Northern Ireland Forum

for

Political Dialogue

~~~~~~~~~

FINAL REPORT

ON

LONG-TERM UNEMPLOYMENT

by

STANDING COMMITTEE E

(The Northern Ireland Economy)

~~~~~~~~~

Presented to the Northern Ireland Forum for Political

Dialogue

on 31 October 1997

This report has been prepared by Standing

Committee E for the consideration of the Northern

Ireland Forum for Political Dialogue. Until adopted

by the Forum in accordance with its Rules, this

report may not be reproduced in whole or in part or

used for broadcast purposes.

Note

DRAFT REPORTS

ACKNOWLEDGEMENT

The Committee wishes to express its sincere thanks to

all who provided submissions or contributed in any

other way to this investigation into long-term

unemployment.

LONG-TERM UNEMPLOYMENT

CONTENTS

Page

I. INTRODUCTION 1

II. EXISTING TRAINING AND JOB CREATION

MEASURES 5

1. Enterprise Ulster

2. Action for Community Employment (ACE)

3. Jobskills

4. Community Work Programme

5. Open and Flexible Learning Centres

III. SUMMARY OF EVIDENCE 11

1. Introduction

2. Integrated Approach

3. Access

4. Culture

5. Training and Education

6. Job Creation and Assistance to Industry

7. Partnerships

8. External Issues

IV. WELFARE TO WORK 25

1. Introduction

2. New Deal Task Force

3. The New Deal for Young Unemployed People

in Northern Ireland

4. The New Deal for Those Over 25 who have been

unemployed for Two Years or More

Page

V. COMMITTEE'S CONCLUSIONS 31

1. Introduction

2. Integrated Approach

3. Access

4. Culture

5. Training and Education

6. Job Creation and Assistance to Industry

7. Partnerships

8. External Issues

9. Welfare to Work

VI. SUMMARY OF RECOMMENDATIONS 38

Appendices

A. Membership of Standing Committee 'E'

B. Membership of Northern Ireland New Deal Task Force

C. District Councils asked for views on Long-Term Unemployment

Consultation Document

D. Other organisations asked for views on Long-Term

Unemployment Consultation Document

E. Minutes of Evidence taken from Mr G Loughran (DED) and

Mr I Walters (T&EA)

F. T&EA Response to Interim Recommendations

G. CBI Response on Welfare to Work

LONG-TERM UNEMPLOYMENT

I. INTRODUCTION

1. The Economy Committee (Standing Committee E) of the Northern Ireland

Forum for Political Dialogue was set up with the following Terms of

Reference:-

"To examine issues relevant to the performance of the

Northern Ireland economy and report to the Forum at

periodic intervals."

2. Having begun its work of examining issues affecting the performance of the

Northern Ireland economy the Committee focused on long-term

unemployment as one of a number of key areas identified as worthy of

consideration.

3. There are areas within Northern Ireland where unemployment has become

a way of life over a number of generations. In such areas there is simply

not enough employment for the people who live there and the number of

school leavers each year greatly exceeds the number of jobs available for

them. There are, in such areas, families where for generations heads of

households have been on long-term unemployment and this has inevitably

become a way of life for too many people.

1

4. In its 1996/97 Operational Plan the Training and Employment Agency, in

line with its commitment to improving service to its customers, set itself an

objective to examine the needs of the long-term unemployed and review

existing provision.

5. In March 1997 the Agency issued a document discussing the economic

context of its work in relation to the long-term unemployed and offering for

discussion approaches for the recovery and reintegration of the long-term

unemployed into the workforce.

6. The discussion document sought views on how best the Agency could

utilise its resources and provide appropriate measures to make maximum

impact on long-term unemployment.

7. Having identified long-term unemployment as a key area for consideration

and wishing to provide a response to the Training and Employment

Agency's consultation document, the Economy Committee presented an

Interim Report to the Forum on 18 July 1997.

8. The Committee's recommendations relating to the following key issues

were published in that Interim Report:-

(a) Investment;

(b) Training;

(c) Single Integrated Programme;

(d) Benefits Trap;

(e) Skills;

2

(f) Self-Employment;

(g) Community Led Initiatives;

(h) Special Needs; and

(i) Child Care Provision

9. The Committee would welcome incorporation of the following

recommendations which were made in its Interim Report on Long-Term

Unemployment as part of the new Welfare to Work Programme:-

(a) Both individuals and the statutory agencies should continue and

enhance their efforts to attract both inward and indigenous

investment.

