about the apprenticeship programme. I think it’s absolutely essential. The point about it is that an apprenticeship leads somewhere. The Future Jobs Fund doesn’t; it’s a six-month contract and that is theoretically it. There will be some people in the Future Jobs Fund who manage to continue in employment afterwards, but I think you are much more likely to find sustainable employment in the part of the economy that is going to grow and develop in the next few years if you go through the apprenticeship route.

Q123 Teresa Pearce: Just going back to what you said earlier about 50% of people who have been on the Future Jobs Fund being back on benefit in the seventh month, with lots of young people I meet, they’ve come out of college, they’ve been unemployed and they’ve done course after course after course but employers say, "You’ve not ever actually had a job," so that is a barrier. When they’ve done that six months on the Future Jobs Fund and they have had a job, they come out of that, maybe in the seventh month claiming benefit, but do we have any evidence of whether they then get a job under their own steam in the eighth, ninth or 10th month?

Chris Grayling: We don’t yet, as not enough time has passed. We will be looking at that, and I will be very happy to come back and talk to the Committee about it in due course. The timing of the programme was that effectively the first people didn’t really start in the Future Jobs Fund until the first part of this year. They have then gone through the six months. The seventh month figure we have from the labour market statistics a month or two ago, but we as yet do not have the data for the two, three and four months beyond that, simply because not enough time has passed, but we will be looking at that.

Q124 Teresa Pearce: So it could have possibly been more of a success than we know at the moment?

Chris Grayling: Yes, it is possible there is movement upwards, but equally there is likely to be movement downwards on that 50% figure because we know that some of the Future Jobs Fund placements through local funding were extended to eight, nine and 10 months. There will be more people in that initial cohort moving off the Future Jobs Fund, so the 50% figure will fall. Yes, there might be some who get jobs as a result, but they might well have got jobs anyway at that point.

The question is: where is the evidence of relative cost? They could have gone through a supportive programme like the New Deal for Young People, and I hope the enhancements provided through the Work Programme of more tailored personal support will improve the performance level by comparison with what we’ve experienced with the New Deals. If you can deliver somebody a work opportunity, if you can find them a work experience opportunity, and if you can get them into sustainable employment for a small part of the cost, you have a package that is nonetheless better. I am not suggesting for a moment that there are not young people who will have been through the Future Jobs Fund who won’t then be able to find a job. What we have to say is, "Okay, this is a very expensive programme." There are technical reasons why the private sector really didn’t participate to any significant degree at all in the Future Jobs Fund-

Chair: We have questions on that next, so don’t go into that in detail.

Chris Grayling: What are the relative benefits and the relative likelihoods of the different programmes to get somebody into sustainable employment? The judgment we took was that we would see the Future Jobs Fund for the rest of the year, but then move on to the Work Programme.

Q125 Glenda Jackson: Could I just take you back to the Marks and Spencer experience? Is this something that other retailers are participating in? I am thinking of those, for example, who wrote that letter saying that the private sector would be able to create the jobs necessary. Are they all participating in this, and are they actually coming to you and saying, "We can guarantee to create this number of jobs for this number of young people."?

Chris Grayling: We’ve been very encouraged by the response so far to the work experience initiative we launched three months ago. I will get Mark to talk a bit more about that in a moment. The guidelines we inherited basically said to Jobcentre Plus advisers, "Don’t let people go for work experience of any length while they are on benefits." We have changed those guidelines and are now actively encouraging Jobcentre Plus advisers to seek out vacancies, and we have an outreach team within Jobcentre Plus that goes and looks for them. We have also said to them, "Look for work experience opportunities as well," and we have said to advisers, "We want you to try and put some of young people who are looking for work into those work experience opportunities." This is in the first few months of job search, not by the time they get to the point covered by the Future Jobs Fund or by the Work Programme. I am very much of the view that this is a good thing to do. So far we have had a good response to it. We have a way to go yet to really dig it in, but I think this is the direction of travel. Certainly we have found bigger retailers and bigger employers very co-operative. Mark, do you want to say a few words?

Mark Fisher: I am actually visiting Asda next week to try and get an engagement with them on exactly the same basis as Marks and Spencer-i.e. they are going to participate on this sort of work experience-type arrangement or other arrangements. The other initiative I think is relevant is we have been working closely with BIS and with the Sector Skills Councils on a concept called a Service Academy, which is an arrangement whereby we provide that somebody’s benefit can run on while they get work experience with a retailer or in the hospitality sector, and the skills system will provide bespoke training for that person in that sector-for example part of an NVQ in customer service in retail or something of that sort. The employer will then give them a guaranteed interview, so they then spend six or eight weeks leading to a guaranteed interview, with some skills training. If they don’t get a job with that particular employer, they have a really good chance of getting a job somewhere else in the sector, because they have had work experience and they have had some skills training. I think that could be potentially a very powerful intervention that brings together skills and employment.

I think it is partly the answer also to the point that was made about these particular young people who come into the labour market having never had a job or any work experience and therefore find it really difficult to take that first step. It seems to be that if we can find businesses and employers who are willing to give somebody six to eight weeks of work experience, that real work taster and some relevant skills training, we have a real chance of encouraging young people into jobs, particularly in retail, hospitality or care. We knew, even in the depths of the recession, that there were plenty of jobs in those particular sectors of the economy suitable for young people.

Q126 Glenda Jackson: So you are not actually pushing those companies that are engaging in the work experience programme to give you some kind of numbers of the jobs that they can guarantee to create? In that work experience, is there any cost to the employer that the Government have to cover?

Chris Grayling: Beyond some core costs of just people’s time organising it, no. This is something that employers will be doing themselves and we are looking at employers on a large scale and a small scale. If there is a small business down the road that is in contact with Jobcentre Plus, I’m looking to the individual Jobcentre Plus outreach person to try to arrange a work experience placement at that business as well. My vision for all this is to get employers around the country focused on doing something positive for young people who are looking for work by providing an opportunity to give them a couple of months of experience of real work. In some cases those young people will end up staying with those organisations because it has worked well. In other cases it will give them a bank of experience to take for other interviews. Teresa Pearce is right that it is absolutely fundamental to give young people who have never had a sense of the workplace, or who are coming from a background where they have grown up in a workless household that-

Teresa Pearce: Not necessarily.

Chris Grayling: Sorry.

Q127 Teresa Pearce: It is not necessarily that their parents were out of work; it is just that they’ve left college and not-

Chris Grayling: Absolutely, in both cases, but it is particularly helpful where you have young people who have come out of school or college without any experience of work themselves, and without any experience of work in the family. One of the things I sense from the Marks and Spencer programme, when you talk to people who have been through it, is that it is quite transformational-it is the first time they have really had a sense they can do this.

Q128 Glenda Jackson: So is the evaluation of the experience exclusively down to the individual who has gone through that process, or will there be some other form of evaluation of just how well these programmes are working?

Chris Grayling: We are looking at this as very much a devolved arrangement. What I am trying to do with Jobcentre Plus is to make sure that the organisation is as un-top down as possible, to give much more discretion to the local Jobcentre Plus managers and to form partnerships with the local community for different aspects of what we do. We are looking to them to be the people who facilitate the establishment of work clubs in their area, and networks for unemployed people to share experiences and work together. We are looking to the local Jobcentre Plus teams, who are the ones who have the relationship with the small and medium-sized employers, to be seeking out work experience opportunities. In some cases we have national relationships and the companies concerned prefer to have national relationships-Asda being a case in point. Asda has already been helping us by supporting some of the work club developments in the West Midlands, laying on special sessions for work club participants and providing a day on the job for people who are going through the work club route to try and get clubs up and running in the West Midlands. In terms of work experience, one of the reasons Mark is going to see them is they prefer to deal with us on a national level rather than having lots of tentacles in different parts of the country. So in some cases we will do it nationally but, where possible, I see this as being something that is done locally-where the Jobcentre Plus manager knows what works and doesn’t work, and which employers are okay to work with and which aren’t. That is much better than trying to manage all that centrally.

Q129 Chair: But you seem to be saying that a period of work experience will be more successful in making a person job-ready for a permanent job than the Future Jobs Fund, because the evidence we got from our witnesses two weeks ago was that the difference with the Future Jobs Fund-and why they thought it was succeeding where work experience hadn’t-was that this was real work with real pay as opposed to work experience. We have been there before with work experience. This is not anything new.

Chris Grayling: Absolutely, but if you look at the different stages of what we are proposing: there is the support we provide people in their first few months of a claim, helping them network and work together through work clubs, helping them get work experience through the programme I just described. This is a part of the early months’ support for jobseekers more generally. The Work Programme comes at a later date when those people have not been successful in finding work in the way that the Future Jobs Fund also did. The mandatory point for entry to the Young Person’s Guarantee was 10 months. It is later in the job search when it is quite clear that somebody is struggling to a greater degree that we offer much more tailored support. What the Work Programme is intended to do is: to take some of experience that already exists through existing programmes; to give providers the freedom to tailor support as appropriate to the needs of the individual; and to form local partnerships to offer placements, work experience and other such opportunities. However, it is not for us to seek to prescribe from the centre what happens. The danger of central prescription is if we have a programme that says there must be x amount of job placements. In some cases that may be very necessary; in other cases it may not be. In other cases it may be two or four weeks’ placement with a local employer, a degree of job matching with the individual, identifying what their skills and capabilities are, looking at where somebody may need an opportunity, and trying to place them there for a short-term opportunity that potentially leads to employment. This is the way I see the Work Programme providers working.

