03 June 2008
Rt Hon Stephen Timms MP
Minister of State for Employment and Welfare Reform
Inside Government: Next Steps To Full Employment
1 Great George Street
Tuesday 3 June 2008
[Check against delivery]
I am delighted to be here, and I welcome this chance to debate what we are putting in place to achieve our bold aim of an 80% employment rate – up from 75%, itself one of the highest rates we have ever achieved in the UK, given the opportunity to speak to you all today. Securing it will take a great deal of work from us all – and from us all working together. We have already taken key steps to open up employment opportunities for people previously excluded from them, but there remains a great deal more to do.
We are in a very strong position. We have never had so many people working in Britain as we have today. The number of people in work passed 29.5 million earlier this year for the first time ever, and it went up again last month. The number of redundancies is down and the number of vacancies is up, holding out encouraging prospects for the coming months, notwithstanding the current problems in the world economy. The number claiming key out-of-work benefits has fallen by over one million since 1997. The number claiming unemployment benefit is currently around 800,000 – and the last time it was that low was in June 1975.
So it’s a very strong position – and we are determined to make the most of the chance it presents to extend the opportunity of work deep into communities, including to people excluded from that opportunity for many years.
Creation of Jobcentre Plus and the New Deal have made this progress possible, along with the new stability secured in the economy over the past decade. But new challenges lie ahead, and we need to build on past success and redouble our efforts to get the most disadvantaged people into work. So we shall be re-shaping the New Deal, providing more support to lone parents, and making the most of Pathways to Work and the new Employment and Support Allowance in helping people with health problems back into work – all contributing to securing our 80% employment rate ambition. Let me just set out what we are doing under each of those headings.
Re-designing New Deal
New Deal modernisation started in April. Recognising what has worked best in the past ten years, and reflecting that – with unemployment lower now – those needing help will likely need to surmount higher barriers than the average of a decade ago, it introduces a number of important innovations: more intensive job search, new skills assessments and fast tracking for people facing the greatest disadvantage. We are calling it the flexible New Deal.
This increasingly personalised and tailored support will be matched by increased expectations from the recipient, all helping us meet better the needs of those on benefit for a long time or who have struggled to find a stable pattern of work. We have already started procurement for flexible New Deal, and we expect the first customers to be referred in October next year.
Lone Parents
We have had great success in supporting lone parents into work. Since 1998 New Deal for Lone Parents has helped more than half a million lone parents into work. We are building on this as we introduce, in stages, a requirement for lone parents to seek work when their youngest child reaches seven. We are starting later this year, and we hope that, as a result, many more lone parents will return to work – lifting many of their children out of poverty.
In April, Jobcentre Plus introduced a range of employment support to help lone parents make the transition into work. Affordable childcare is fundamental, but, in addition, we have provided better skills support, more work-focused interviews, and extra financial help – for example, through the In-Work Credit which piloting showed to very effective.
Helping people with health problems
For helping people with health problems, Pathways to Work has been a key breakthrough. It has been available nationwide since April, and we are committing a billion pounds to it over the next three years. We are confident it will be money well spent – an independent evaluation published last week estimated that every £1 spent on Pathways leads to a gain of £1.50 to the Exchequer.
I was in Cardiff a fortnight ago for the official launch of Pathways, and I met a woman who was one of the first beneficiaries, having been referred in January. She told me that she had run into health problems at age 17 – she is now 39, so has been on Incapacity Benefit for 22 years. She always hated her review meetings, because the only thing ever suggested to her was a job on a supermarket checkout, when her interests were working with animals or elderly people. She told me that, on arriving at Pathways for the first time, her adviser said something extraordinary and unexpected to her. He said: ‘Would you like a cup of coffee?’ From then on she knew this was different. She started with volunteering with RSPCA, and when I met her she was on the point of starting paid work – after 22 years – as a provider of domiciliary worker for elderly people. She was ecstatic.