(b) Government should offer greater assistance to the business

community as an incentive to provide secure employment for the

long-term unemployed.

(c) Adequate finance should be made available to provide the appropriate

training and assistance to bring the long-term unemployed up to the

required standard to enable them to seek suitable employment.

(d) Government should take an integrated approach towards tackling the

long-term unemployment issue by co-ordinating policies into a single

integrated programme.

3

(e) The benefits system should be redesigned to ensure that the long-term

unemployed are not discouraged from working because of a 'benefit

trap' resulting from a disparity between benefits and wages.

(f) The problem of under-achievement in education should be addressed.

(g) Greater linkages should be established between education and

industry.

(h) Training and financial assistance (including risk capital) should be

available to assist long-term unemployed people who have the ability

and opportunity to establish their own business.

(i) Full recognition should be given to community led initiatives which

make an important contribution to the reduction of long-term

unemployment.

(j) Account should be taken of the special needs of groups within the

long-term unemployed.

(k) Consideration should be given to the provision of affordable child care

to enable unemployed parents to return to work.

10. On 8 September 1997 Mr Tony Worthington MP, the Education and

Training Minister named the members of the Northern Ireland Task Force

which is to spearhead the New Deal initiative which aims to assist

thousands of unemployed young people to move from Welfare to Work.

4

11. Under the New Deal a package of initiatives is currently being put together

to enhance the future prospects of two groups in particular need of extra

help - 18-24 year olds who have been unemployed for six months or more,

and those over 25 who have been out of work for more than two years.

5

II. EXISTING TRAINING AND JOB CREATION MEASURES

1. ENTERPRISE ULSTER

1.1 Enterprise Ulster which was introduced in 1973 aims to assist in the

economic development of Northern Ireland by the provision of effective

quality training and the creation of employment projects of lasting value to

the community. The opportunities created provide the experience and

training to enhance the capabilities, knowledge and skills of the unemployed.

1.2 Enterprise Ulster has two key aims:-

a) to deliver quality training and employment programmes at costs which

equal the best in the field of training and employment provision in

Northern Ireland; and

b) to ensure efficiency and quality performance in each of the

organization's business areas, while avoiding unfair competition with

the private sector.

1.3 Training and work experience is available to people over the age of 18 who

must be unemployed for at least 3 months.

1.4 The trainee receives a training allowance of £10 per week on top of his/her

existing benefits. A tax free bonus of up to £200 can be earned on the

completion of a 12 month programme by any trainee who achieves clearly

defined objectives in respect of attendance, vocational qualifications and job

seeking.

6

1.5 Enterprise Ulster is the largest training organisation in the Province with

1,356 trainee places filled in 1996/97. Opportunities exist in virtually any

field within the public and voluntary sectors, in which an unemployed

person would wish to gain work experience and associated "off the job

training".

1.6 The formal training can be undertaken at a Further Education College,

Training Centre or other recognised facility.

2. ACTION FOR COMMUNITY EMPLOYMENT (ACE)

2.1 Action for Community Employment (ACE), introduced in 1981, is available

only to adults aged 18 and under 64 who have been unemployed for 12 out

of the last 15 months and for 3 months without a break prior to entering

ACE. Those aged 18 to 24 years only need to be unemployed for the

previous 6 months and persons who have been on Jobskills may count all of

this time as unemployed.

2.2 ACE can offer temporary employment for up to one year on projects of

community benefit such as community service, youth work or

environmental improvements.

2.3 ACE was designed to combat long-term unemployment in the hope that

experience gained and training provided would enable the person to compete

more effectively for permanent jobs.

7

2.4 Formal training provided by ACE Providers includes RSA, City and Guilds

and NVQs. In order to become an ACE Provider prior approval must be

sought from the Training and Employment Agency.

2.5 All vacancies for ACE posts are advertised in local Training and

Employment Agency offices.