I think we will understand more clearly the intervention that we have seen through the Future Jobs Fund as the months go by, and whether this was really a suitable vehicle to use on a very short-term basis in a time of recession. I have not heard anybody argue seriously that we should have this kind of intervention on an ongoing basis as the economy recovers. Since the growth in this country is going to come through the private sector and not through the public sector in employment terms, I want to see schemes that really build opportunities for young people in getting long-term employment in the private sector, and that’s going to come through short-term work experience for some, apprenticeships for others, and the tailored support and matching to opportunities that you get through the Work Programme.

Q130 Glenda Jackson: But you’re not asking the private sector to guarantee an increase in jobs?

Chris Grayling: The private sector will never guarantee to recruit a certain number of people, but the point is we have to ensure that those people who are benefits are ready to take advantage of the opportunities that arise. One of the frustrations of the last few months, when you see what we have inherited in terms of the systems that are in place, is that they are not getting people off benefits and into work. Take one example: I am always particularly anxious about making sure that we address unemployment in the North East because it is part of the country that has had its employment challenges in the past. I think it was really gratifying to see this summer that the private sector over that quarter created 17,000 new jobs in the North East. That suggests that, actually, the private sector can really help the employment market in that part of the country. However, there was almost no change at all-I think there was a change of 200-in the number of people on benefits. What we have to do is to make sure that we have systems in place that make those on benefits as work-ready as they possibly can be to take advantage of those possibilities when they arise.

Chair: On that point we will move on to questions about the private sector.

Q131 Richard Graham: Looking briefly at the past and the Future Jobs Fund, one of the difficulties that many people have flagged up for us is obviously the lack of private sector involvement in this programme. It is certainly true in my constituency of Gloucester, for example, that not a single job has been created from business; all the Future Jobs Fund opportunities there are public or voluntary sector. Was this the intention at the start?

Julia Sweeney: The intention of the Future Jobs Fund was to put the capacity into the economy and into the market to create additional opportunities for young unemployed people and long-term unemployed people. There are some real dangers with job creation schemes and intermediate labour market schemes. If you don’t target them effectively, both in terms of how and where the jobs are created, and which people move into jobs, you run the risk of both substituting for real work, and moving somebody into a job that would have otherwise been taken by somebody else.

Q132 Richard Graham: Is that another way of effectively saying that this was a form of national service, with Government requiring local government to provide the jobs?

Julia Sweeney: I think that question is probably slightly loaded in terms of how I would answer it. I wouldn’t directly compare the Future Jobs Fund to national service. I think what the Future Jobs Fund was intended to do was to create opportunities for young people who otherwise would not have been moving into work, and to ensure that the scheme itself didn’t create any adverse conditions in the local economies it served.

Q133 Richard Graham: Okay, so can you tell us, Claire, what involvement was there with BIS. To what extent was BIS involved in the design and structure of the Future Jobs Fund?

Claire Burton: BIS was involved from a very early stage. I deal with work-based learning, but I know that my colleagues in the pre-employment training unit worked very closely with Julia’s team from almost the conception, I think-when the idea was first suggested. One of the positives has been that working relationship and the closeness, not just in the Departments but also at a provider level, that has come out of the Future Jobs Fund. From my point of view, from a very early stage, we started to introduce the idea of moving people from Future Jobs Fund jobs into apprenticeships, so I think-

Q134 Richard Graham: Yes, okay, that’s a separate stage, but at the stage when the Future Jobs Fund was created, what was your expectation of private-sector involvement?

Mark Fisher: Shall I come in on that. The short answer is we never designed the Future Jobs Fund as a vehicle for private sector employment, as Julia has explained, to make sure these jobs were genuinely additional-that they didn’t substitute for other people already in the labour market-and for reasons of state aid.

Q135 Richard Graham: You recognised at the beginning that because of the additional requirement, because of state aid, this was not going to attract private sector employers?

Mark Fisher: Yes, although there were situations in which particular private companies could invent special vehicles to enable access to the fund and so on. It is worth, just if I may, adding one other point: the Jobs Fund was only ever part of the wider guarantee. Under the wider guarantee, there were recruitment subsidies available and other initiatives that would enable young people to get jobs in the private sector. This was part of a wider range of initiatives that were put in place at the time.

Chris Grayling: It is worth saying that this was one of the factors that we took into account. In our very early stages in government, we looked at where Future Jobs Fund jobs were coming from and who the key intermediates were. It was very clear, as I said earlier, that these jobs were being created in and around the public sector. By definition, that wasn’t a path that was likely, in the current climate, to create sustainable employment in anything like the way apprenticeships would.

Q136 Richard Graham: Correct, and that is certainly, I think, the evidence that we have seen so far.

Minister, the whole look and feel of the Future Jobs Fund, where the first jobs actually came into being at the beginning of this year, just at the time when the public sector deficit reached record proportions and was the highest in the G20, seems to be rather ironic in that it was effectively trying to create more jobs in a public sector which was already heavily bloated and consuming an ever higher percentage of GDP. It has the look and feel, effectively, of a Ponzi scheme for young unemployed. What would you say to that?

Chris Grayling: I would certainly not say there is never a role for an intermediate scheme of this kind, but I have to say-had I been sitting in the DWP a few months earlier-that if you look at the cost of the Future Jobs Fund in overall terms, I would have certainly been spending far more of that money on apprenticeships than on Future Jobs Fund jobs.

Richard Graham: Very good. Chair, I think if I stop there and hand over to Karen, and then come back with one question later at the apprenticeships time, if that’s all right.

Chair: No, you will get your lot. Karen has another section.

Richard Graham: No, you carry on. I would rather keep my next question for section six.

Q137 Karen Bradley: I would like to cover how the Future Jobs Fund was implemented. Your written evidence notes that fewer jobs than expected were created by December 2009, and earlier we did touch on the time lag etc. Were the Department’s plans unrealistic?

Chris Grayling: It’s less that they were unrealistic and more down to the fact it was a slow start. If there’s an argument about a lack of realism, it was actually about how long it would take to get this up and running. It took perhaps two or three months longer than I think was initially expected, so there has always been this lag. Certainly, when we took office, the performance level-from memory-was that, by that point, around 25,000 positions were supposed to have been created through the Future Jobs Fund; the reality was it was fewer than 10,000. That was certainly a factor. We looked at this and thought, "Well okay, so how do we achieve what we need to achieve? This is clearly not the long-term way forward. There are a number of jobs that are already committed to that have people lined up to take them; we’re not going to suddenly bring the axe down and stop everything tomorrow. It is logical to phase this out as part of our plans to phase out all the existing programmes and merge them into the Work Programme at the end of the year." So, while I probably wouldn’t have got to where we were when we started, it seemed to me inappropriate simply to chop that support overnight, given the impact that would have had on all of the individuals that were lined up for opportunities at that time and the organisations that had arranged the placements.

Mark Fisher: Could I just add one point on the implementation, if I may? There is a balance. It is absolutely true that this whole scheme took off more slowly that we planned and expected. On the other hand, the scheme was announced in May. We had to build an entirely new supply chain with a whole set of partners we had never actually done business with, and we got the first jobs through the door in September/October. Just to balance this, it was delayed but it was quite an achievement in simply getting the whole scheme running and getting to an industrial scale in really quite a short time. I think Julia and her team did a fantastic job to get that done, recognising that we didn’t get as many jobs through as we thought, there were problems with CRB checks, and there were other issues that have been picked up. I’d just like to put that on record.

Chris Grayling: I would echo that point. Whether or not the policy is right, one of things that I have experienced since arriving in the DWP is we have a very good team of very committed people who will move mountains to try to deliver what we ask. Nothing that we hear or say today should deflect from the efforts that Julia and team put into making this happen. If there is a question mark about whether the policy was right or not, that is something that resides with politicians.

Q138 Karen Bradley: Certainly the evidence we’ve received from a number of witnesses has been that the contractual arrangements were very complicated, and we touched on how long the legal issues had taken. One of the themes that came through from the witnesses was that, because the contractual arrangements were quite difficult, the providers who ended up delivering the jobs were the providers who’d always been involved in delivering jobs under these kind of schemes, and it didn’t really bring in any new providers in. Do you have any views on that?