Nine out of ten people making new claims to Incapacity Benefit say they want to return to work. What Pathways does is give them the help and support they need to do that. People on Pathways agree a programme of tailored support with their personal adviser, which can include help with better managing their health condition or disability. And once in a job, there is help for them to remain in employment, including a Return to Work Credit of £40 a week paid for up to a year for people earning less than £15,000.
The success of Pathways in combining employment and health support has informed our new Employment and Support Allowance, replacing Incapacity Benefit for new applicants from October. It is designed to help establish what a person with physical or mental health impairment can do, rather than what they cannot. Looking further ahead, our aim is to transfer existing Incapacity Benefit claimants to Employment and Support Allowance in due course.
Professor Dame Carol Black will, I am sure, explain later that reducing numbers on benefit does not just mean helping people to move from benefits into work. It also means helping people to stay in work, or return to work quickly when health problems start. Dame Carol's review, ‘Working for a healthier tomorrow’, published in March, concluded that the cost to the UK economy of working-age ill health is in excess of £100 billion per year – greater than the annual NHS, and equivalent to the GDP of Portugal – and that for many people a new approach is needed. Too often, the assumption has been that people with health problems need to be protected from work, when the reality is that, for many people, particularly people with mental health problems, being in a job is a key part of getting better.
Dame Carol's review provided compelling evidence of the economic and social case for investing in the health of the working age population. Dame Carol is speaking later, so I won't steal her thunder, but no discussion of a 21st Century Welfare State can now take place without a proper consideration of the points Dame Carol has made.
Working in partnership
In each of these measures, our aim is to extend, modernise and personalise the support we offer. Helping people to succeed at work, and to improve their skills so that a job leads to a career. Making sure that work pays.
But this offer has a condition. In return for providing opportunities to get into employment, to learn new skills, and to be better off financially, we expect those who can work, to look or train for work.
A number of representatives from Jobcentre Plus are around the room. You and your colleagues are at the heart of our welfare reform programme. Jobcentre Plus has done a great job and is for me an exemplar of a transformed public service.
So Jobcentre Plus will continue its central role, but we are convinced we can do better still in partnership with other public, private and third sector providers. This was set out in our Commissioning Strategy earlier this year. We want to find ways to enable providers to innovate, and to develop new and creative approaches.
The role of employers is key. That is why we have established Local Employment Partnerships (LEPs). For example, I visited the Nissan plant in Sunderland. It is the most productive car plant in Europe and its cars are being sold faster than they can make them. They needed to recruit 800 people within a month for round the clock manufacturing, and Jobcentre Plus was able to help them – through a Local Employment Partnership, with the aim that at least 120 of the 800 would be disadvantaged jobseekers.
By 9 May, over 7,000 disadvantaged jobseekers had found work through LEPs and 1,000 employers have recruited through LEP’s. The Department itself has now recruited over 100 people through its LEP in the last 6 months. By the summer, we expect LEPs to be helping several thousand people into work every month, with a quarter of a million in work through LEPs by the end of 2010–11.
Alongside this employer engagement we need to empower local communities. We have recently established, jointly with Communities and Local Government, a new Working Neighbourhoods Fund of £1.5 billion. This became available last month and will support councils in the most disadvantaged areas help get people back to work.
Integration of skills support with employment support is key to all our plans. In the future, we want people to be able to obtain help with developing skills alongside help in finding a job. Changes like skills screening for all new claimants will help people both move from benefits into work, and also stay in work and progress once having secured a job.
Conclusion
We understand today that many people on welfare are capable of much more than we previously expected. We want all that potential to be realised. We know that people in work are not just financially better off, but healthier and better off in themselves too. And, once in work, we want people to be able to progress.
Those are the aims of our programme of welfare reform programme. A great deal has been achieved, but there is a great deal more to do. My appeal is that everyone should work with us, to make a reality of these ambitions which all of us share.
Thank you.
