Speech

Universal Credit and in-work support – the call for ideas

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

A speech by Mark Hoban, Minister of State for Employment.

Thank you for attending this event today and our thanks to Policy Exchange for hosting.

Labour Market

Even without Universal Credit, we are seeing signs of the behaviours UC will underpin. This is reflected by the increase in the number of people in work, which has risen over 400,000 in the last year. Over 90% of the increase came from people in full-time work.

The latest labour market statistics from the ONS showed that in the first three months of 2013 the UK workforce clocked up more hours than ever before - over 20 million more hours each week than in the same period last year. This increase in hours is not just driven by more people in work but also by people working more hours.

There are also more than half a million job vacancies in the UK – the highest number since 2008.

So there are opportunities out there. Opportunities for people to find work, opportunities to change jobs, or opportunities to pick up more hours.

The essence of Universal Credit is to remove the barriers to work and earning more by providing the stronger financial incentives to encourage people to work and for those in work to increase their earnings. Whilst we have a formidable toolkit for helping people into work, the Government is breaking new ground helping people in work to increase their earnings. To harness the full power of Universal Credit we need to work on these interventions.

And this is why we are all here today – to talk about the initial findings from the Call for Ideas on how Universal Credit claimants can progress in work and increase their earnings.

Responses

Let me say first of all that we are very grateful for all the proposals that you submitted - they ranged from the fully formed proposal, through to high level ideas; from small and inexpensive through to grand and costly.

We had over 400 responses from a wide variety of organisations and individuals, including IT consultancies, local authorities, thinktanks, lobby groups, employers. Even Number 10 and the Treasury had their say!

So whilst we obviously can’t take forward every idea, we have certainly looked at each of them and we hope you’ll continue to work with us through this process as we reform the benefits system. Because the introduction of Universal Credit will transform the way we work with people on benefits.

Universal Credit

Universal Credit is an in and out of work benefit for the whole household. It will help ensure work always pays and make it easier and less risky for claimants to take up work. It also means that we will work with a much wider group of benefit claimants than ever before, including claimants who are working but earning less than could reasonably be expected. We will only be able to harness the full potential of UC if we are able to influence the behaviour of claimants. We know that our interventions help people into work, but we will need to be innovative in our work with those in work.

This is a new idea so there is limited evidence on what works. We need to understand what sort of labour market interventions would be effective in supporting people to stay and progress in work. So we are really keen to test and pilot new approaches to build a firm evidence base before we commit to any national rollout. My colleague Lord Freud will be telling you a bit more about this later.

Ideas

From the many responses we received, broad themes have emerged and these were expanded through three working groups looking at things from different points of view – policy ideas, how things are actually delivered, and how best to work with employers. The themes that emerged were the need to; work with individuals and employers, focus on careers and skills support, support the identification and generation of progression opportunities, increase claimants motivation and break the inertia of low pay, support self employment and address particular barriers that prevent people from working more. Of course many, but not all, involved digital approaches.

To increase skills it was suggested that skills brokers could provide awareness of, and signposting to, accessible funding for qualifications that specifically meet a job requirement or promotion opportunity. Many responses pointed out that flexibility is key when it comes to skills - a great deal of existing provision is aimed at the unemployed and is available during the day time. By making it available later in the evening, early mornings or weekends and available online, it would be much more accessible to the people we want to reach. Bespoke online modules could be designed by working with employers to understand their skills and training needs and this would ensure that work time is not used for training, enabling claimants to fit training around their working lives.

To better match supply and demand a company called Slivers of Time suggested creating a website that turned claimants into a pool of local top-up workers available to any employer at short notice and for short periods. Some suggested employers clustering together to share seasonal workers. Others suggested encouraging employers to set up shared crèches – pooling their resources on, say, business parks, or a local high street – to allow their employees to extend their hours without worrying about rushing home to collect their kids.

Some of the most exciting ideas we received were not on how we should intervene but how we can build in the self-reliance that is core to UC. There were suggestions for self service tools and support we could put in place for both claimants and employers - for example better off calculators, online skills assessments and jobsearch apps.

Deloittes and Monster, among others, highlighted the potential to use online jobsearch systems and automatic text messaging to nudge and encourage claimants to take positive action to increase their earnings. Many respondents including Accenture suggested that an IT solution could be developed to better match employers and jobseekers, and have proposed that through Universal Jobmatch employers should be able to specify exact hours, location and required skills.

A number of organisations suggested variations on an online calculator. Accenture have provided us with a calculator which shows UC claimants how much better off they would be by taking work or increasing their hours. And the Centre for Social Justice suggested that a Universal Credit calculator is incorporated into Universal Jobmatch. This would be complemented by a state support bar which shows the proportion of the claimant’s income received through the state, encouraging people to take more responsibility for looking after themselves and their family.