Julia Sweeney: It is probably worth making a couple of points about that. The system was relatively complex for a grant mechanism, but it didn’t preclude any partners from participating in the fund. So it was a very inclusive scheme and initiative. We did actively encourage large partnerships; the administrative overheads for the Department, had we had lots of very small players in the game, would have been very significant. Partnerships were encouraged around areas, so regional, sub-regional, local partnerships featured quite strongly. There are also some very interesting new national players. You heard from Tony Hawkhead that they made a groundbreaking partnership with the National Housing Federation, and the work that they have done in terms of giving energy advice and so on to householders in some of the most deprived communities across the country has been really quite significant. Another very new partnership that was set up was 3SC, which brought together a very big group of voluntary sector organisations that didn’t have the capacity or the wherewithal to participate individually but, through that vehicle, were able to draw down from the fund and deliver some very quite interesting projects on the back of it. I think the fund didn’t preclude people from participating. It made it difficult for some players. We have heard about the barriers for the private sector-the need to make community interest companies or profit-locking mechanisms to ensure they complied with state aid-but nobody was precluded from participating.

The last thing I would say is that the rolling application process allowed people to try, and if they failed to get some feedback and some support to bid again. Pretty much all of the organisations and partnerships that wanted to bid into the fund and had a second go at it were successful with the support of our team and partners across the sector. So I think it was inclusive. We put the necessary mechanisms in place to safeguard what is a considerable amount of money and to make sure it was spent appropriately and in a timely fashion. I think we struck the balance between good governance and enabling people to participate.

Q139 Karen Bradley: Thank you. The final point on implementation I would like to make concerns Jobcentre Plus. We have had some very mixed evidence about the effectiveness of Jobcentre Plus, and a sense that it wasn’t perhaps ready for the need to create so many new jobs very quickly and wasn’t able to help, but actually evidence that it got a lot more helpful as time went on. I just wonder if you have any views about the initial performance of Jobcentre Plus and any lessons that can be learned from those early days.

Chris Grayling: I think it is only natural that if you put any system in place there will be a bit of bedding down. Of course the job of Jobcentre Plus and the front line is simply to identify the support opportunities that are available and provided to them, and to deploy them appropriately. You have picked up a degree of evidence; my sense is generally that the front-line staff in Jobcentre Plus do a pretty good job. There might have been a bit of bedding down at the start of the programme, but I wouldn’t say it was anything more than that.

Chair: A number of people want to get in. If we could take Alex first.

Q140 Alex Cunningham: I want to go back to the slow start. We accept the reasons, and Julia was clear about the CRB check and things like that, but I’m pleased that the Minister acknowledged that it will meet its target. What I am interested to know is: if there is a potential gap between the end of one programme and the start of a new programme, what learning can you take from the slow start and what can we do to make sure that we don’t have the slow start to the next programme?

Chris Grayling: Let me start. I think the key point about the Future Jobs Fund is that it was first of all a very different kind of programme. The structures that had to be put in place were very different to those, for example, in existing employment programmes. Now let me give you a practical example. The PRaP system that was established for previous programmes is something we will be able to use for the Work Programme, so there isn’t a great systems change required up front to introduce it. I am not concerned in the same way about the introduction of the Work Programme because we are dealing with an industry that’s there, we are changing the contracting basis and we are giving greater freedoms. I don’t think the introduction of the Work Programme represents, in systems terms, the kind of change that the Future Jobs Fund did, because there hadn’t been something quite like it done within the Department before.

In terms of the gap of provision, this is something that is very much on my mind. Of course, young people after 12 months would anyway be referred to the Flexible New Deal, if they weren’t going into the Future Jobs Fund. We are mapping out a careful transition at the moment between the Flexible New Deal and the Work Programme, and between the other employment programmes and the Work Programme. That will take shape over the next couple of months as we publish the framework and identify where there are potential gaps. For example, if there is an FND provider that is successful in winning a place on the Work Programme in the same area, the transition is an awful lot easier than if we are starting from the complete green-grass position. We may need to take additional steps just to smooth the transition; for example additional support through Jobcentre Plus for that transitional period. It is very much on my mind to ensure that, as the existing programmes come to an end in the latter part of this financial year, there isn’t a substantial gap that is not then filled.

Q141 Alex Cunningham: Just to go back to the safeguarding of young people, the environment has changed-we’ve moved on. There is a higher requirement as far as protecting and safeguarding young people is concerned. How do we make sure that these employers or whoever is taking on young people are fit for purpose from a safeguarding perspective?

Chris Grayling: From a safeguarding perspective, first of all the Work Programme providers will have to be able to deal with young people anyway. For example, staff who are working on New Deal for Young People and the Flexible New Deal-because Flexible New Deal can have young people referred to it as well-will already need to be CRB-checked, and clearly new staff that are being taken on will need to be CRB-checked in the appropriate way. For employer placements, the normal rules will apply in terms of making sure that the protections are in place if you are referring somebody who is potentially vulnerable. Generally speaking, we are not talking about children; we are talking about adults over the age of 18. Therefore the requirements are much less onerous than they would be if we were dealing with children.

Mark Fisher: It’s probably worth adding that we did learn a lot about the application of the CRB process to particular groups during the Jobs Fund. Particularly, we did a lot of work with the care sector about how you make that as efficient and speedy as possible, and how you make sure the full rigour of the CRB process is applied only in areas where it is really needed. We will be able to deploy some serious learning from that in working particularly with the care sector in the future.

Q142 Stephen Lloyd: I am gratified to hear what Mr Fisher has said about the CRB thing. From private sector perspective, it can be an absolute nightmare in employing people, so I am glad you’ve made that clear.

A couple of things really. First off, it is obvious that there were some good things that came out of the Future Jobs Fund: some learning, some contacts made, some networks, and some expertise. Whatever the political decision has been eventually to wind it down, I would want real reassurance from the DWP and you, Minister, that the baby will not be thrown out with the bathwater, and that the good learning bits and the protocols are actually in the Department to ensure that they are taken on board. Can you give me that reassurance?

Chris Grayling: You can absolutely have that assurance. God forbid we should find ourselves in another set of economic challenges in the next few years. Learning and understanding what has worked previously and what has not worked previously is very important. I have to say that I trust the judgment of the professionals in the Department to do that analysis rather than buying it in from the outside, because at the end of the day we have tight budgets at the moment. I can absolutely assure you that we will look at the experience of the Future Jobs Fund. We will understand the points made earlier about what happens eight, nine, and 10 months down the road. Does this kind of intermediate labour market approach have a material impact on the likelihood of somebody getting to employment subsequently? Yes, we will certainly learn the lessons. At the end of the day, in the short term you have to take a judgment based on the best evidence available to you.

Q143 Stephen Lloyd: I agree, and I will be coming on to that in a minute. Like you I’m personally very favourable of the localism agenda, but none the less there are some instances where it is controlled from Whitehall and where a protocol document goes out across the regions specifically insisting and ensuring that the separate offices do take all the learning opportunities they had through the Future Jobs Fund. I am being so emphatic because a lot of money has been spent on it. It would fill me full of despair if all that learning was put in a cupboard and then revisited in 10 years. I am encouraged to hear that.

Chris Grayling: We won't let that happen and there is some legacy benefit as well in terms of the provider networks built up and so forth.

Q144 Stephen Lloyd: Crucial, absolutely crucial.

Now the second thing, and this is a direct political question that you alluded to earlier. I’ve been struck by how certain sections of the media, and you might say vested interests, have screamed merry hell about the closure of the Future Jobs Fund. Looking at it objectively, James Purnell, the previous Secretary of State, actually impressed me a lot. I have to say I thought he was rather good, and he wrote a piece in The Times yesterday broadly agreeing with the direction of travel with the coalition Government on this, but then saying it is a terrible tragedy the Future Jobs Fund is being cancelled. Now obviously, misquoting Mandy Rice-Davies, there is an element of "he would say that", because clearly it was part of his remit. I would just be curious as to if you can give any more analytical rationale as to why there has been so much objection to its cancellation other than the obvious "they would say that anyway", because to me the data, particularly with the restrictions that are going happen on the public sector, do seem to be fairly clear that apprenticeships appear to be a more viable way forward. However, I have been struck-and I do not mean this pejoratively; it’s an honest question- by very considerable howls of outrage at its cancellation and that we are missing an enormous opportunity here. I would just be grateful, from a politician’s perspective perhaps, if you could explain why you think it has been as vigorous as it has other that the Mandy Rice-Davies defence.

Chris Grayling: There are two aspects to this. One is clearly the politics. This was a flagship programme of the previous Government, and you would therefore expect the Opposition to be making a noise about the decision to wind it down. I think there has been a degree of misrepresentation of that decision. Some of the time you would believe that the guillotine had been brought down in its entirety on 12 May, which of course wasn’t the case. This is seeing the programme through to a natural transition point of all the existing programmes. Equally, the Future Jobs Fund provided effectively Government-paid additional labour for local public and voluntary sector organisations, and I am sure that was extremely welcome to them, and it undoubtedly helped them to strengthen their activities. However, it cost a lot of money, and the question we have to ask is, given the fact that we are going through difficult times financially, is: what is the best way of deploying the resources we have available? What is the best way of securing sustainable employment opportunities for young people? I think we are better off focusing on apprenticeships and that we get better value through programmes like the Work Programme, which I am very confident will deliver job outcomes for young people at a much lower rate than the Future Jobs Fund, and it is a judgment of what is the best approach to deliver what we need to do and to deliver value for money. In time, I think the decisions we’ve taken will be proven to be the right ones.

