Jobseeker’s Allowance (18–21 Work Skills Pilot Scheme) Regulations 2014

Lord Freud Excerpts

Wednesday 19th November 2014 Grand Committee

Moved by

[Lord Freud]

That the Grand Committee do consider the Jobseeker’s Allowance (18–21 Work Skills Pilot Scheme) Regulations 2014.

Relevant documents: 9th Report from the Joint Committee on Statutory Instruments and 12th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

These regulations were laid before the House on 13 October and I am satisfied that they are fully compatible with our obligations under the European Convention on Human Rights.

Recent labour market statistics show that youth unemployment is moving in the right direction. The most recent figures from last month show that young people—those between 18 and 24 years of age—saw the largest annual fall in unemployment since records began, of more than a quarter of a million since last year. Excluding those in full-time education, there are now 468,000 unemployed young people. This is down by nearly a third compared to last year and is fewer than just before the recession. Clearly, this news should be celebrated, but we will not be complacent. Compared with other countries in the OECD, we in the UK still have a higher proportion of young people who are not in employment, education or training—who are NEET—and despite the general upturn in the economy, this remains a stubborn issue. Even in past better economic times, on average some 7% to 9% of young people have struggled to find work, and this is not a situation which the Government are prepared to accept.

Since coming to power we have done much to address the issue. We have expanded the apprenticeships scheme and launched traineeships to support young people who are not yet ready to apply for an apprenticeship. We have worked with business to create more than 100,000 work experience placements for young people. We have cut the national insurance contributions that businesses pay for young employees, and we set up a Cabinet Office review of all policies funding our provision for 16 to 24 year-olds who are NEET. Outcomes from this review include opening up the Jobcentre Plus network to 16 and 17 year-olds so that they can receive support and guidance from jobcentre work coaches, and a new careers guidance system is planned for 16 year-olds to help them make the best possible decisions about their future. Also as a result of the review, the Chancellor announced in the 2013 Autumn Statement the intention, which was reaffirmed in the Deputy Prime Minister’s speech on 27 February last, for the launch of two pilots of support for young people aimed at addressing the skills and experience gap that is holding so many of them back from joining and progressing in the labour market.

We know that a young person is twice as likely to be NEET if they have not achieved a level 2 qualification in English or maths by the age of 18—that is 19% compared with 39%. Young people are much more likely to remain unemployed for longer. Some 45% of the young long-term unemployed have qualifications in English or maths below level 2 as against 20% of the population as a whole. Moreover, two-thirds of JSA claimants do not have level 2 qualifications in English or maths. We also know from employers that English or maths skills are critical in the workplace and are paramount to the recruitment practices of many. Findings from the Employer Skills Survey 2013 suggest that where young applicants were not considered to meet the requirements of the role, the main reasons cited were lack of skills and experience.

The aim of the two pilots, or “phases” as they are described in the statutory instrument, is to test new approaches to the delivery of support for young people who lack the English and maths skills or work-related experience and skills that employers demand. It is not the aim of the pilots to deter young people from making a claim for JSA or to make the claiming of JSA harder. Through these pilots, we want to give young people the tools that will serve them throughout their working lives.

Under phase 1, we will require new claimants of jobseeker’s allowance aged 18 to 21 who do not possess level 2 qualifications in English or maths—the equivalent of a GCSE grade A* to C—to undertake learning in one or both of these subjects for up to 16 hours per week for up to six months. We will test whether the use of mandation is effective in securing participation in the learning, compare the two methods of learning in terms of effectiveness and cost, and identify the impact of the learning on job outcomes and off-flow from benefit. Under phase 2, we will require all 18 to 21 year-olds who are still claiming jobseeker’s allowance after six months to undertake an appropriate skills or work-related activity, if they are not already doing so. Doing nothing will not be an option for them. We will test the impact of mandation on take-up of provision, off-flow rates from benefit, job outcomes and skill gain. We also seek to understand how the new process is received by claimants, work coaches and employers, and the net impact of piloting this approach.

Phase 1 will be delivered in jobcentres within the Mercia, Kent, the Black Country, Devon, Cornwall and Somerset districts. Implementation is planned to begin this month, with the last referrals to learning taking place towards the end of 2015. Phase 2 will be delivered in Kent jobcentres only. It will also begin this month but is expected to end in the autumn of 2015, as we do not require as many participants to provide robust evaluation.

We believe that the pilots will have a positive impact on the skills and experience levels of young people, improving their competitiveness in the labour market and enhancing their wage-earning potential in future years. It will also give us the opportunity to gain more evidence of what types of support work best for young people, thereby informing future decisions on our approach to helping those claimants who are furthest away from the labour market.

--- Later in debate ---

[Lord McAvoy (Lab)]

My Lords, I am grateful to the Minister for his very full exposition of the regulations. Twice I have heard him say that the number of full-time students has been extracted from the figures. To start off, can he give us the figures for those in full-time education this year and the previous year, if he has them available? If not, would he write to me? Secondly, I would like to follow up on an aspect of what the noble Lord, Lord German, had to say. I think the Minister used the term “deselected” for students who do not come up to scratch on the two aspects of education. Could he explain why information technology is not included in the subjects in this pilot? It would seem almost essential these days, even for my generation, to be fully competent in information technology. I do not see that that would cause too many complications. I would like to find out more about why information technology is not included. I also do not know whether he can find a better word than “deselected”, which is a bit harsh. Maybe he just has to have a sensitive side.

