19 June 2008

Rt Hon Stephen Timms MP

Minister of State for Employment and Welfare Reform

National Welfare to Work Reform Conference

Tuesday 19 June 2008

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National Welfare to Work Reform Conference: Mapping the Route Towards Full Employment

I am delighted to be here.

Last week, as a contrast to the gloomy news about the world economy, the monthly employment figures showed that the number of people in work in the UK had hit a new record – 29.55 million, the largest number ever. The number claiming unemployment benefit went up a little as well, but remained in the low 800,000s – the last time the number claiming unemployment benefit was that low was in 1975.

It is ten years since the New Deal was introduced – what can we say about the progress of welfare reform? The claimant count is quite a volatile number – a better yardstick is to look at the number claiming all the out of work benefits: incapacity benefits, lone parent benefit, Income Support as well as Jobseekers Allowance. That number has fallen by almost 20 per cent since 1997, from 5.5 million to 4.45 million, and it has been a sustained and consistent fall. This has been a very substantial achievement, delivering what we said we would, moving people from welfare to work. But it's also clear that a great deal remains still to be done.

I visited Merthyr Tydfil a few weeks ago, where the Primary Care Trust has introduced a programme of recruiting people direct from Incapacity Benefit. I met a man in his early fifties who told me that he had been on Incapacity Benefit for 13 years, but that he then attended a two week preparation course for work as a healthcare assistant in the Trust.

He has now been in work for two and a half years. He hasn't had a day off sick in that time. He is clearly doing a great job, working with patients, and enjoying it. His confidence has returned, his health problem is behind him, he is better off, and he kept on saying "I just wish this had happened to me years ago."

And what we want now is for more of those five and a half million people still out of work to get the chance – as he has had – to transform their lives for the better through work. And to make sure that people like the man I met don't have to wait thirteen years for the opportunity.

So, next month, we will be publishing a Green Paper with our proposals on the next steps, building on the achievements of the past ten years. We will be consulting on how best to modernise the benefit system, deliver value for money for the taxpayer and provide support for people at the time they need it most.

You will appreciate that I am not in a position today to announce the contents, but we will include measures:

• to ensure disabled people have greater choice and control
• to give more incentives for people to move from benefits to work, building on introduction of the Employment and Support Allowance later this year
• to require people on Incapacity Benefit and lone parent benefit to undertake training if that is considered essential in their move to employment
• to strengthen the benefit contract between the individual and society – the individual's right to support, and responsibility for improving their own circumstances
• to strengthen the requirements of non-resident parents to contribute to their children's upbringing and
• to simplify the benefits system.

The backdrop against which these changes are being made is a very demanding one. Pressures and opportunities from globalisation require continuous reform. We need to strive continuously for a skilled and highly motivated workforce. With international competition from countries like India and China, the pressures are becoming greater and greater.

Working in Partnership

We are committed to working in partnership. We will work closely with employers, making the best use of expertise across pubic, private and third sectors.

Jobcentre Plus is at the heart of our welfare reform programme. We are asking Jobcentre Plus to deliver much of the reform, and it is an exemplar of what a transformed public service can do.

To complement work by Jobcentre Plus, providers in the private, public and voluntary sectors have a key role in delivering specialised support to customers. We want providers to innovate, to develop new and creative ways of working with workless people.

We will restructure the New Deal from April next year, recognising that, by contrast with ten years ago, the easiest to help are now in work, and that, on average, those out of work now need a greater degree of help. Innovations will include more intensive job search, new skills assessment and fast tracking of people facing the greatest disadvantage. This flexible New Deal will provide more personalised support, and be better able to meet the needs of those who have been on benefit for a long time or who have struggled to find a stable pattern of work.

A key initiative for us is our Local Employment Partnerships (LEPs), which I am delighted that more and more employers are signing up to. 2,000 employers have recruited through LEP's, so far.

For example, in February I visited the Nissan plant in Sunderland. It is the most productive car plant in Europe and at the moment its cars are being sold faster than they can make them. They need another 800 people to introduce a third shift, for round the clock manufacturing, and Jobcentre Plus is helping them - through a Local Employment Partnership, with the aim when I was there that at least 120 of the 800 would be disadvantaged jobseekers – that is people on Jobseekers Allowance who have either been unemployed for a long time or live in a neighbourhood with a very high level of unemployment; or on Incapacity Benefit; or lone parents on Income Support. Those are the disadvantaged jobseekers for whom we are aiming to find work through Local Employment Partnerships.

