Policy Briefing 21st November 2011
(8 November – 21 November 2011)
Youth unemployment has deservedly occupied recent headlines as the number of out of work 16 – 24 year olds rose above the one million mark for the very first time. This was accompanied by news of a broader rise in unemployment, meaning that the out of work currently account for 8.3% of the UK population. In response to the latest figures, Employment Minister Chris Grayling said: “These figures show just how much our economy is being affected by the crisis in the Eurozone. Our European partners must take urgent action to stabilise the position.”
High unemployment, combined with the recent downgrading of growth forecasts from the Bank of England, places additional emphasis on the Chancellor of the Exchequer’s Autumn Statement due on 29 November. This will offer an assessment of the Government’s ability to eliminate the structural deficit by 2015-16. As we await this assessment, the Government has continued to announce reforms to the skills system to meet the twin challenges of growth and employment, including the diversion of £250m funding to employers and new measures to incentivise the take-up of young apprentices.
Skills & Workforce
The ONS has released the latest labour market statistics covering the period July to September. The figures show that UK unemployment has risen by 129,000 to 2.61 million (8.3% of the population) and the number of unemployed 16 – 24 year olds has increased by 67,000 to reach 1.02 million (21.9% of the age group). There were also a total of 147,000 redundancies over this period, whilst the number of vacancies increased by 7,000 to reach 462,000, and over 5,000 extra individuals claimed JSA. Total pay (including bonuses) fell by 0.4% over the three months and currently stands at £463 per week.
Competitive funding worth £250 has been announced to help route public investment in training directly to employers. This will consist of £50m in 2012/13 and a further £200m over 2013/14. Funding will be open to collaborative proposals from businesses of all sizes, and all bids will need to demonstrate how they intend to leverage private investment, support Apprenticeships, and raise skills levels in their sector or supply chain. The Government expects to issue a formal prospectus on the fund jointly with UKCES early in 2012 so that projects can begin later in the year. The origin of this funding is unclear, although it is expected to be supported by “significant resources” from existing skills budgets.
Several new measures have been announced to encourage the greater take-up and quality of apprenticeships. This includes incentive payments worth up to £1,500 for small employers that take on apprentices aged 16 – 24 that complete their framework (a total of £30m of funding taken from existing budgets); ensuring that every employer is in a position to advertise a vacancy within one month of deciding to take on an apprentice; and a requirement for training advisers to offer training in English and Maths up to the standard of a good GCSE (level 2). A new review into the standards and quality of apprenticeships is also due to be completed by spring 2012.
John Hayes, Minister of State for Further Education, Skills and Lifelong Learning used a recent speech at the Association of Colleges conference to outline new policies to free up further education provision. This includes a new “innovation code” to improve colleges’ local responsiveness; a de-regulated and speedier qualifications system; and a new system of three year budgets to help providers to plan future provision. A full package of FE reforms are expected to be released next month following the results of the recent New Challenges, New Chances consultation.
The final report of the independent commission on Colleges in their Communities has been published. The Commission was set up in January 2011 to explore the public value generated by further education and is based on evidence assembled by NIACE, the Association of Colleges and the 157 Group. It makes a series of recommendations including the creation of a “community curriculum” defined to respond to local needs and the development of good practice guidance and performance measures for community engagement.
The Skills Funding Agency has made additional funding available for training organisations from the voluntary sector to help those not in education, employment or training (NEET). This funding is designed to enable organisations to widen their engagement with individuals aged 19-24 and support their entry to the labour market or progress to an Apprenticeship or training. Training organisations that currently have an Adult Skills Budget (ASB) allocation are invited to complete an Expression of Interest document by 30 November 2011.
A national framework of skill and competence is currently being developed for healthcare support workers and adult social care workers. This was announced in a recent speech by Health Secretary Andrew Lansley to the NHS Employers and will involve work with Skills for Health and Skills for Care. The two sector skills councils are expected to present recommendations to the Department of Health by September 2012 and will be used to inform the development of a voluntary register for healthcare support workers and adult social care workers in England.