Chair: Harriett, do you still want to come in?

Harriett Baldwin: It was just that Julia’s answer earlier reminded me that I needed to put in the declaration of interests that I am on the board of the Social Investment Business, which has an interest in 3SC.

Q145 Chair: May I just return very briefly to the state aid rules, because that from our witnesses seemed to be acting as a barrier to get the private sector in, but they thought there would have been a way around the state aid rules and the Department could have done a lot more to encourage the private sector to find a way around those rules? They told us, for example, that there are exemptions within the state aid rules that might apply to particularly disadvantaged groups, such as longer-term unemployed. Is that your understanding of how the state aid rules work, and if that is, why wasn’t there more effort put into perhaps helping the private sector to be able to compete for some of these places but not fall foul of the state aid rules?

Chris Grayling: Well there are certainly ways around the state aid rules. Most particularly, private sector organisations can set up special vehicles to do this. The truth is it is quite complicated to work around these things and that has made it much less appealing for the private sector to do. What we surely want is not to support private sector jobs, but actually to work together with the private sector in partnership in the way we do with apprenticeship model, where the private sector pays the apprenticeship wage and we pay the training costs, and at the end of it there is a route that continues beyond that. I will ask Julia to say a bit more about what work was done, but the Future Jobs Fund is a much more hassle-filled approach to developing the kind of participation we want young people to have in the private sector than simply apprenticeships.

Julia Sweeney: Very early on in the Future Jobs Fund process, partners raised this particular issue. We worked with lawyers and colleagues to develop a good practice guide to show the variety of ways in which the private sector could get involved with the Future Jobs Fund, for example by delivering in areas of corporate social responsibility, by delivering non-core services and by setting up special purpose vehicles and community interest companies. There was quite a lot of activity within the private sector to engage in those ways. We gave support and further guidance where it was wanted. There isn’t facility to stretch the state aid rules; however, we did help people to navigate their way through them and identify ways in which they could get involved. As we had good examples of people doing just that, we published them within the guide as case studies so people could see the reality of private sector involvement. Now that didn’t in any way balance off the private/public sector ratios, but it did show those private sector organisations that wanted to get involved exactly how they could.

Chair: Moving on to questions on the termination and transitional arrangements. I know we’ve touched on that, but some more detailed questions.

Q146 Teresa Pearce: Yes, I was going to ask about transitional arrangements and we have touched on it. One of the first things the Chair asked was about the fact that the Jobs Fund ends in March and the Work Programme doesn’t really come on stream till summer, but you said that you didn’t think there would be much of a gap. I wondered when precisely you thought the first entrants to the Work Programme would be taken on.

Chris Grayling: The target date for the full launch of the Work Programme, as published in the Department’s business plan, is next June. A lot in terms of transition will depend on who is successful in the bidding process, so in some areas you will have an established FND provider with an established network of sub-contractors that has been doing a good job that brings forward a good bid for the Work Programme and is successful. Of course, there really isn’t much of a transition at all there because the capability is there-the only thing that changes is the nature of the contractual arrangement. They will evolve the support they provide accordingly to meet the new world, but the fact is there is still a team of people and a centre and the transitional arrangements can be relatively straightforward. We will negotiate with them to make a fairly smooth transition between existing programmes and the old.

Where an issue will arise is in a part of the county where there is no current provision from the people who are successful in getting on to the framework and then getting the individual pieces of the Work Programme. That is something that the team and I will be working on pretty hard-as soon as we have confirmed the people on the framework-because that will give us a sense of where the gaps may be. If you are in such a region in the country, or the people who have been put on the framework have expressed an interest in that part of the country anew, then clearly we have an issue and we have to work through how we best manage the transition. In areas where the existing providers have won contracts and we have carried them through, that problem doesn’t exist. Therefore, when we come to talk about the Work Programme contracting process-in the new year I believe, Chair-I’ll be able to give you more detail of that. I am acutely aware we have to fill the gaps, but we’ll fill in the gaps as the framework unfolds over the next couple of months

Q147 Teresa Pearce: Are you saying you expect some areas of the country to be able to embrace the Work Programme quicker than others?

Chris Grayling: If we have a part of the country where the providers have moved forward from the Flexible New Deal-they have come forward with an attractive package to build that on into something broader for Work Programme participants to help the harder-to-help groups, for example-then I am very much of the view that we should work with them to bring into force the new arrangements sooner, when that is appropriate.

Q148 Teresa Pearce: So what Mark was saying earlier about some employers wanting to work nationally, would you be able to direct them more in areas where you thought there was that gap?

Chris Grayling: There are effectively two levels of partnership with the national employers. You will have a partnership between Jobcentre Plus and an individual employer to provide support over the first few months of job search. We may very well indeed use some of those partnerships to secure work experience opportunities if there were any kind of gap in provisions. At the moment the first priority for the work experience effort is in those parts of the country where there is a particular unemployment challenge, but if we look at areas where there are gaps in provision, we can deploy some of the things we are doing through Jobcentre Plus to suit those areas to a greater degree to strengthen the transition. It might very well be that we have discussions with some of the national partners of Jobcentre Plus to help provide some of those opportunities.

As soon as we have taken the final decision about the framework, which will happen in the couple of weeks, we will be publishing details of it-the official team are finishing the evaluations now. As soon as we know the shape of the framework, we will be able to get a first sense of where there may be gaps. We will then have a second round of that when the Work Programme is contracted in the new year where we have a sense of where gaps may arise and if necessary we will deploy the recourses of Jobcentre Plus to fill in gaps or we will make additional arrangements in parts of the country where there is a particular problem.

Q149 Teresa Pearce: Will young people who have been on the Future Jobs Fund, and maybe part of that 50% who are then back on benefits, be eligible for the Work Programme or will they have to wait?

Chris Grayling: I would certainly expect those young people to be eligible for the Work Programme, but not straight away, because they would have come out of an existing position of being on Jobcentre-

Q150 Teresa Pearce: What sort of gap would they have to wait before they were allowed back?

Chris Grayling: It will depend very much on the circumstances. The coalition agreement sets out a six-month entry point for young people. We are looking at the moment as to whether we bring forward the entry point for some of the hardest to help groups to three months-those who have grown up in the most challenging circumstances and from the most challenged backgrounds. We are also looking at the dead weight issues for those around six months. So we haven’t finally formed a decision yet; we will have to in the next couple of weeks. I have asked for some further pieces of evidence just to inform that decision making. Certainly, around the six-month point would be the answer.

Q151 Teresa Pearce: In some of the evidence we’ve had people have talked to us about rolled-up weeks; unspent funding where it has already been allocated. There has been a suggestion that the Future Jobs Fund could be extended in those cases. Would that be possible or is March 2011 the cut off?

Chris Grayling: Mark, do you want to pick up on that one?

Mark Fisher: I think there are two things. One is there will be people in Job Funds jobs after March 2011; March 2011 is only the last date for putting people in jobs, not the actual end date of the scheme. I think it is true that a number of providers have said, "You have not spent all the money, therefore can you roll it on?" I am afraid we cannot actually do that. For example, if somebody has been in the Job Funds job for less that the full six months and gets into another job earlier, then fine-the taxpayer has to take the profit from that and that was the arrangement we have come to. Our financial modelling has always assumed that some of these jobs would not need to last six months, so I’m afraid we do not have spare money we can give to providers in that way.

Q152 Teresa Pearce: A last thing: one of the key things about the Future Jobs Fund was the posts had to be additional. What safeguards do you have in place for when the Work Programme rolls out for people being put on that Work Programme and other people actually losing their jobs? Are there any safeguards with major employers to make sure that doesn’t happen?

Chris Grayling: Well of course the difference in the Work Programme is it’s not about placing people in the intermediate jobs the Future Jobs Fund represents. It’s really about a supportive and intensified recruitment process into longer-term employment.

Q153 Teresa Pearce: But the work experience that Mark talked about earlier, with the skills training in maybe Asda or places like that, would be real people in real stores, wouldn’t it?

Chris Grayling: It will be very unusual for work experience placements to be used as, say, a replacement opportunity. The one reason for setting the limit at eight weeks is to prevent that from happening. If you allow someone to go for six months’ work experience, they absolutely can be exploited in that way. I don’t think it would be possible to do that in eight weeks, as it takes that long to get somebody to the point where they really could effectively take the role of somebody else.

Q154 Teresa Pearce: That is something that has been considered and you think it won’t happen?

Chris Grayling: I think eight weeks is sensible. I think if you go beyond eight weeks in a specific work experience placement, you will risk exactly what you described. The guidance effectively was that a week or two is fine. I didn’t think that was sufficient, but eight weeks seems to be the right kind of balance.

