Devolve work programme for harder to help and save £500m, DWP told

A group of 22 ‘co-operative’ councils are urging the government to devolve part of its back-to-work programme to a local level, amid widespread disappointment at the ability of Whitehall to help the long term unemployed and other ‘harder to help’ groups get back into work.

In a report published today, the Co-operative Councils Innovation Network (CCIN), said that locally-led cooperative employment schemes are far more effective at getting people back into jobs.

The group said that devolving powers to a local level would allow for a scaling up of successful cooperative approaches, and estimated this would stimulate the creation of 90,000 jobs and reduce the cost of employment programmes by up to 25% (saving £500 million).

The CCIN pointed to a recent report from the Public Accounts Committee which found that the DWP has not succeeded in incentivising Work Programme providers to support harder-to-help claimants into work, with almost 90% of Employment and Support Allowance claimants on the Work Programme having not moved into jobs.

This is despite the numbers of harder-to-help claimants having risen significantly since 2011. A quarter of people who entered the Work Programme in September 2014 were on ESA, compared to just 3% when the scheme first began, the Councils said.

In their report, Unlocking Our Wealth, the 22 councils argue that devolving the adult skills budget and employment support would help local authorities to provide better assistance to harder-to-help claimants, often those with a range of disabilities and mental health challenges.

The councils concluded that in contrast with Whitehall, local cooperative approaches, designed around people’s needs, can have far greater chances of success, with a social return on investment of £3 for every £1 invested. Examples include:

• Business in the Community’s Ready to Work programme, which leverages public sector funding to attract private sector resources to support homeless people into employment. The effectiveness of this cooperative approach to employment support for disadvantaged groups is such that were it to be scaled up nationally we could secure job outcomes for participants at between 25 per cent and 40 per cent less cost per person.

• Stevenage’s Business Technology Centre is an enterprise hub for innovation, business incubation and engagement providing integrated business support. If each of the 256 district authorities in England established a similar hub, the resulting small business growth would create 90,000 jobs. Because the Centre generates an income stream, the cost of business support per job is less than half that calculated for previous national programmes.

• Southampton’s unique employment and skills framework, developed with the Construction Industry Training Board, maximises local skills and employment opportunities in all major construction, retail and hospitality projects. If every local authority played the coordination and brokerage role played by Southampton Council, we could see the value of developer contributions and commitments to employment and skills nationwide grow from £15m to £225m annually.

At a launch event for the report, the 22 cooperative councils are calling on the government to trust them. The council leaders say that they “know their areas, they know what works, what matters and how to get things done.”  But they need the power to implement locally designed solutions, and providers to be freed up from national targets so they can focus on local impact.

The CCIN, with secretariat support provided by the RSA think tank (who also managed last year’s flagship City Growth Commission), concluded that local economies and local labour markets are different in every area. The strengths and capabilities of local institutions vary hugely, as do the attitudes of citizens.

The councils argued that at the moment budgets are locked up in different agencies and institutions each working to national priorities. Services should instead be commissioned locally by people who know what is needed in their patch, the report said.

At the event, the councils pledged to strike new local deals with 1,000 businesses to help get more people back into employment, promising to do more to get businesses involved in the leadership of their local area, and to use their buying power to promote innovation and collaboration amongst local businesses and social enterprises.

Together, the group of 22 councils represent five million citizens, with 97,000 people on Jobseekers Allowance. Of these, 29,000 adults might be described as hard-to-reach, because they are long-term unemployed. They also represent a further 310,000 individuals on ESA and incapacity benefits, with over half a million (508,000) individuals on out-of-work benefits in total. 

 

Lambeth Council Leader, Cllr Lib Peck, said:

“For those in our communities who are really struggling to find and hold down a job, the nationally designed Work Programme is not working. The rigid national skills system is training young people for jobs that don’t exist, while employers face enormous shortages in other sectors. The same money would go much further if it were spent locally by local authorities who know the employment challenges in their patch.

Cooperative councils are innovating, not waiting. But we need government to recognise that the status quo isn’t working. A package of funding (including money for skills, employment and health) should be devolved to councils to enable them to provide tailored packages of support to help those who are most excluded get into sustainable work. 