The Localism Bill has now become an Act of Parliament. The Act promises to trigger “the biggest transfer of power in a generation” and involves a comprehensive list of measures including new rights for communities to bid to take over local assets and deliver local services, as well as new provisions to allow communities greater say over planning developments. Many of the measures are expected to be implemented from April 2012. A plain English guide to the act is available here.
The Education Bill has now become an Act of Parliament. This completes the legislative framework for the Government’s key education reforms and includes new powers to tackle poor behaviour in schools, a renewed focus for routine Ofsted inspections, additional powers to tackle school underperformance, and the abolition of several public bodies (including the General Teaching Council for England and the Young Person’s Learning Agency).
David Cameron was called upon to give evidence on the Big Society to the ‘Liaison Committee’ (a group consisting of the chairs of all the other parliamentary Select Committees). This session covered the following topics - bureaucratic obstacles to the Big Society; community budgets and decentralisation; the future of rural communities; policing and the riots; the implementation of welfare reforms; offender rehabilitation; early intervention and social impact bonds; the National Citizen Service and the funding of youth services; professionalism and public services; and the ability of the civil service to implement policy reform. A full transcript of the session is available here.
Labour leader Ed Miliband delivered a speech on Britain’s economy at the Social Market Foundation in London. In the speech Miliband called for a change of course on the economy and the creation of “a more responsible capitalism”. This was followed by an outline of five plans for a new economy - reconnecting finance and the ‘real economy’; encouraging long-termism in business; addressing the shortage of vocational skills in the economy; a new commitment to responsibility over executive pay; and challenging large concentrations of private power.
DWP has published the results of an independent review aimed at reducing the cost of sickness to employers, taxpayers and the economy. The “Frost/Black Review” estimates that sickness absence costs £13bn to the taxpayer and £15bn in lost economic output. The authors suggest wholesale changes to the current system, including a new Independent Assessment Service that employers and GPs can refer long-term cases to for bespoke advice; a new job brokering service for employees on long-term sickness absence who are unable to return to their current employer; and the removal of the assessment phase for claimants of Employment and Support Allowance.
New plans have been announced by DWP for those who have been unemployed for over two years to be referred to compulsory community work placements. The placements are expected to involve 30 hours a week of work for 26 weeks. The Government is to test this proposal coupled with more intensive support through Jobcentre Plus in four key areas ahead of rolling out the scheme nationwide in 2013.
The Government has announced the details of its new housing strategy. This involves a new build indemnity scheme for prospective buyers who are unable to meet large deposits; a £400m ‘Get Britain Building’ fund to support building firms in need of development finance; new ‘Pay to Stay’ proposals for tenants on high salaries to continue living in social housing; and a further £50 million in funding to tackle geographical concentrations of empty homes. A consultation is also expected to be launched soon on new “Right to Buy” proposals under which social housing is sold to tenants to finance the construction of new affordable homes.
HM Treasury has confirmed new measures designed to help credit unions and co-operatives compete and grow more effectively. The Legislative Reform Order (which will come into force on 8 January 2012) will enable credit unions to accept new types of members; allow interest to be offered on deposits; amend common-bond and membership requirements to allow expansion, consolidation and merger; and give societies the flexibility to choose their own year ends and remove the requirement to have interim accounts audited. This follows a long-standing campaign from Co-ops UK and the Association of British Credit Unions.
The Department for Communities & Local Government has formally launched a £5m programme which aims to bring together people from diverse communities and different faiths to get to know each other better and improve their local neighbourhoods. This will consist of small grants of £250 to £5,000 available in four geographical areas (Birmingham, Bradford, East London, and Leicester).
The Department for Education has launched a consultation on planned changes in the provision of early education. The consultation includes proposals to make the entitlement to 15 hours per week of free early education more flexible; use the criteria for free school meals to decide which disadvantaged two-year-olds should qualify for the entitlement; and to dramatically reduce the size of statutory guidance for local authorities. The consultation will run until 3 February 2012.
The Department for Education has released data on the number of children’s centres by local authority in response to a recent parliamentary question. As of September 2011 there were 3,507 children’s centres across the country, representing a net reduction of 124 children’s centres since previous figures were released in June 2010. Of this figure, only six centres closed outright, with the remainder of the reduction being accounted for by local reorganisations and mergers.