3. JOBSKILLS

3.1 Jobskills was launched in Northern Ireland in April 1995 as an integrated

training scheme to replace the Youth Training Programme (YTP), the Job

Training Programme (JTP) and the Skills Training Scheme.

3.2 The programme caters for:-

a) persons in the 16-24 year old age group who are first time entrants to

the labour market or unemployed; and

b) persons in the 25-60 year old age group who are unemployed for more

than three months.

3.3 Young people under the age of 18 receive a training allowance of £29.50 in

their first year and £35.00 in their second year. Adults are entitled to

£10.00 per week to augment their weekly benefit which is not affected. In

addition a lump sum bonus is payable on completion of relevant NVQs if

completed within the specified time.

8

3.4 Access Training is targeted at NVQ Level 1 and is regarded as a preparatory

stage which allows trainees who gain NVQ Level 1 to progress to

Mainstream Training. Trainees who achieve NVQ Level 1 are eligible for a

bonus of £200.00.

3.5 Mainstream Training focuses on gaining NVQs at Level 2 and Level 3. A

tax free bonus of £300.00 is available to trainees who reach NVQ Level 2

and a further £400.00 to trainees who reach NVQ Level 3.

3.6 Jobskills is funded by the Training and Employment Agency and anyone

wishing to join should first approach their local T&EA office which, in turn,

will refer them to the Recognised Training Organisation (RTO) which will

be responsible for delivering the appropriate training. Any Training Centre,

College of Further Education or Managing Agent can become a Recognised

Training Organisation but only with the prior approval of the T&EA.

3.7 As all training is based on standards set by industry, participants gain skills

which employers need and, therefore, have a much greater chance of

getting a job.

4. COMMUNITY WORK PROGRAMME

4.1 The Community Work Programme is a new programme being piloted in 3

areas: Fermanagh, Strabane and West Belfast. It is only open to adults

who have been unemployed for 12 months or more. In the initial pilot

phase, 1,000 places are available.

9

4.2 The programme is community focused, offering individuals the opportunity

to expand and develop their existing skills on projects which in turn will

benefit their local community, without in any way affecting their own

benefits.

4.3 The Community Work Programme aims to:-

a) provide meaningful and rewarding work with training lasting up to

3 years for the long-term unemployed;

b) empower communities to take effective action through locally identified

projects to address local needs, and

c) enable the long-term unemployed through community work projects to

make use of and to develop their skills with complementary training.

4.4 Most participants are not amenable to classroom type or overtly directed

training. In the main training takes place on-the-job and focuses on

allowing participants to regain the disciplines of a working environment and

practice and upgrade their existing skills. In outline training in CWP

involves:-

(1) Induction - This includes: the Programme

the Placement Provider

the work practice

activity

(2) Health and Safety - This includes: safe work practices

safe work environment

safety of colleagues

10

safety of public

(3) Work Tasks - This includes: what is the task

how is it done

what is the standard

(4) Customer Care - This includes: who is the customer

what do they expect

what is the standard

11

(5) Jobsearch - This includes: skills audit

progression planning

where to find a job

selling yourself

4.5 Participants receive a training allowance equivalent to benefit entitlement

plus an additional weekly training premium ranging from £20 to £55

depending on the position held. There is also the opportunity to qualify for

bonus payments based on performance and achievement of qualifications.

4.6 The programme is funded entirely by the Training and Employment Agency

who contract its delivery with regional partnerships.

5. OPEN AND FLEXIBLE LEARNING CENTRES

5.1 The T&EA is committed to the use of Open and Flexible Learning, where

appropriate, to meet the training needs of individuals and organisations.

5.2 The Agency provides information and advice on Open and Flexible learning

and supports training for the unemployed, women returning to the

workplace and the disabled via a network of approved Open Learning

Access Centres.