The third shift will start operating either late this month or early next. They have had 11,000 applications since March, and recruited over 800 people in total, of whom more than 400 were previously not working. And 244 – so over twice the target – have come through the LEP from disadvantaged groups, with more expected.

People started work with Nissan from March onwards, undertaking pre-employment training at Gateshead College, and then moving onto the current two shifts to consolidate their learning before the third shift starts up.

By the beginning of this month, nearly 10,000 disadvantaged jobseekers had found work through Local Employment Partnerships – including over 200 in the Department itself. But our target is for a quarter of a million by the end of 2010. By the autumn, we expect LEPs to be helping several thousand people into work every month.

Personalised and responsive approach

We want the welfare system to adopt a more personalised and responsive approach. We want Jobcentre Plus personal advisers – who have really been at the heart of the success of welfare reform over the past decade, with a new model of public service – we want them to have more discretion and flexibility at the front line. Changes will allow us to deliver an increasingly personalised and tailored service, to meet individual needs, including help with skills, health, childcare and financial support.

A balance of rights and responsibilities

We need the right balance of rights and responsibilities. It's right that people need support in looking for work and overcoming barriers. In return, we can expect people able to work and receive benefit to take all necessary steps to get and sustain work.

As Chair of the Ethnic Minority Employment Task Force and as MP in one of the most diverse constituencies in the country, I see it as crucial that we do better on increasing ethnic minority employment. There is a large and persistent gap between the employment rates for many ethnic minority communities and for the working population as a whole. We need to do better at shrinking it.

The overall employment rate at the moment is 75 per cent – but our aim is that it should be 80 per cent. It is arithmetically impossible to achieve that without doing better on the employment rates of ethnic minority workers, and of women in particular. By 2020, we estimate over half of the working age population will either be from an ethnic minority community, or be over 50. So supporting these groups into employment is going to be crucial to Britain's economic and social success.

Our approach will be:

• firstly, to make the best use of our mainstream welfare-to work policies
• secondly, to support specialised services at a local level to meet the need of individual communities and
• thirdly, tackling head on the discrimination that prevents Britain making best use of the skills and talents of minority groups.

A key part of what we need to do is to help people on Incapacity Benefit back into work. We are spending a billion pounds on our "Pathways to Work" programme which from April has been available nationwide. But we are confident it will be money well spent – an independent evaluation published recently estimated that every £1 spent on Pathways leads to a gain of £1.50 to the Exchequer.

At the launch in Cardiff recently of Pathways in Wales, 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.

That approach 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.

Retention and Progression

We recognise today that retention and progression, not just job entry, should be central to our work. We must help people remain and advance in work, through advice, incentives and training. Integration of skills support with employment support is key to all our plans.

Last week we published the command paper ‘Work Skills’. That set out how we are helping individuals take control of their skills needs, and helping employers get the skilled workforce they need.

We will have a skills system, shaped by employers, that puts the individual in charge of their learning. We will extend the principle of rights and responsibilities to those with skills needs that are preventing them from finding work. The skills system will be less top heavy, and be driven by those who know best how to shape services to meet local needs.

We are improving and extending our skills support for individuals by giving everyone access to a personal Skills Account that will give them more choice over the skills they acquire, and access to the range of services that will help them achieve their ambitions in learning, work and life.

Local Empowerment and Devolution

Regions, cities and localities will play an important role in identifying strategic priorities and delivering solutions. We recently established, jointly with Communities and Local Government, a new Working Neighbourhoods Fund of £1.5 billion over three years. It will support councils in the most disadvantaged areas help get people back to work.

Conclusion

Work is good. It is good for people's health and well-being, for their self-esteem and for the well-being and future prospects of their children. Work promotes choice and independence and builds cohesion. It is the best route out of poverty. But we know that, for some, we need to provide more support to enable them to enjoy the advantages of work.

Work is changing. A higher level of skills is needed to get a job and progress in work. That creates new challenges for individuals, organisations and government.

But we are in so much stronger a position today than we were eleven years ago – with a real chance of extending the opportunities of work out to many individuals and communities who have not been able to enjoy them in the past. Let's work together, make the most of what we have learned together over the past eleven years, and extend the opportunity of work to many of the five and a half million who don't have it today.

Thank you.