With some justification, the Minister has indicated that the proportion of young people not in education, employment or training is significantly higher here than in other countries. As has been pointed out, alongside the NEET figures referred to by the Minister—where there has been a reduction—there has also been a dramatic growth in the number of young people we just do not know about, as my right honourable friend Stephen Timms pointed out in the other place. Taking account of these issues, the position is perhaps worse than the NEET figures suggest.

I am also interested in finding out what happened to the review authorised by the Cabinet Secretary in September last year, now over a year ago, which intended to look at the Government’s approach to youth unemployment in the United Kingdom. As my right honourable friend Stephen Timms also pointed out, there does not seem to be any indication anywhere in Parliament of what happened to that review. I am certainly looking for an explanation as to why it was not carried out.

The Minister talked about sanctions. It is becoming clear across Jobcentre Plus that many people have no idea why they have been issued with their sanction. An explanation really needs to be given whenever sanctions are introduced, if we are not going to destroy totally people’s morale and belief in themselves, as the noble Lord, Lord German, pointed out. We are going to totally destroy people who are lacking in self-belief by wiping them out in this manner. That was not deliberately put across by the Minister, but it is certainly the intention.

I would also like to see more positive indications. Folk will quite rightly ask, “What alternatives have you got?”. Stephen Timms has announced that a Labour Government would take unemployed 18 to 21 year-olds who have not been in employment for a year and who have not yet achieved a level 3 qualification off jobseeker’s allowance and instead place them on a new youth allowance that would be dependent on participation in training. I can see elements of that taken account of —I will not say “poached”—in the proposals for these pilots. The proposal was, rightly, that the amount of allowance would be based on parental income on a similar basis to that used for assessing student maintenance. Positive suggestions have been made by Her Majesty’s Opposition but the concentration here is on the regulation put forward by the Minister.

I have no further questions other than about the number of full-time students; what considerations were taken into account before information technology was disqualified from being included in the exams; and, finally, what happened to the review which the Cabinet Secretary was supposed to carry out. I would not like to think we have armchair or sofa government at No. 10, so there must be a reason why that review was not carried out.

[Lord Freud]

I thank noble Lords for those two contributions. There is a consensus here that we need to do everything we can to reduce unemployment in young people, increase their opportunity for sustained employment and get their earnings to the maximum possible level. One of the key elements underneath the academic research—most dramatically that undertaken by Professor Wolf—is that English and maths, at the levels required by employers, are at the heart of successful vocational education. That is exactly what this pilot is designed to look at.

I remind noble Lords that this pilot is about whether we can make something work which is very difficult to achieve. We are trying to find evidence of whether systematically mandating young adults to blended or online learning works, and we need a randomised control trial to provide an evidence base to determine whether that is the way to go. If my noble friend will accept the innovation here, it is about finding out what actually works. There have been various tests abroad—in California and Chicago—of whether this kind of model works for people who have not been able to get these skills or qualifications through the educational process. There is sound evidence elsewhere and some academic research so it really is worth testing the proposition. We clearly need the pilot to find out the most cost-effective and best method of delivery for learning and to ensure that the claimants are engaged and supported to complete their learning aim. The last thing we want to do is roll out, on a national basis, something for which we have not established the costs and benefits.

The question from my noble friend Lord German was: how on earth will six months of this kind of activity succeed where 11 years of compulsory education has failed? The reason is that the form of learning is different; it is more flexible, more attractive, focused on work and largely online in both the different types—the blended and the pure online. The providers involved will address learners’ needs, such as a lack of confidence, through their training. They are registered further education providers with experience of working with these types of learners.

The other question asked by my noble friend was: why is this taking place in England alone? He answered his own question with far greater precision than I ever could. As he knows, skills is a devolved matter and any pilot activity in a devolved Administration would require consent from the respective Governments. We will, of course, be sharing our findings on these particular pilots with these Governments to inform their own policies in this area.

I was asked by the noble Lord, Lord McAvoy, about the number of people in full-time education who are looking for work. The number currently unemployed is 737,000 of whom 489,000 are not in full-time education, so the number of people looking for work who are also full-time students—I wish I could do sums in my head—is 248,000. This is really taxing my mathematical competence without a calculator so I will send the noble Lord the equivalent figure from last year before I collapse in a heap.

[Lord McAvoy]

Oh, go on.

[Lord Freud]

I know the noble Lord would enjoy that more than anything but rather than do that let me go on to talk about the Heywood review, which he admired so much in public for which we are very grateful. In addition to these pilots there is also the 16 to 17 year-olds’ NEET initiative by the DWP in partnership with local authorities which provides personalised job advice and support through Jobcentre Plus. In the Autumn Statement the Chancellor announced a further range of pilots around changes to benefit rules surrounding traineeships, and in February the Deputy Prime Minister announced changes to careers advice and a new UCAS-style system for 16 year-olds. I can assure the noble Lord that there will be further announcements in due course about additional support for young people. I know that he will claim that they were all ideas generated by his own party but I think he is stretching credulity with that claim.

On the question of why information technology is not included, it is almost a logical impossibility, if we are testing online capability with these tests, to get English and maths learning over. It is a completely different proposition to look at online proficiency. It presupposes online proficiency, which is what we understand to be the most important thing, but English and maths are important. We may have to have a look at IT skills as well, as I suspect the noble Lord is suggesting, but that is not what this pilot is about. However, I take his point under advisement.

I am infuriated that I have just been given the figures but no sums have been done, so some of my team are as mathematically challenged as I am. No, I have been given the calculations too: I can confirm the figure of 248,000 in the three months to September 2014, which was down 62,000 over the year. I think that that has addressed all the issues raised, and I commend the regulations to the Grand Committee.

Motion agreed.