Q155 Chair: This gap, though. It is not just the Future Jobs Fund providers that are concerned about the gap, which I think you made a bit light of this morning. Other providers who are delivering the Flexible New Deal are concerned that effectively their funding finishes at the end of the financial year, and with the best will in the world, even the shortest gap is still three months. I am not sure that we have heard a robust answer to that question of what will happen to these people who have already geared up-who are delivering Flexible New Deal successfully-because there is bound to be a cliff edge at the end of March for them and they don’t know what is going to happen three months down the road. What they do with their workers, their advisers and everything in that space?

Chris Grayling: It is not an issue for Flexible New Deal areas because their contracts continue until June. In those parts of the country where Flexible New Deal is established, the transition should be pretty straightforward. The issue is around those parts of the country where FND2 didn’t come into force, and where we have existing programs like the New Deals that wind down at the end of the year. I absolutely accept that there is an issue there. If we have an existing provider that is going to use the infrastructure they have in place to support the New Deals who gets on to the framework-we know by early February that that’s the case, and they know by the end of this month that they are in the frame for that part of the country-I don’t for a second believe that they are going to be sacking all their staff on 1 January, if they are in the frame to start a contract in the spring.

I think we have to identify those parts of the country in two stages. First of all, when the framework is published, we will understand where there is a certainty of a gap. We will then have to put in place transitional support for those areas, because if there is no existing provider of substance operating in those areas that is on the framework, clearly that gap will exist. Equally, once we see the bids come in-we will have an idea of this much sooner than we publish the outcome, because we will know who is bidding in each area and we will be able to take a first glance at which bids look the most attractive-we will then be able to move pretty quickly to say, "Right, okay, in these four parts of the country there is a genuine issue that remains unresolved because there is no existing bidder in place that is going to end up as one of the Work Programme providers in that area and can migrate early, so we will have to put in transitional support." Where there is somebody that has won a Work Programme contract that has New Deal-related infrastructure in place in terms of staff and a centre, I would envisage us negotiating with them to start their contract early. They will clearly need to build on that for the Work Programme, but they will have the core to make the transition earlier than June.

Q156 Chair: I think this is obviously something we will return to when we enter the Work Programme.

Chris Grayling: We will absolutely, but I just want to make the Committee aware that I am very acutely aware of the issue, and we will work through as carefully as possible and we will respond to gaps as they appear. However, we only really know once the framework bidders are in place, and then we know who’s actually bidding for each bit of the country in reality.

Q157 Glenda Jackson: Two points actually: what are the constituent parts of an attractive bid; and what are the numbers of young people you are expecting on these programmes?

Chris Grayling: The number of young people on the programme that will go through the Work Programme at a six-month entry point is 210,000. If we vary around that, there is quite a lot of dead weight after six months; a lot of young people drop off JSA between six months and 12 months. While I am very keen that we provide support to those young people who genuinely need it as early possible, equally I don’t want to pay for a large amount of dead weight between six and 12 months for those who would have got a job anyway-those who were signing on temporarily before a job offer starts.

I remember when I left university, although I didn’t sign on, the job I got didn’t start till the following April, so I did bits and pieces over that nine months, and there are some people in that position who will just sign on and then will sign off after six or seven months before they start their job, or other circumstances similarly. My concern is to make sure that we get those people who really need it on to the Work Programme as quickly as we can. I don’t want to pay unnecessarily for dead weight, so I have asked for a bit more work to be done on the dead weight issue around six, seven, eight and nine months. That will have an impact on the final numbers involved, but if you have pure straightforward six-month entry, the total number is 210,000.

Q158 Glenda Jackson: And what would be the constituent parts of an acceptable bid?

Chris Grayling: The point we have to achieve in contracting the Work Programme is the point on the map on which the investors get a return and the taxpayer does well. That is the goal of the process over the next couple of months. We have to deliver the best value for money for the taxpayer financially and the biggest social impact, but equally if we don’t deliver in return for the companies and organisations that are doing it for us, they won’t bid and they won’t do the job, so that’s the balance. My definition of the ideal bid/contract arrangement is the one that finds that position where everybody wins and everybody has a unified purpose to get people into work.

Chair: Okay. We have got some important questions on apprenticeships. Stephen.

Q159 Stephen Lloyd: Thank you very much. Minister, moving on to apprenticeships, as the Chair says, the first question is a clear financial one. I’m not absolutely clear exactly how much money the coalition is intending to spend on apprenticeships. I would be grateful if you could tell me the overall total in 2011, 2012, 2013, plus the amount that the coalition Government are spending more than the previous Government were spending on apprenticeships. Does that make sense?

Chris Grayling: Yes it does. I’ll answer the last bit and then I’ll hand over to Claire, because of course apprenticeships are a BIS capability. The things we are doing additionally to the previous Government: first of all there are 50,000 extra apprenticeships in the current year. That is a one-off extra investment in the aftermath of the recession. Then, in the spending review, we announced an increase of 75,000 apprenticeships over the course of the spending review period, so that is over and above what was previously planned. Claire will talk you through the individual figures for the next financial years.

Claire Burton: I shall. This year is very simple. This year we are putting £1.3 billion into apprenticeships programmes-that is the 2010-11 academic year. Both BIS and DFE, because of course DFE has a stake in the apprenticeship programme for 16 to 18-year-olds, have yet to publish their figures going forward, so the actual year-by-year allocations will be published for BIS in the next week or so, and I am happy to write to the Committee with a copy of that, and then for DFE in December, and again I am happy to write if that’s of interest.

Q160 Stephen Lloyd: I would be grateful for that. So it is £1.3 billion as far as we know this year, and with additional sums coming from DFE, and the £150 million that the coalition Government have added since it came into government is on top, or is that included in the £1.3 billion?

Claire Burton: That’s right. The £150 million was a single year figure and it was put in in June. It was one of the first actions on the coalition Government. That was for one year only. What we know the spending review allows us to do is maintain that level of spend and add another £250 million, although it has to be decided on how that is to be spilt over the years.

Q161 Stephen Lloyd: I would be very grateful, Claire, if you did send those and they were all circulated. Equally, what I would be grateful for is if you could put in an expectation of how many apprenticeships we are anticipating in each of those years. If you could send them to the Chair, we would be grateful.

Claire Burton: Yes.

Q162 Stephen Lloyd: Apprenticeships are real wage jobs provided by employers. How will the Government incentivise employers to create apprenticeships under the current labour market conditions?

Chris Grayling: This is something I have been keen to pursue with BIS as well. Clearly it is all well and good having lots of new apprenticeships, but there has to be somebody there actually to provide them. Thus far that has not been a problem. For example, this year, the allocation looks like being fully taken up-the additional 50,000 looks like being fully taken up. Generally speaking, even in relatively difficult times financially, the employers have been there to provide apprenticeships and there is no real indication that is going to change. Claire will add more to that.

Claire Burton: I think that’s exactly right. We have to work very hard to bring new employers into the programme, but for the past two years-certainly on the adult side of the programme-we have actually had to cap the number of places we could offer because there was more demand from employers than there was funding to supply the places. What the additional funding has allowed us to do is to open that up, and the indication is that we are going to fill those places.

Q163 Stephen Lloyd: A key thing with apprenticeships is obviously assuring employers that they have a long term-that it is three or four-year funding, depending on how long the apprenticeships are. You are confident that that’s in the model and the employers are confident themselves that the money will always be there?

Claire Burton: Yes, that’s right. As you say, apprenticeships can last from 18 months to three or four years.

Q164 Stephen Lloyd: And that’s in the business model and the employers know that. Okay.

Claire Burton: That’s confirmed.

Q165 Richard Graham: Can I just interrupt very briefly? Claire, one of the problems with the apprenticeship design from the employer’s point of view in the past has been that it has been rather inflexible. There is a certain quota for 16 to 18-year-olds, quotas for 19 to 21-year-olds, and quotas for different sectors. You can’t really swap a quota from one type to another very easily. What sort of work has gone on to try to make these more flexible and attractive to employers?

Claire Burton: One of the main things that BIS has been consulting on over the summer is a new funding flexibility model that would actually make it much easier, as you say, to cross those boundaries where previously there have been different ring-fences within the programme for different age groups and social groups. The results of that consultation and the response will be published in the next week. I think that has been one of the big responses that we will be coming back on.

Richard Graham: Good, so published next week. I think that will be something very useful to the Committee.

Q166 Stephen Lloyd: Definitely, thank you. The Family Jobs Fund was designed primarily for young people in danger of sliding into long-term unemployment. How will the Government ensure that employers recruit longer-term unemployed young people, or those at risk of this, into the additional apprenticeships? What I will flag up is what I have heard in the constituency and in evidence taken over the last few months: in some instances, particularly for the long-term unemployed, pre-apprentice training is felt to be necessary. Do you agree with that? What steps will be taken by the Government to ensure that the longer-term unemployed can actually get up to that level?

Chris Grayling: Claire can talk in moment about the pre-apprenticeship work that BIS is doing, but in terms of our Department and the Work Programme, clearly an apprenticeship for a young person is one of the routes they can follow into work. The key, I think, is to make sure that young people are ready to move into apprenticeships as you describe. In terms of the long-term unemployed, a central task of the Work Programme providers, as I see it, is to ensure that they actually support, motivate, encourage and provide the right degree of direction-matching an individual to opportunity and so forth-actually to get that young person into an apprenticeship. In essence, we have said, "What is the Work Programme about?" It is about preparing people for work and then matching them with the right opportunities.

