Getting the UK working

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Speech by Lord David Freud, Minister for Welfare Reform.

CBI has hit the nail on the head.

The Office for Budget Responsibility is forecasting increasing employment over the next few years.

But we continue to have a problem with inactivity.

There are nearly five million people on out of work benefits.

This number has fluctuated over the years but has remained between four and six million for more than a decade, in good times and bad.

Long term benefit dependency is a real problem.

Of the 2.6 million claiming incapacity benefits, over half have been on benefit for at least five years, and a third have been on benefit for 10 years or more.

Given this, the CBI are right to say that there is a strong business case for addressing these problems: those in work are healthier, live longer and are better off.

We now know that work is good for you - there is strong evidence that being in work can be beneficial to health.

Far from protecting people from work we need to recognise that it can be part of recovery from illness and part of a full life for disabled people.

Employment is entirely the right route for those people who can work.

We do not believe that it is acceptable to write people off to a lifetime on benefits because they have a health condition or disability.

We believe the many of these people could work, if they received the right support.

But that support has not been forthcoming.

We’ve had active labour market policies in the UK for some time but they have failed to make any real difference to the large numbers of people for whom claiming benefits has become a way of life.

It is time for a complete revolution in welfare provision and employment support. 

Government has started this revolution; with the introduction of the Work Programme, the development of Universal Credit, and the re-assessment of many of the people currently claiming incapacity benefits.

But I know that employers are key to the success of our efforts.

Private sector employers will be creating jobs over the coming months and years. I want to ensure that people leaving benefits are in the best possible position to take up those jobs - that they have the right skills at the right time to be the best people for those positions.

This means having an ongoing discussion with employers throughout the UK to ensure the support we provide matches demand.

This seems obvious, but it hasn’t always happened.

A few months ago Professor Alison Wolf published a study into vocational qualifications.

She found that among 16 and 17 year olds between a quarter and a third are in, or moving in and out of, vocational provision which offers no clear progression into employment.

We have been paying for vocational training that does not lead to a vocation.

It is small wonder that we have well over a million 16-24 year olds who are not in full-time education or employment.

One of Wolf’s key recommendations was that education, whether academic or vocational, should provide for labour market and educational progress.

And to achieve this employers should be directly involved in quality assurance and assessment of training at local level.

There is a really important role for employers to provide opportunities for young people so they don’t get stuck in the age old catch 22 situation of not being able to get a job because they have no experience and not being able to get experience because no-one will give them a job.

Government is playing its part; we have accepted Professor Wolf’s recommendations to improve the system of vocational education for 14-19 year olds.

And we are committed to raising the age of participation in education or training to 18 by 2015.

In this year’s budget, we increased funding for apprenticeships to over £1.4 billion, enough to provide 360,000 places.

Apprenticeships are an excellent way of building capacity for the future and ensuring young people move into fulfilling and sustainable careers, and have the skills base they need to progress in their chosen profession.

The additional funding will give us the extra capacity to target young people who are not in employment, education and training - the so called NEETs.

But of course we rely on employers to provide those placements.

We need employers to work with training providers, Jobcentre Plus and the National Apprenticeship Service to ensure apprenticeships meet the needs of employers, young people and the economy as a whole.

We are also working with employers to develop 100,000 work experience places over the next two years for job seekers aged 16-24 to help bridge the experience gap.

There are real benefits to business as well as youngsters of providing work experience placements and apprenticeships.

The UK Commission for Employment and Skills recently surveyed 80,000 employers and found that whilst only 22 per cent of employers recruit direct from education, those that do overwhelmingly say it has benefited their business.

This report suggested a number of recommendations for Government and employers to expand and develop opportunities for young people.

Central to these recommendations and the findings of the Wolf report is bringing the worlds of skills training and work much closer together.

We are having a total shift in philosophy away from the work first approach towards a more sophisticated understanding of the skills needs of employers.

The analysis the CBI have released to launch the Getting the UK Working project add to this understanding.

The maps are an interesting visual representation of the challenges faced at a sub-national level.

This Government is committed to bringing together employment and skills - making the real world of work the focus for skills training.

By using data about current and emerging jobs Jobcentre Plus can identify future skills needs and work with local training providers to develop short courses designed to meet those needs. 

Frontline services are being encouraged to operate much more strategically and now have the power to tailor support to individuals and employers, funding training that’s appropriate for the claimant, rather than just convenient for bureaucracy.

Returning to the issue of inactivity.

And the large numbers currently claiming out of work benefits, including those people claiming incapacity benefits, many of whom could work with the right support.

That support will now be provided, for people who are at risk of becoming long term unemployed, by the new Work Programme.

Launched last month, the Work Programme provides personalised back to work support delivered by private, voluntary and public sector specialists.

The Work Programme is not like previous Government back to work employment schemes.

We have contracted providers on a payment by results basis and have not dictated how they should get people into work - just that they should get them there.

And not just into any job but in to sustainable work.

After a provider has helped someone into a job, we will pay them for each month that they help that person to stay there, up to a set limit. In the hardest to help cases full payment will only be made when a provider has supported someone in work for two years.

This means the nature of provision has to change to include in-work support as well as back to work help.

This could include mentoring schemes and close engagement with employer and employee to stop vulnerable people falling out of a job and back into the benefits system.

I think we’ll see greater convergence of the in and out of work support networks.

For example, one of the things we are currently working on, which I know the CBI and its members are very interested in, is the Sickness Absence Review.

In January the Government appointed independent reviewers David Frost of the British Chambers of Commerce and Dame Carol Black, the National Director for Health and Work to investigate the current sickness absence landscape.

As part of the review the team will be exploring exactly where the financial and other incentives are in the system for both employers and employees.

We know that many firms offer excellent support to return to work after a period of illness and this can have a really significant impact on bringing down the number of days lost to sickness absence and the well being of workers.

I think the findings of this review, and the best practice demonstrated by employers in this area could include important lessons for Work Programme providers as they develop new approaches to in-work support.

However, the freedom we have given providers through the Work Programme contracts means they have the freedom to draw upon these ideas or develop their own innovative approaches as they see fit.

But I do know that private providers are very good at working closely with employers to ensure they are delivering the right candidates for the job.

And I would not be surprised that if in the process of doing that much closer binds were forged between skills training and the work agenda and between in and out of work support.

I think we all recognise we have a stake in getting the UK working.

I hope the CBI’s latest project will support the efforts Government is making in the welfare and employment space and I look forward to reading the findings in the autumn.