12

III. SUMMARY OF EVIDENCE

1. INTRODUCTION

1.1 The organisations listed at Appendices C and D were asked for their views

on the Long-Term Unemployment consultation document issued recently by

the Training and Employment Agency. They were also requested to make

a brief written submission to the Economy Committee setting out any

thoughts they might have on how to alleviate the problem of long-term

unemployment. Responses have been received from the following

organisations and their views and suggestions are summarised thematically

below:-

(a) District and Borough Councils

Ballymena Borough Council

Banbridge District Council

Coleraine Borough Council

Cookstown District Council

Craigavon Borough Council

Down District Council

Larne Borough Council

Lisburn Borough Council

Moyle District Council

(b) Other Organisations

Bryson House

13

Confederation of British Industry (Northern Ireland)

Enterprise Ulster

Fermanagh Community Work Programme

Lenadoon Community Forum

Northern Ireland Committee of the Irish Congress of Trade Unions

Northern Ireland Federation of ACE Schemes

Strabane and District Community Work Programme

2. INTEGRATED APPROACH

2.1 The general feeling relating to an integrated approach was that the level of

long-term unemployment can be reduced through a concerted and

co-ordinated approach by government, the community/voluntary sector and

the private sector. However, it is also essential that the long-term

unemployed themselves are committed to the development of solutions. A

high profile campaign is required to address this issue.

2.2 The T&EA and Central Government have been encouraged by a number of

respondents to take an integrated approach towards tackling the long-term

unemployment issue insofar as this recognises the need to have a single

policy dealing with the related social and economic programmes. A

pragmatic multi-programme approach is required to tackle the problem of

long-term unemployment.

2.3 This multi-levelled, multi-disciplinary approach is dependent on providing

the access, guidance and learning opportunities to meet the individual needs

of the customer at the appropriate time, pace, place and cost.

14

2.4 There must be closer liaison between the funder of programmes and the

DHSS and a re-engineering of the benefit structure to remunerate

participants.

2.5 A multi-level, multi-disciplinary Integrated Programme should include:

a seamless, flexible process relating to the needs of the customer on

entry and building on their strengths progressively so as to gain

employment and qualifications;

a one-stop access point to this process with outreach to the street

corner;

provision of foundation training for those entering the process without

adequate basic skills;

provision of transitional support when required between vocational

training levels;

real work experience in segments of the labour market where vacancies

occur;

recognition of special group needs; disabled, ex-prisoners etc;

special targeting to PAFT and TSN areas;

15

harnessing local capacities and skill to meet needs and services identified

in the process of local development audits.

2.6 Where opportunities arise T&EA programmes should be linked with

European Union packages.

2.7 Many respondents have welcomed the T&EA's consultative document and

respondents have endorsed the recognition in the document that the

long-term unemployed are not a homogeneous group. A number of

measures need to be taken together to form a co-ordinated programme for

the long-term unemployed and it has been argued that a "benefit-plus"

approach is both inappropriate and ineffective.

2.8 A broad programme for the long-term unemployed should cover initial

guidance, induction training, remedial literacy and numeracy courses,

training to NVQ level, work placement, job search and interviewing skills, in

both employment and training programmes specially designed to recognise

the fact that the long-term unemployed are not a homogeneous group.

2.9 Northern Ireland should be regarded as a suitable pilot study area in which

the issues of interface between unemployment, the Jobseekers Allowance

and education courses should be more fully explored.

3. ACCESS

3.1 Lack of access to mainstream training/employment programmes remains a

significant factor to be overcome and it has been suggested that District

16

Councils and local partnerships can offer examples of relatively small scale

innovative programmes aimed at tackling issues of access.

3.2 A "Bridge Builder Programme" delivered by one District Council in

partnership with the Local Enterprise Agency and Industrial Training

Services (ITS) is a very successful pilot training project designed

specifically to help the long-term unemployed to access mainstream

training/employment programmes.

3.3 The local Economic Development Officer believes that the T&EA should

consider the delivery of small scale innovative programmes, such as Bridge

Builder, in partnership with local Councils and local partnerships.

Role of Employers

3.4 Employers have an essential part to play in providing information on job

requirements and skill needs. However, it is essential that such information

is collated and appropriately distributed to ensure that the long-term

unemployed know more about the job market, and how it is changing.

3.5 Government, as the largest employer in the Province, should review what it

can do itself to improve the access of the long-term unemployed to job

opportunities.

4. CULTURE

4.1 One of the Economic Development Officers who responded does not feel

that existing training programmes go far enough to tackle the mental and

17

cultural impact of being unemployed for a long period of time. He has

submitted an MBA thesis entitled 'A Study to Examine the Effects of a

Structured Training Plan on the Employability of Unemployed Individuals

within Northern Ireland' which looks at the perspective of the long-term

unemployment culture and its effects on allowing individuals to get back to

work. An Executive Summary of his thesis is included as Appendix C(3).