Facebook, Skype and Twitter could be used to provide digital forums for claimants to discuss job-search and progression but also to allow individuals to share achievements and goals with a peer group – increasing commitment and potentially building a sense of competition.

These are obviously just a handful of the hundreds of ideas we received. So where do we go from here?

Existing pilots

One key message is that we should make sure we take full advantage of what is already in train.

Several organisations highlighted work they are already doing with low-earners. For example the UK Commission for Employment and Skills (UKCES) employer ownership pilots are testing approaches to joint investment in skills between employers and government. The current round of bids also included scope for employers to develop career pathways and training frameworks to ensure routes for progression to higher skilled jobs. Once the current bidding process has been assessed we will have a better idea of the sorts of opportunities available and there may well be bids that can be built on.

Wiltshire council are engaged in an exciting initiative with 10 local authorities and agencies in southern England and northern France. They are working with employees to provide post employment support, skills and career development and employers to improve staff retention with a package of business support services.

And of course we have our own work programme, a programme that has significantly increased the rewards that are available to providers to keep people in work which should drive more innovative approaches. We will make sure we learn from all of these examples.

New Initiatives

We want to supplement these with a wide range of new initiatives. Lord Freud will talk about what DWP will trial directly. But there are other areas we want to progress.

Technology

As you would expect, technology plays a major part in our plans and we are testing out a model Jobcentre Plus of the future to demonstrate how a truly digital-based jobcentre might look. The aim of this pilot is to create an interactive environment where claimants are helped to access services themselves digitally and where the labour market is wrapped around the claimant.

We will explore a number of potential new departures such as social media, both to provide digital forums for claimants to discuss job-search and progression but also to allow individuals to share achievements and goals with a peer group – increasing commitment and potentially building a sense of competition.

We’re looking at the use of online screening tools and carefully targeted e-learning. And we will begin local testing of online vocational training this summer. This will be with current JSA claimants but this will clearly be valuable in understanding how to run such a system, but you can see already how this feeds naturally into in work support.

But we need to go further and think how we can make available labour market data to innovative programmers and app developers who can create new products to help progression. Labour Market Information for All, a project led by UKCES, is critical in this - pooling Governments labour market information in a way that can then be used by others. They will also be running consultative days with IT developers to explore the opportunities available to develop new products. We want to expand the effectiveness of this and will be making available vacancy information held on Universal Jobmatch, with the aim the labour market data available to programmers is as rich as possible. Our data and their creativity should be able to deliver apps and other products to help low earners achieve their full potential.

Employers

We can only achieve our goal of progression with the support of employers and we are very grateful for their engagement with us during this call for ideas, and for the work led by Charlie Mayfield, chair of UKCES. We have had really valuable input from UKCES Commissioners, employer contacts and Sector Skills Councils.

We are working hard to engage with employers and I meet regularly with a range of business leaders – from large multinationals to local start-ups – in order to see what works for them.

We are also exploring how we could best work with organisations such as Women Like Us, by learning from their ‘employer first’ approach to stimulate the supply of better quality part time jobs. Because to help people progress we also need to ensure the right opportunities are there for them.

We are also working with the Sector Skills Councils. Those representing sectors which employ low paid and low skilled workers and who are very keen to work with us. We are looking to develop trials that demonstrate how employers and skills organisations can work in partnership to drive progression. These could involve establishing an on site training centre, enabling people to work for a range of employers at the same location or to switch sector altogether. This could be backed by establishing databases of employees and their skills that give employers on the site an easy way to fill vacancies.

A key part of these trials will be demonstrating the business benefits of supporting progression. We need to show employers that it’s in their interests to help their employees learn new skills and increase their hours. We need to show employers the benefits of having a skilled and motivated workforce. Because if an employee feels like their employer cares about their future, it stands to reason that they feel more committed to their job and to the company they work for. Frankly it will help their employees compete in the global race.

So making this work is in all our interests. And this brings me to my final point. This is, as we’ve said many times, a new area. And we are putting in place a range of tests and trials to understand how best we can support progression. But this isn’t just about DWP. As I’ve set out the Sector Skills Councils are already looking at what they can do. And other organisations are equally well placed to get involved. So from a “call for ideas” to a “call for action”. If you have an idea – perhaps one you submitted through the consultation – that you are keen to pursue then I’d encourage you to take it forward. We can offer support on design, including helping ensure robust evaluation and fit with other trials. Your findings will help us in determining the longer term approach.

It’s in all our interests to have a better qualified, better skilled workforce who are better able to achieve their aspiration to support themselves and their family. Universal Credit is not an IT project; it is a radical reform of the welfare system which marries the financial incentives to work with interventions to help people into work and innovative approaches to boosting earnings. But its success will be a collective endeavour, thank you for starting that endeavour with us and we look forward to working with you as we develop new ideas and innovations.