Q167 Stephen Lloyd: Before Claire answers, to make that happen you are going to have to have funding within the model to allow the suppliers actually to spend that month, two months, three months-whatever it takes-to get through the pre-apprentice level. They will have to be able to be paid for that, obviously.

Claire Burton: We are looking very closely at the moment at what a pre-apprenticeship should look like. I think you heard from Groundwork, which actually uses the Future Jobs Fund and their allocation of the scheme as a form of pre-apprenticeship. I think that is one of the areas we have been learning from. For us, I think the real importance of the Work Programme is, as the Minister says, getting people to a point where there are able to compete for and take on an apprenticeship, which is a high-quality industry standard training, and then move forward to successfully complete it, because the great bonus of apprenticeships is they are sustainable employment. Some 80% of employers report that they have good company loyalty coming out of the scheme and continued employment, but that is only the case if you are actually able to move in, if you have the skills, and if you are ready to start work and move up that productivity scale.

Q168 Stephen Lloyd: There is a recognition of that obviously within BIS. Okay, that’s fine.

Chris Grayling: I would just add to that in terms of joined-up Government. Given how integrally linked these two things are, as witnessed by the fact that we are doing the session today on both a BIS matter and a DWP matter, one of the things we have sought to ensure is a close relationship between our two teams. John Hayes, the Skills Minister at BIS, and I work quite closely together on all of these issues and, I think that is right and proper.

Q169 Richard Graham: Stephen, may I just have one more question? Just in terms of qualifications needed for apprenticeships, I am taking on an apprentice myself, and there is a head teacher in Gloucester who will also be taking on an apprentice. These will be NVQ 2 level, so not a huge amount of pre-preparation is needed. The question in a sense is: do you think that we are able to get the message out wide enough that apprenticeships can cover almost anything under the sun including, for example, someone doing business management for both an MP and a head teacher? Do you think that the current structure at the NAS, which has broadly one person per county, is adequate for getting that message around, or is there more that employment or sectoral organisations and associations could do, especially in the world of SMEs? Could we use the FSB for example?

Claire Burton: I think if I look at the National Apprenticeship Service question first, one of the core aims of its set up was that it should not only do some business-to-business work itself, but rely on intermediately bodies like the local chambers of commerce and Jobcentre Plus, to get the maximum reach possible into local communities. I think that was a recognition of the fact that, as a Government agency, it is a small agency, so it needs to get the maximum distribution across local areas. Although I think there are a small number of people in the National Apprenticeship Service in the regions, actually the business model was that they should work through other bodies, which often have better links into the sort of employers that we are seeking to reach. I think it is exactly right that the messaging that we are trying to use now is far more on trying to talk about the range of sectors that the apprenticeship covers. It covers around 80 industry sectors already, and actually the business administration apprenticeship is the largest framework. So it is beginning to move away from the old style, traditional concept that apprenticeships are only people who work with their hands. Actually, there are a lot of young people out there who are doing a whole variety of jobs. In the marketing campaign to employers that was launched last week by my Minister, Mr Hayes, one of the main sectors he was specifically interested in targeting was IT. What we found through our research and evaluation of previous marketing campaigns is that tailoring your marketing very carefully to the sector you are approaching has the best effect, so we have gone out specifically on that IT sector.

Q170 Mr Heald: I am very pleased to hear you say that because one of the things that I have banged on about for a long time is that we have these skill shortage areas in Britain, and IT is one of them-absolute classic. Are you also going to be looking at engineering?

Claire Burton: Engineering is another one of our target areas. Engineering and manufacturing I think have been mainstays of the apprenticeship programme, but they are also areas where we think there is significant opportunity for growth. My Minister has being working quite closely with the Technician Council, which is looking at a wider engineering and STEM subject growth in apprenticeships, and I know it is very interested.

Q171 Richard Graham: Claire, will you be able to have small specialist trainers providing the training in the new system, rather than just consolidating into big further education colleges? The specialist trainers have a key role, I think.

Claire Burton: That’s a question that we are looking at quite carefully for our publication next week: the role that specialist trainers can play, particularly with the younger age groups. The 16 to 18-year-olds’ providers tend to be very small.

Q172 Stephen Lloyd: On the Future Jobs Fund again, focused on the longer-term unemployed young people up to the age of 18, many came through from the NEET sector. Are there plans to create additional apprenticeships targeted at longer-term unemployed 18-year-olds, or is it just going to be 19-year-olds up?

Claire Burton: There are apprenticeships for 16 upwards, and that’s a significant part of the programme. The last year for which we have data for apprenticeship starts is 2008-09, which showed that of the 240,000 starts, about 100,000 were 16 to 18-year-olds. So that is a very significant part of the funding-

Stephen Lloyd: And it is already part of the model. Okay, that’s fine.

Chair: Okay, I’m going to come to Kate and then, Glenda, I’ll bring you in if your question hasn’t been answered.

Q173 Kate Green: Sorry, may I just try to understand a little more clearly, because we seem to have a lot of things going on now? We have an apprenticeship programme coming for which you have substantial funding for the academic year 2010-11. Is that available to 19-year-olds and over, or 16-year-olds and over?

Ms Claire Burton: 16-year-olds and over.

Q174 Kate Green: So that money is being spread across all age groups from 16 onwards, okay. We heard evidence from a number of witnesses that some of the young people who had gone through the Future Jobs Fund were in no way ready to take up an apprenticeship. Indeed, I was very interested in the description that you were giving us, Chris, of the eight weeks’ work experience, which is some senses might be one of the things that the more disadvantaged young people need to embark on before they might be ready for an apprenticeship. Paul Gregg expressed concerns that if you put everything into a black box, you don’t know that the providers will make use of those good eight-week work experience-type models, or that they will genuinely concentrate on young people who are a long way away from being ready to move into work or into an apprenticeship. Now I know you will say, "Well, the funding model should incentivise them to do that," but how confident are you that that group of young people will be properly addressed in the Work Programme?

Chris Grayling: I take you back to the point: I believe that you need to have an increased price for harder-to-help groups-the more challenged young people. The NEETs are one of those categories that we would put into the Work Programme with a higher price on their heads. The key disadvantaged groups are those people who are constantly cycling around the welfare system-the JSA system-or who are very long-term unemployed. We have a worrying number of people who have been out of work for three years out of four. Very often they have come off benefits for only a very short period of time, and maybe they have not been into work at all. Those people who are coming off incapacity benefit and also those people who are coming from a particularly challenged background-ex-offenders for example-are people we are looking to put into the Work Programme at a higher tariff rate so that the return for a provider is going to be better if they get one of those people into work than it would be if they could get a conventional jobseeker into work.

If you look at a programme like the Flexible New Deal, one of the problems is that it dumps everybody into one pot. You get paid your £3,300 for everyone. To my mind, that is an automatic guarantee of parking, because you make no more money on the harder-to-help people. I can never guarantee to you that we have an absolutely perfect system in that respect, but I do think that if you pay significantly more for a harder-to-help person, there is an incentive to the provider to have a specialist group of people working with the harder to help to try and get them into work and overcome the bigger barriers. So that is the key tool we will be using.

We will be transparent about the Work Programme. I do want us to make the relative performance levels, and indeed you as a Committee would expect us to be giving you evidence about that. If one provider is proving much more successful than another at getting NEETs into work, I want that to be in the public arena so that a provider is able to say, "Hang on a moment. We are being beaten by the guy up the road. We need to do something about it."

Q175 Kate Green: What level of apprenticeships are we talking about in terms of NVQ 1 through to 3? Again, from Professor Gregg, we heard there was very little point in routing people into NVQ-1 type apprenticeships. I am drawing on my memory here rather that the brief we had, but I think there is a lot of evidence that NVQ 3 is where you see the real difference in terms of long-term employment prospects and earnings.

Claire Burton: That is the case, yes. Apprenticeships exist at level 2 and above, so there are no level 1 apprenticeships. They exist at levels 2 and 3, and there is a small number at level 4-so moving into higher education. I think where we see the apprenticeship programme sitting is as a progression route. So level 2 is an important step, but actually level 3 is, as you say, where you begin to see the real wage benefits to the individual, but also the growth benefits to the business as well.

Q176 Glenda Jackson: We’ve also been briefed that FJF is a good way of leading people into apprenticeships, but I understood from what you were saying that those people on FJF will not be at the forefront for going into this programme. Is that correct? Is this going to apply also to those people who are the last tranche of young people who are on FJF?

Chris Grayling: Well there is no reason why somebody who has been on the FJF can’t move into an apprenticeship; I don’t think there is anything in the rules that prevents them from doing so.

Q177 Glenda Jackson: I was building on your saying that there is going to be a need for pre-apprenticeship schemes. If people are advising us that FJF is a very good way of readying people to go into apprenticeships, isn’t that a waste of money to say that they can’t be considered for these schemes and you’re going to have to have a pre-apprentice scheme as well.