5. TRAINING AND EDUCATION

5.1 More could be done to provide training which would help prepare the

unemployed to have a reasonable chance of being recruited in new or

expanding industries.

5.2 One District Council has suggested that it may be worth considering

offering specific programmes to exclusive target groups for maximum

benefit, eg providing places on Jobskills only to those with low skills levels.

5.3 The following ideas to alleviate long-term unemployment have been put

forward by one of the District Council Economic Development Officers:-

Provide skills refresher courses for those whose unemployment is not

due to a declining industry.

Provide motivation courses, and training in interview skills and CV

completion for those suffering the effects of long-term unemployment.

18

Prepare the long-term unemployed by educating those who are willing in

skills/topics relevant to the industries of the area that are planning to

expand or have just arrived.

Promote the option of self-employment and the training and help that

exists.

Voluntary placement schemes of a short or long duration to allow new

graduates to expose themselves to industry and its demands.

The continued support of the Community Business Programme operated

by LEDU to allow individuals collectively to run a business thus exposing

them to the idea of entrepreneurship and increasing their confidence to

help them realise their ability to do something individually.

5.4 Any programme that is going to aim to tackle the diverse range of issues

involved in Long-Term Unemployment must be multi-layered and

encompass opportunities for all at differing levels of entry. It is considered

that the initial steps to access information, advice and guidance on the

opportunities available on the necessary starting point on a career-learning

curve should be through an Information Resource Centre. A number of

options may follow on from the initial intervention and may include some of

the following:-

Second Chance School - could address the basic needs of those people for

whom the educational system has failed.

19

Structured Volunteer Placements - the commercial sector should be

encouraged to form partnerships with the voluntary sector and share in the

support and mentoring of people as they make their return to the world of

work.

Targeting Long-Term Unemployed and Those "At Risk" - a way of dealing

with those at risk of becoming long-term unemployed would be to remove

current rules on eligibility for both current and future schemes.

Training for Work - should encompass: sectored (manufacturing, retail,

warehousing, or where demand lies); technological (IT, internet, e-mail,

networking) and; enterprise (pre self-employment programmes combined

with work experience, shadowing, mentoring and other coaching activities.

Business Training - linking and matching to employment opportunities.

Learning Support Unit - offering additional support and assistance to slow

learners and low achievers in reaching their targeted outcomes.

Programme Duration - opportunities for work trialling within programmes

should be permitted within a longer contracted period of employment.

Financial Incentives in Training - could be increased at each stage leading

to higher training and eventually employment.

5.5 One respondent has suggested that enhanced investment and greater effort

should be made by Central Government to allow existing training schemes

20

such as ACE to provide tailored training, co-designed by and for local

industry.

5.6 There is a need to establish and create meaningful linkages and joint

ventures between Education and Industry. There appears to be a gap

throughout Northern Ireland between the requirements of local industry and

the quality and variety of output being delivered by the Education sector.

5.7 The Northern Ireland Business Education Partnership (NIBEP) was

established in 1995 with the aim of bringing a greater focus to the

importance of such links in strengthening the educational and economic

infrastructure. NIBEP is jointly sponsored by the Training and Employment

Agency (T&EA) and the Department of Education for Northern Ireland

(DENI).

5.8 The T&EA's careers officers offer advice and information to young people

in secondary schools regarding job opportunities and at senior policy level

the T&EA and DENI meet regularly to consider issues and topics of

common interest.

5.9 It is vital that low and under achievement in the education system is

addressed if the flow into LTU is to be reduced in the medium/long-term.

The extent of under achievement within the Province remains at

unacceptable levels and a concerted effort is required to reduce it.

6. JOB CREATION AND ASSISTANCE TO INDUSTRY

21

6.1 Greater assistance should be made available to industry as an incentive to

provide secure employment for the long-term unemployed. The Industrial

Development Board could consider the possibility of offering grant

assistance to any potential inward investor with the proviso that where

possible up to 5% of the new workforce should be from the long-term

unemployed sector. Assistance could take the form of additional 'tax

breaks' as opposed to direct employment grants, which in the past have

often failed to secure long-term employment.