The Department for Culture Media & Sport has published a new report which explores the giving of time and money to the cultural and sporting sectors. Encouraging Involvement in Big Society provides a detailed demographic profile of those contributing to the Big Society, their engagement in and attitudes towards the cultural and sporting sectors and their wider public participation.
The Voluntary Sector
The Government has announced a new £16.8 million fund to help not-for-profit free advice services in England. The new Advice Services Fund (managed by BIG) will be open for applications from the voluntary sector and will provide grants of £40,000 to £70,000. All applicants must provide free advice on debt, welfare benefits, employment or housing; and must be able to evidence public funding cuts of at least 10% from central and local government sources in 2011/12.
The Cabinet Ofiice has launched an official review of charity law to be led by the Conservative peer Lord Hodgson of Astley Abbots. The review (which follows an obligation in the Charities Act 2006) will consider a broad range of issues, including the definition of a charity and the role and status of the Charity Commission. A report will be presented to Parliament in summer 2012 following a call for evidence with the voluntary sector. The terms of reference are available here.
The Big Lottery Fund has announced £6m of funding to help develop the social investment market. The ‘Next Steps: Supporting Social Investment in England’ initiative will involve awards of between £40,000 and £1m to social investment proposals that are already in development but are in need of extra funding. The funding is available to organisations acting as commissioner or intermediary as well as frontline organisations. Organisations have until 14th December 2011 to express their interest in the fund.
The Minister for Employment, Chris Grayling, has confirmed that all Work Programme providers should enter into contractual relationships with voluntary organisations if they wish to access their services. This follows reports from Volunteering England that volunteer centres in 14 areas have received unpaid referrals from prime providers of the Work Programme. The full correspondence between DWP and Volunteering England, and a policy briefing on the issue are available here.
The Charity Commission has announced the results of a survey of 3,000 newly registered charities. Of these charities, over half (59%) provide services, representing a higher proportion than all charities currently on the register (34%). It also found that 40% have not given their trustees any training so far and 39% were looking to recruit additional trustees. Nearly all of the respondents (97%) were confident in their organisation’s ability to fund its work over the next few years.
Charity CEO’s body ACEVO have released the findings of their latest pay survey. Top findings from this year’s survey include that the average CEO salary had risen over the past year by 3.5% (currently £60,000); around a third of organisations (32%) have had to reduce services and a further 41% have had to make redundancies; and the gender pay gap has risen, from 10% to 16%, meaning that the median basic salary for men was £63,000 and for women was £53,400.
Think Tanks & Research
The Institute for Public Policy Research (IPPR) has published a comprehensive new research paper in partnership with the Association of Colleges which explores how to strengthen the role of apprenticeships in society and the economy, how to create more and better apprenticeships, and what an institutional framework for flourishing apprenticeships would look like. This includes the contribution of various researchers, academics, practitioners and policymakers (including Vince Cable and John Hayes). The report calls in particular for a more active industrial policy to support skill-intensive industries and other forms of work-based learning for those aged 25+.
The Chartered Management Institute have estimated the costs of ineffective management to be over £19bn per year for the UK economy. This is based on a recent study of 2,000 employees across the UK which reveals that three quarters (75%) of workers waste almost two hours out of their working week due to inefficient management. The worst management practices were identified as being unclear communication (33%); lack of support (33%); micro-management (26%); and lack of direction (25%).
Pricewaterhouse Coopers and Demos have teamed up to release a publication which explores public opinion on matters of policy and economic growth. Through extensive polling and conjoint analysis (forcing participants to make trade-offs between factors) they reveal that people value issues such as work-life balance, health and housing as critical components of good economic policy.
The Chartered Institute of Personnel Development has released the results of its Labour Market Outlook survey for autumn 2011. Based on the opinions of over 1,000 HR professionals across sectors, this found that employment prospects are likely to weaken further due to decreased staff levels and that any recruitment is likely to be focus on business development, sales and marketing, or finance staff.