Claire Burton: I don’t think we are saying that people who have been through FJF wouldn’t be considered for apprenticeship schemes. I think the fact that they have been in paid employment for six months is actually likely to mean that employers are more ready to take them on.

Richard Graham: Can I just interrupt here-

Chair: No hold on Richard, I want-

Glenda Jackson: Can I have my answer?

Chair: Can I exercise my role as Chair. Richard, as Kate was in middle of her question, can I get Kate to finish her question, then I will bring both you and Glenda in, I promise. But please let Kate finish.

Q178 Kate Green: As I understand it, what we are hearing from you is that, for the more work-ready and better-qualified young people, you would like to route them where appropriate into apprenticeships as quickly as possible. They will be at least level 2, and could indeed be part of a progression through to level 3 and beyond. For those who are not ready to move into apprenticeships-who lack the skills and qualifications, and might have the significant barriers you mentioned, Chris-you very much see the black box model as offering the opportunity to do more things with that group around work experience, and about free apprenticeship skills, and that might take quite a long time, and indeed might never lead to an apprenticeship-you might lead them straight into a job.

Chris Grayling: Yes, yes.

Q179 Kate Green: So I think the real test of success of your Work Programme apprenticeship model is if it is able to be subtle enough to address those different levels of need and scale and work readiness in those different ways, and to be sure, as we said earlier, that employers have the apprenticeships to offer at the end of the process.

Chris Grayling: Yes, absolutely.

Q180 Kate Green: I think that is really helpful, Chair, because it sets the framework for what a successful Work Programme will look like. You can judge it against that down the line.

Chris Grayling: The key to defining the success of the Work Programme is most fundamentally its success in getting people into employment, and apprenticeship is clearly employment. The route to get there is about making somebody work-ready, and the key challenge to the providers is to deploy whatever support skills are available. Sometimes it might be light-touch guidance; sometimes it might be quite intensive work. What I don’t want to do is to have a system that is devised in Whitehall that says, "That’s what you will do," because that might be appropriate for one person but not for another.

Q181 Kate Green: I think we really want to ensure, though, that the more vulnerable young people do have that chance to make that progression through and potentially get into the apprenticeships. How confident are you that will happen?

Chris Grayling: I am confident that the approach that invests a higher amount of money- The benefit of the AME-DEL approach is that it does enable us, on a payment-by-results basis, to invest more in the hardertohelp groups. I’m confident that’s the best tool we have available to maximise the likelihood of the hardertohelp groups getting into work. I think, at the end of the day, by ensuring that the provider gets a higher return for the hardertohelp groups, they are incentivised to work with those people as well.

The other benefit of the framework-and we’ll talk more about this when we do the discussion about the Work Programme contracting-is it is specifically designed to allow local authorities and other public sector organisations to buy boltons to the Work Programme relatively inexpensively. The core cost of the Work Programme is funded, but if you as a local authority have a particular problem with NEETs in your area, and you want to spend a million or two extra really to develop an enhanced package for the NEETs, you can contract very quickly and easily with your local Work Programme provider to provide that addon, and you would do it at a lower cost than you would otherwise have to do, because you are building on top of something that’s already there, rather than creating something afresh.

Q182 Kate Green: Just a last question from me, Chair. We understand that the adult apprenticeship placements that you were talking about, Claire, don’t apply in Scotland and Wales , so what apprenticeship provisions will there be there?

Claire Burton: Apprenticeships is a devolved policy, so my Department covers England. I can’t represent the devolved Administrations, but they do each have their own apprenticeship schemes, which I believe focus as well, and which Jobcentre Plus and DWP have been working with.

Q183 Kate Green: To your knowledge, are they scaling up apprenticeship provision in the way you’ve described as happening in England?

Claire Burton: To my knowledge, I think all of the devolved Administrations have had much the same focus on apprenticeships over the last two to three years, and have had very similar measures coming forward from the recession as well.

Chair: I’m going to bring Richard in, and then Glenda.

Q184 Richard Graham: Because this Committee hasn’t actually looked at apprenticeships in much detail, the workings of them and how you recruit an apprentice might not be very familiar to people. I think what would help Kate and Glenda to get a feel for what sort of people go on apprenticeships is if you just explain very briefly how you set about recruiting them. If you’re looking for a business apprentice, by advertising on the NAS website, I can interview anybody from 16 upwards. They might be people who have GCSEs; they might be people with no educational qualifications whatsoever. They might be people who’ve been on the Future Job Fund, they might be people who’ve had work experience-it could be anyone. It’s entirely up to the person interviewing to decide what sort of apprentice they take.

The training is then provided by the training provider. In my case, as it is for many further education colleges, that’s actually done in my office. They don’t go to the further education college physically, except to do the exam, which they then do after 12 to 15 months for NVQ level 2. You can then extend that, and you can go on to level 3, and you can keep extending the apprenticeship until you want to offer them a permanent job.

It isn’t as if there is a formal qualification needed to take somebody on as an apprentice. It is entirely up to the employer, and there are benefits in taking young people who have no work experience and haven’t got into bad habits, and there are benefits in taking people who have work experience. So I think that would help.

Kate Green: Perhaps I could ask Claire a question on that point, Chair, because that’s really very helpful. What evidence do you have that there are employers like Richard, who are very willing to consider young people with no qualifications and very low levels of skills in the context of offering them an apprenticeship?

Claire Burton: I think the first thing to say, as I said, is that we don’t interfere in the private recruitment practices of employers, as a general rule. From some of our larger contracts, and looking at companies like Morrisons, Tesco and McDonalds, we know that they angle a significant degree of their recruitment through the apprenticeship programme at individuals who are coming in from the Jobcentre Plus route and the unemployed. So I don’t have data that will allow me to say exactly what the proportion of the programme that would be taken from that group would be, and also not necessarily all apprentices are newly recruited; in many cases they may already be working with the employer. From the larger contracts, we do know that there is a real focus from employers on that recruitment method.

Richard Graham: There’s a huge opportunity, Chair, for individual MPs to lead on this in our constituencies-to identify people and then put them together with employers for work experience, and then for apprenticeships. There are 650 of us here who could also take apprentices.

Chair: May I also point out that we perhaps need to speak to IPSA first in terms of the jobs, because I know that there have been problems with previous schemes because of the way the funding works out.

Q185 Glenda Jackson: My question, essentially, was on the point that you had made of employers talking about preapprenticeship schemes, and whether those people who had gone through the FJF programme would be eligible for this programme when it starts, or are they going to have to wait six months? If they are, how much is it going to cost for the preapprenticeship scheme?

Chris Grayling: For the Work Programme or for BIS? For the Work Programme, they will have to wait, because these are people who are coming out of six months of paid work. They would receive support through Jobcentre Plus for that first period, but if they weren’t successful in getting into employment, they would then be moved into the Work Programme. I think, given the investment the state has made in the people who’ve gone through the Future Jobs Fund, at the very least we would leave them with Jobcentre Plus for a period of time to try and realise the benefits of that investment before we wrote it off and started again, effectively.

Q186 Chair: I think we’d all agree that it is going to take more money to get the hardest to reach into jobs, and you’ve said that that’s the case. Haven’t you effectively set a cap on the amount of money that any of the providers through the Work Programme or through the apprenticeship system is going to be able to spend? You are already saying that the Future Jobs Fund is too expensive at £6,500. Obviously, if that’s too expensive, and that’s why you’re not going ahead with it, the Government would therefore not be willing to spend that amount of money on those who are furthest from the job market to get them back into work.

Chris Grayling: I don’t think that necessarily follows. You’re looking at potentially different groups within all of this. The Future Jobs Fund takes young people on a mandatory basis at 10 months. At 10 months, the likelihood of them finding a job on their own efforts over the following two, three, four, five or six months is massively higher than it would be, for example, if they were somebody who’d been on incapacity benefit for five years and was found fit for work. So it is a question of, within the Work Programme, trying as best we can-there is no perfect science to this, but as best we sensibly can-to segment according to the relative likelihood of those people getting into work, and the nature of the challenge to get them into work, and then of course the relative benefit savings of doing so. So no, I don’t think it necessarily follows that because paying £6,500 for a Future Jobs Fund place is much more expensive than the Flexible New Deal, you wouldn't pay that amount of money for someone who’d been on incapacity benefit for a long period of time.

I think the relative decision about the Future Jobs Fund is that these are, to a significant degree, conventional jobseekers, who may have been unemployed only once for 10 months. Does the amount of money being paid, which is gross £13,000-net more than £10,000-really reflect value for money by comparison with the experience of the New Deals, which we now all acknowledge probably underperformed their potential because they were too prescriptive? If we can deliver what we believe we can through a payment-by-results regime in the Work Programme and by a greater flexibility for the front-line providers, but in the New Deal for Young People price bracket rather than the Future Jobs Fund price bracket, that’s clearly a better deal for the taxpayer.

Q187 Chair: And we will know at the end how much these will cost? There will be the proper tracking and the full costing through this?

Chris Grayling: Yes.

