Government perspectives on employment

Speech by the Rt Hon Chris Grayling MP.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
The Rt Hon Chris Grayling

This morning I am here to talk to you about the Government’s perspective on employment.

And as the Government Minister who goes on television each month to present the latest employment figures, I am perhaps more focused on the detail behind the headlines than most.

Last week’s unemployment figures demonstrate the challenging economic climate we currently face.

Unemployment remains high and dealing with it continues to be a priority for the coming year.

But beyond the headlines the figures show that there is still a lot of movement in the labour market.

This month’s figures also show a small rise in employment.

The numbers of unemployed people have increased in part because people who were previously not looking for work - particularly women and students - have decided to try to get a job.

And the numbers claiming unemployment benefits has broadly flattened out, despite welfare reforms adding to the numbers claiming Jobseeker’s Allowance.

The figures also show that there are opportunities available for those looking for work. 300,000 people stopped claiming out of work benefits last month, and Jobcentre Plus took nearly 350,000 new vacancies.

Indeed over the course of the last year something like six million people have started a new job.

There are 10,000 new vacancies advertised through Jobcentre Plus every working day. This is estimated to be around half of all potential vacancies in the UK.

Even in difficult times there are vacancies and opportunities available for unemployed people.

And many people get themselves back into work quite quickly.

More than half of unemployed people leave benefits within three months.

But there are some people who find it much harder to get back into work and are unemployed for much longer periods.

And the longer someone is out of work the more difficult it can be for them to find another job. Their skills and experience become less relevant to the jobs market, their confidence may suffer and they may become indoctrinated by the welfare system and alienated from the world of work.

There are one million people of working age who have been claiming benefits for 10 years or more.

And 1.84 million children living in homes which are currently workless.

Of those 300,000 children live in homes where no one has ever worked.

And what is really sad is the way an attitude that being out of work is acceptable can pass down through generations, so entire families expect nothing more than a life on welfare.

Almost unbelievably inner London has the highest proportion of children in workless households - inner London - an area in which Jobcentre Plus takes an average of 15,000 new vacancies a month.

It is clear to me that, even in these difficult times, the supply of job vacancies is not the problem.

We must help people gain the skills, experience and motivation they need to get back into work.

And this support must be tailored to meet the needs of the individual, of employers and the local labour market to have the best chance of success.

To deliver this support we have created the Work Programme and contracted the best of the private, voluntary and public sector to deliver it.

This Programme is bigger than any previous employment programme and it will serve an unprecedented range of people, some of whom will need more help finding and keeping a job than others.

Organisations delivering the Work Programme are therefore paid variable amounts which are dependent upon the perceived complexity of getting an individual into work.

So, the more difficult it is to get someone into the work the more we will pay for that support.

Maximum payments for supporting people into sustained employment will range from around £4,000 for typical jobseekers to almost £14,000 for the hardest to help, reflecting the differing levels of support required.

This in itself is a unique approach for Government but what is really revolutionary is that we have not dictated the terms of this support.

The Work Programme is being delivered on an almost entirely payment by results basis.

How the providers get those results is broadly up to them.

But they receive a significant part of their fee only when they get someone into work and the rest of the payment when they keep them there.

In just over 12 months we have completely redefined employment support to focus on sustainable results.

And in doing so we have designed a contracting Framework that is deliberately flexible enough to bring in other forms of social intervention to support people in to work. 

This means other parts of central and local government can use the Framework to deliver support in a much more holistic and comprehensive way.

We have built something that can go much further than tackling unemployment, and we are now looking at developing a sophisticated system of social interventions based around the payment by results model, with the Work Programme at its core.

The Prime Minister has made it clear that he is committed to extending payment by results to increase accountability and transparency as part of wider public service reform.

At the same time we are pushing power out from central Government and down to Town Halls.

The Localism Act gives local councils more power over the services they provide.

It frees local councils to make their own decisions about the services they deliver and shape their services around the needs of the people they serve.

On another level we are also giving Jobcentre Plus managers and advisers more discretion to tailor the services they provide to the needs of the jobseeker.

Jobcentre Plus staff understand far better than those of us in Whitehall what someone needs to help them get into work.

We have improved the service by encouraging our own staff to focus on results and giving them much more choice and flexibility in the services they provide.

We are also encouraging them to forge partnerships with local government officials, employment support providers, health and charitable organisations to deliver effective, holistic support.

And these partnerships make a real difference to successfully helping unemployed people back into sustainable employment.

I have visited virtually all of the Work Programme prime providers now to see how they are getting on.

And it is those that are forging links with the local government services, with Jobcentre Plus, with locally based charitable organisations, community organisations and crucially employers that appear to be performing the best.

It is those providers who have developed the strongest networks that are delivering more for their clients.

Because they are able to draw upon a much richer reserve to help people overcome their barriers to work - whether those barriers are a lack of skills and experience or something else - an addiction, or a criminal record.

We are already using the Work Programme Framework to develop similar partnerships to provide support from some of the most troubled families.

There are a small but significant number of families - around 120,000 - who are truly struggling and contribute a disproportionate amount to Britain’s social problems.

These families often have multiple problems and are well known to Local Authorities as they are already being supported in different ways by a host of local services.

Turning the lives of these families around and enabling them to fulfil their potential is a priority and would bring real social benefits.

Using European Social Fund money we are investing £200million in drawing together that support to deliver real change for troubled families and help them get back in to work.

The ultimate aim is to break the intergenerational cycle of worklessness and get families working.

But a similar non-prescriptive, payment by results model to the Work Programme will mean providers have the resources and the freedom to really work holistically with these families, bringing together a comprehensive package of support that rewards progress towards work as well as starting in a job.

Local Authorities have played a key role in getting this service up and running.

I know you have been working extremely hard with officials at the Department for Work and Pensions and with the providers to get this provision in place.

And you will continue to play a critical role in making sure we see a strong flow of family referrals to make this provision a reality.

It is written into the contracts that families must be referred by their Local Authority and that suppliers must work with local services to deliver support.

I know that this work is already well underway; contracts went live earlier this month, the first families have been referred and the first action plans are being developed right now.

But this is just the beginning.

We are already looking at a number of other options, including using this approach to provide services to tackle drug and alcohol addiction and rehabilitate ex-offenders.

Ultimately, this comes down to a more sophisticated appreciation of public service delivery.

And a growing understanding that social change cannot be achieved simply through ever increasing spending, we have to be smarter than that.

Payment by results can help us deliver better public services by providing a real opportunity to shape services around individual need and in doing so really change people’s lives for the better.

Updates to this page

Published 24 January 2012