The adult skills budget should be devolved to local areas so businesses, colleges and training organisations can work together to equip our citizens with the skills that we actually need for future jobs and growth. Town Halls are better placed than Whitehall to unlock the wealth of talent there is in our communities.”

 

An Apprentice in Sandwell, Kim Hawthorne said:

“Careers advice in school is no help. Young people need to know what jobs are out there and what training routes are available. Lots of young people would rather work than go to university and they have lots to offer business if given the chance.”

 

Simon Hosking, Managing Director of the Marine Technology Division, Babcock International, said:

“We welcome the proposals in this report for councils to broker more effective relationships between schools and employers, highlighting career opportunities and enabling providers to better develop the skill sets of students to meet the local demand required by Babcock and other businesses.”

 

Chief Executive, Plymouth Chamber of Commerce, Peter Hartland said

“This cooperative deal for business is great. It addresses key issues about business engagement and how business and education need to work better together. Central government should also show leadership and encourage all businesses, to get involved in local networks and take an active role in supporting future growth.”

 

Cllr Andrew Burns, Leader of Edinburgh Council and Chair of the Cooperative Councils Innovation Network, added:

“Local government can set an example when it comes to employment and enterprise. In Edinburgh, our council took on 170 apprentices and the energy and ideas they have brought with them is transforming the way we work.”

Today’s report is the product of a six-month policy commission on community resilience, jobs and growth that took in evidence from job-seekers, businesses and councils up and down the country. The councils propose that three new cooperative deals be struck by local authorities:

• A new deal with job-seekers, based on relationships with them as individuals

• A new deal with businesses, based on genuine partnership and quid pro quo

• A new deal with government, based on what works and trust

 

Notes to editors

1.  

   For more information contact Luke.Robinson@rsa.org.uk or call 020 7451 6893 or 07799 737 970

2. The percentage of Employment and Support Allowance claimants on the Work Programme that have moved into employment is 11% compared to original performance expectations of 22% and revised performance expectations of 13%. Source: http://www.publications.parliament.uk/pa/cm201415/cmselect/cmpubacc/457/457.pdf

3. The Department for Work and Pensions budget for 2013/14 includes £1.92 billion for labour market activity and programmes. (The biggest of these is the Work Programme, at £703m.) The co-operative approaches we have examined secure job outcomes for participants at between 25 per cent and 40 per cent less cost per person than comparable programmes. If this was applied across the board it would lead to a saving of between £480m and £767m on expenditure on labour market activity and programmes.

4.  This social return on investment is calculated to include the value of reduced benefit expenditure, increased tax take, savings in health services and avoided costs of re-offending.

5. Figures for individuals receiving benefits are the latest available from Nomis official labour market statistics from ONS. JSA figures current to December 2014 and other figures (including ESA) are for May 2014.

6. The invitation-only launch of the report of the Cooperative Councils Innovation Network Policy Commission on Community Resilience, Jobs and Growth will take place at 3.30pm – 5.00pm on Thursday 26 February 2015 at the RSA, 8 John Adam Street, London, WC2N 6EZ. Please contact Luke Robinson (contact details above) if you wish to attend.

7. The Cooperative Councils Innovation Network’s website is: www.coopinnovation.co.uk

8. The 23 councils in the Cooperative Councils Innovation Network are: Bassetlaw District Council, Croydon Council, City of Edinburgh Council, Glasgow City Council, Islington Council, Knowsley Metropolitan Borough Council, Lambeth Council, Liverpool City Council, Milton Keynes Council, Newcastle City Council, Newcastle-Under-Lyme Borough Council, Norwich City Council, Oldham Council, Plymouth City Council, Rochdale Council, Sandwell Metropolitan Borough Council, Southampton City Council, Stevenage Borough Council, Sunderland City Council, Telford and Wrekin Council, City of York Council

9. The Cooperative Councils Innovation Network has been developing cooperative approaches in a range of policy areas, such as communal energy generation and fair credit. In housing, for instance, Edinburgh has a student housing co-op, Oldham has established a community co-op to build new homes and Islington has the highest number of estates managed by their own tenants in the country. Now, these councils want to apply their successful cooperative approach in the crucial field of employment.

10. The RSA is commissioned by CCIN to provide ongoing secretarial support to support the network, and played an administrative role in requesting and analysing evidence as part of the Commission, which was directed by a working group of CCIN members.