Government Employment Programmes
Government Employment Programmes
- Number 54 in the TUC Welfare Reform Series
May 2004
Introduction
This report takes a brief look at the record of the Government’s employment programmes. As far back as 1998, briefing number 7 in this series offered An Introduction to the New Deal, which was introduced nationally from April of that year.
When the next New Deal statistics are published later this month they are likely to show that half a million young people have moved into jobs from the New Deal 18 - 24, [1] and this is a good opportunity to look back at the Government’s record.
Background
The New Deal was designed to address mass unemployment, which had lasted for more than 20 years, and particularly affected young people. In 1994, when the TUC called on politicians to make full employment their goal, we were derided for setting an unattainable target, and many still thought it unreasonable in 1997.
In 1997 unemployment (ILO definition) was still at 2m and the claimant count at 1.6m. In 1997 the Employment Service had possibly the worst morale problem in the public sector, brought about by years of political neglect. In 1997 it was still official policy to limit most ES assistance to people who received Jobseeker's Allowance, and schemes usually excluded disabled people and lone parents, who were mainly in receipt of different benefits. In two major depressions, in the early 1980s and early 1990s, the Employment Service actively encouraged unemployed people to reclassify themselves as disabled - and it was hard to avoid the conclusion that this was done simply to bring down the headline unemployment figure.
A record of success
Seven years later the UK has the highest employment rate in the G7 group of leading industrialised countries, and its unemployment rate is the lowest. Unemployment has fallen by three-quarters of a million, and is at its lowest level for 30 years.
Jobcentre Plus, created in 2001, has faced difficulties, but overall has been a success. By 2006 the public employment service and the administration of benefits for most people of working age will have been completely merged - a model currently being investigated by policy analysts from all over the world. The rate of increase in claims for Incapacity Benefit has been stabilised, and substantial sums are being invested in helping disabled people to move into employment.
Using computer simulation methods to analyse the likely impact of the Government’s range of reforms, Holly Sutherland, Tom Sefton and David Piachaud have found [2] that welfare-to-work policies and substantial benefit and tax credit increases have helped the Government to achieve its 2004 target of reducing child poverty by a quarter.
Employment rates for hard to help groups have, for the most part, risen even faster than the increase for people generally :
Employment rates of disadvantaged groups [3]
|
1997 |
2003 | |
|
All |
72.7 |
74.9 |
|
Over 50s |
64.7 |
70.1 |
|
Ethnic minority people |
55.1 |
58.3 |
|
Lone parents |
45.6 |
53.4 |
|
Disabled people [4] |
43.52 |
49.1 |
|
Lowest qualified |
51.8 |
50.8 |
And the New Deal and other active labour market programmes also have results to boast about:
- It seems likely (see above) that half a million young people have now moved into jobs - independent analysis has shown that long-term youth unemployment would be twice as high as it is without NDYP. Lower benefit payments and higher tax revenues reduce the programme’s net cost to £150 million a year - about £2,000 per participant getting a job. [5] A Policy Studies Institute survey of 6,000 participants [6] found that nearly 2/3 believed that the New Deal was very or fairly useful.
- Since it was reformed in 2001 the New Deal 25+ has helped over 96,000 older long-term unemployed people to get jobs. Since 1998 the programme has helped more than 173,000 people.
- The New Deal 50+ Employment Credit (now transferred to the tax credit system) has also been very successful, helping 33,000 people into jobs. 50 per cent of people participating in this programme in its first year got jobs, a very high proportion for any programme.
- 247,000 lone parents had moved into work through the New Deal for lone parents by the end of 2003. The next monitoring data should raise this figure to more than 260,000. Lone parents’ employment rate has increased by 8 percentage points, and the programme’s net cost is negative - it saves the taxpayer around £40 million a year. [7]
- The New Deal for Disabled People has helped more than 28,000 people to find jobs. For the job broker element of the programme, jobs as a proportion of registrations stand at 32.6%. [8]
- Employment Zones have helped more than 44,000 people to get jobs. [9]
- Early results for the StepUP intermediate labour market programme are encouraging (it is still too early to come to a definitive judgement). An interim report [10] has found that, compared with people in control areas, people in StepUP areas were 15% more likely to have left benefits, and t here were 13.3% more respondents in paid work in the StepUP areas.
Conclusion
The TUC is not arguing that the Government’s programmes are perfect. The last issue of this series, The New Deal and Race, argued very strongly that the New Deals are failing to deliver equal results for all ethnic groups, and that this is, in large measure, due to the programmes’ failure to perform as well in London as in the rest of the country. Furthermore, as unemployment has fallen, so the proportion of Jobcentre Plus clients who are particularly hard to help (homeless people, care leavers, people with a criminal record, for instance) has risen, and programmes need to be re-fashioned to cope with this challenge.
Nonetheless, the general verdict must be positive. Combined with a successful macro-economic policy, the Government’s active labour market programmes have all made a significant contribution to reducing unemployment, increased employment rates and the overall fall in the number and proportion of people who are poor. On the employment front, Britain is benefiting from the most successful mix of policies ever.
Notes
[1] The last New Deal monitoring data (at http://www.dwp.gov.uk/asd/asd1/ new_deal/new_deal_young_dec2003.asp) showed that 479,660 participants had left New Deal for jobs by the end of 2003. This was a 19,860 increase on the previously released figure (table 6) - it is reasonable to predict that the total will reach 500,000 when the next set of figures is released.
[2] Poverty in Britain: the impact of government policy since 1997, JRF, 2003.
[3] Opportunity for All 2003,DWP, http://www.dwp.gov.uk/ofa/indicators /indicator-17.asp Figures are for GB.
[4] 1998 figure.
[5] New Deal for Young People, NIESR, 2000.
[6] National Survey of Participants, A Bryson, G Knight and M White, PSI, ES report ESR44, March 2000.
[7] Quantitative Survey, Lessof et al, DWP, 2003
[8] http://www.dwp.gov.uk/asd/nddp.asp supplemented by additional data from the New Deal Evaluation database, Information & Analysis Directorate, DWP.
[9] http://www.dwp.gov.uk/asd/emp_zones/Dec2003/ez_nat_dec03.pdf
[10] Evaluation of StepUP: Interim Report, P Bivand et al , Centre for Economic and Social Inclusion for DWP, Mar 2004.
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