Q188 Chair: I think these are probably questions for the Work Programme.

Chris Grayling: Yes.

Q189 Chair: You alluded to the fact that there are plans to develop a crossdepartmental strategy on NEETs. Can you tell me more about that: which Department is going to lead on it; what’s the time scale for it?

Chris Grayling: It’s not specifically a crossdepartmental programme on NEETs. What I was saying was that we’ve been working very closely with BIS; for example, in the development of work experience, service academies, and the new enterprise allowance, which is the selfemployment package. There’s a clear interlocking between what John Hayes’s team is doing on preapprenticeships and what we’re doing on the Work Programme. In terms of service academies, which we’re working to get up and running, there’s a training portion and a work experience portion. So there are a number of areas in tackling the issue of youth unemployment where our two Departments need to work very closely together, and that’s happening.

In terms of the Work Programme framework that I was describing, what we’ve done is to create a very simple mechanism that would allow another Department, or another public sector body like a local authority, to add something to the core Work Programme proposition that was relevant to their own area. If a particular part of the country-a particular local authority-felt that it had a real problem with NEETs or older unemployed workers in its area, it could invest additional money in buying enhanced support for those people, over and above what the Work Programme is already doing. This would have a local focus and a community focus, and could be done in a way that’s quick and easy and quite costeffective. You can do it through the framework without having to go through convoluted contracting processes and, because the core infrastructure of the Work Programme is already paid for, you can probably do it more inexpensively than you would otherwise be able to if you were starting completely from scratch.

Q190 Chair: The reason I asked the question is that that’s what John Hayes said in a Westminster Hall debate, so maybe we need to look at what he said. I’m not sure if there’s a difference of approach, but that’s what he called it: a crossdepartmental strategy.

Julia Sweeney: It is probably worth adding that, at official level, we work very closely across education, business and employment policy agendas. My team is working with those in the other two Departments to think about the work that BIS will be leading on the NEET strategy, and the work that Education plans to do on helping young people achieve. We recognise that having a threedepartmental responsibility for young people is complex, but it’s our complexity, and we need to ensure that young people’s transition through the system doesn’t expose the joins between the interests of the various Departments that look after them.

Q191 Mr Heald: One of the points that came out of the evidence to this inquiry was that young people are bad at applying for jobs. The applications to go on the scheme were poor in quality, although the employers liked the young people by and large when they saw them in action. If you talk to providers who pick up young people and are trying to help them at six months, they say that quite often, after six months of job search, they still haven’t managed to provide themselves with a CV. I wondered if it is just worth thinking about either doing something through the education system, or putting online-so that young people can get it up on their mobile phones or their computers or whatever-just a simple thing about how you prepare a CV. To have a young person, six months in, and they haven’t even a CV they can leave at a shop-it’s a major gap.

Julia Sweeney: If I could just reflect on the way that this works. There is quite a lot of guidance on the Directgov and Jobcentre Plus websites, and indeed such a guide does exist. One of the things that Jobcentre Plus advisers focus on, right from the start of a young person’s claim, is making sure they’re well equipped to apply, because actually nowadays you don’t actually drop your CV at the shops-everything is done online. Having a good capacity to put together a CV and tailor it for online applications is important. That is focused on very strongly through Jobcentre Plus in the relationship with young people, but I think it’s true to say that the art of compiling a good CV is a complex one-that’s why people even at our level pay quite a lot of money for those sort of services. So it’s not perfect. I think one thing the Future Jobs Fund did was enable organisations that aren’t accustomed to employing young people to recognise the difference. They may be quite roughedged when they arrive, but actually they learn quite quickly, and I think one of the key findings of the fund for employers that don’t traditionally employ lots of young people is that they can acclimatise and be good in a job quite quickly, and that legacy is important to leave.

Chair: I think we’ve got about four minutes left, so we have a final question from Alex Cunningham.

Q192 Alex Cunningham: Very quickly, I recognise the evaluation of the Future Jobs Fund has some way to go yet, but are there successful elements that will be retained in the Work Programme?

Chris Grayling: We will certainly provide the lessons to programme providers. We will certainly see benefits in terms of the provider network that’s there. I’ve no doubt that those who’ve been involved in the Future Jobs Fund will end up being involved in the Work Programme on a localised basis, and I think that the learning they have built will be helpful to them in supporting the Work Programme. We’ll certainly seek to capture the learnings. As you rightly said earlier, we must make sure that we learn from this experience, whatever the learnings are, so that we can shape future policy if we go through a period of economic difficulty again.

Mark Fisher: If I could just add one point? I think the link the DWP and its systems made with the skills Department with apprenticeships-not just through the Jobs Fund, but the whole recession activity-has strengthened by degree through this experience, and the remainders of the Jobs Fund, and that’s a legacy I’m sure will continue.

Q193 Stephen Lloyd: The important thing with that, sort of building up from what Alex is saying, is it’s not just so much the interdepartmental learning, which I’m sure you’ll do, as that, as we know, there’ll be tremendous contacts and networks made out there in the regions by the providers of the Future Jobs Fund. I was in business many years before I came into politics, and so many times I’ve seen "Oops! Disappeared!" and six months later, "Where have they all gone?" and those contacts are lost. So, I would urge the various Departments to write a very strong letter to your regional people to say it is vital that these contacts are made and maintained and kept, because it’s a terribly valuable resource.

Chris Grayling: I would agree with that, and one of the messages I’ve given to the applicants for the Work Programme framework is that I would expect them, as a matter of routine, to have close working partnerships with, for example, local authorities, who’ve been one of the key partners in the Future Jobs Fund. I think the learnings and the networks that exist locally will all be very much part of the Work Programme.

Q194 Alex Cunningham: When Barnardo’s and the Wales Council for Voluntary Action gave evidence, they were concerned that a lot of this expertise would be lost and that some of the partnership arrangements that have been strong may not be going forward. Julia mentioned earlier that strong, new, dynamic partnerships have evolved during the Future Jobs Fund work. How will you ensure that the totality is actually retained, that we can exploit the partnerships, and that it is inclusive, rather than exclusive to large organisations?

Chris Grayling: But if there are already good partnerships that can make a real difference, the nature of the Work Programme-the payment-by-results model-makes it absolutely commercially logical that those partnerships would be retained. The benefit of a black-box approach, differential pricing and payment by results is that that should maximise the incentive for the prime contractors, or the consortia that lead the contracts, to use the best expertise available. If there are strong local partnerships that have been effective in the past, it makes perfect sense for those to be retained.

Q195 Alex Cunningham: So the large contractors will be encouraged to make sure that they do use sub contracting organisations to bring that expertise to the table?

Chris Grayling: Absolutely, and we’ve been very clear about the criteria we will judge the Work Programme providers by, and we will be able to report back when we have a future evidence session about the Work Programme contracting process. We are not going to give contracts to organisations that cannot demonstrate that they have the ability to build and manage, and have built and developed, an appropriate supply chain of expertise to do the job. I don’t believe there is any organisation out there that has the skills to do everything geographically. I suspect what we’ll see in the Work Programme is the bigger organisations in the bigger centres, and smaller, localised groups doing some of the individual smaller towns and so forth. Equally, within the scope of the different needs, there is a world of difference between helping a young 18yearold from a slightly difficult background, but who is smart and just needs that extra leg up into the workplace, and an 18yearold with learning difficulties who is going to need that extra level of support to get into some form of employment and then might have to go through various steps. There are organisations out there that have expertise in these different groups, and I want to see that captured.

Glenda Jackson: Could I just ask a followup to that one? Very briefly?

Chair: I was going to bring it to a close, but alright then. Very quickly.

Q196 Glenda Jackson: On variability, there must also be financial variables. You’ve given the example of someone with special educational needs. Say that someone with special educational needs lived in a rural area, their costs must be than that someone’s who is living in the centre of an urban environment. Is the budget flexible enough to be able to cover those costs? I mean, it can’t just be simply that everybody across the whole country costs the same amount.

Chris Grayling: I have said that we will have variables. I don’t think we will be able to plan in variables between comparable people in different areas. I think across an individual contract package area, generally speaking, it will level out for the provider. I mean if you look at, say, the east of England, for example, where you have an urban centre like Norwich but you have also the rural areas around, actually that will balance out in the mix of the contract. Where the variations will come is in reflecting that there is a world of difference between the challenge getting that kind of savvy young person who is not quite yet there into work, and the problem of getting somebody with learning difficulties into work. That’s a quantum difference of challenge, and it will be priced accordingly.

Q197 Chair: Thanks very much for coming along this morning. I suspect that we’ll be revisiting quite a number of these things in even more detail when it comes to the Work Programme, and I think we’re also looking forward to the publication of the White Paper tomorrow on welfare reform, which I think is probably your responsibility as well, Minister.

Chris Grayling: Right.

Q198 Chair: You’ve got a big departmental weight on your shoulders. But anyway, thank you, and thanks to your colleagues for coming along this morning. I’m sure the evidence you’ve given will be very useful when we come to write the report.

Chris Grayling: You’re very welcome. I look forward to the report. Thank you.