6.2 One respondent feels that employers would be encouraged to consider

employing the long-term unemployed if they were granted significant

subsidies to do so. The subsidies would help to compensate for staff time

spent "training up" the new employees and additional job related training.

6.3 A scheme could be introduced for a subsidy for employers, both in the

public and private sectors, who are prepared to take on the long-term

unemployed. There should be a specific recognition of the value of

employment in the social economy and that consultations and discussions

take place with the voluntary and community sectors on ways in which

they may be able to assist in developing projects and programmes in this

sector.

6.4 Given the size of the budgets of both the IDB and LEDU, it is felt that both

agencies should include in their grants packages provisions to set targets for

companies receiving grant aid in respect of a proportion of new jobs created

being aimed at the long-term unemployed.

22

6.5 Creation of sustainable new jobs through community organisations should

be encouraged, particularly in areas of social and environmental care.

6.6 Well established, financially viable, local family run businesses could be

offered some sort of financial/training package to encourage expansion and

provision of skilled employment possibilities.

6.7 In one District Council area where there is a persistent and unacceptable

level of long-term unemployment which is particularly endemic among

young people under 30 and adult males over the age of 45 the Council

believes that this poses a major threat to the future economic prosperity of

the district and is firmly committed to finding a lasting solution.

6.8 The District Council recently published a local economic development

strategy which highlights the development of a new approach to tackling

long-term unemployment as an essential component. This new approach is

centred on the perception that government has failed to address the problem

and that long-term unemployment can only be resolved at local level

involving local actors working in partnership.

6.9 The Council has engaged the WISE Group based in Glasgow to apply its

successful job creation model which is already working in several areas of

Great Britain. Essentially, the model assists long-term unemployed people to

reintegrate back into the labour market by paying the going rate for the job,

delivers a range of socially useful products and services to the local

community, and involves local people in the management of projects to

promote ownership and ensure sustainability (see Appendix C(6)).

23

7. PARTNERSHIPS

7.1 There is a need to create additional sustainable jobs within the public, private

and voluntary sectors and a greater degree of private sector involvement in

the consultative and job placement processes.

7.2 In responding to the main challenges outlined in section seven of the T&EA

Consultation Document one District Council Economic Development

Officer suggested that as many councils and local enterprise agencies run

successful employment creation programmes, the partnership option would

seem suitable. A partnership approach would necessitate a realistic injection

of funds from the government agencies and a private sector contribution.

7.3 The development of local partnerships, involving all the key players, to

address LTU is to be encouraged. The T&EA has a key task to ensure that

these partnerships are provided with comprehensive breakdown of both the

LTU (in ward areas) and the current labour market opportunities (in ward

and wider geographical areas).

7.4 The perspective of a 'public works' approach should be included.

Partnership between Local District Councils, CWP Managers and local

community group providers could have a favourable impact on the

provision of work experience for the long-term unemployed, the

empowering of local communities and the provision of enhanced local

amenities.

24

7.5 Innovative community led initiatives must complement existing Government

initiatives if the problem of long-term unemployment is to be successfully

tackled. In one area of Belfast it is envisaged that a Neighbourhood

Regeneration Work Programme will be managed and delivered by a

Partnership Board. The Board will be composed of representatives of the

community, private and public sectors and thus modelled on the Community

Work Programme structure.

7.6 Community economic development initiatives have created greater

confidence and skills levels amongst many of the long-term unemployed and

it is felt that a range of tailored, sectoral and local responses can keep

long-term unemployment to a minimum. It is considered that a

non-academic, pro-community and pro-commercial driven response is

required.

25

8. EXTERNAL ISSUES

8.1 External issues such as child care provision, the 'benefits trap' and any

potential minimum wage for part-time employees, will all have a direct

impact on long-term unemployment.

8.2 It has been suggested that one of the factors affecting returnees to work is

the lack of provision of affordable child care. This needs to be addressed

and may even create new employment opportunities.

8.3 Government, as the largest employer in the Province, should review what it

can do itself to improve the access of LTU to job opportunities. There are

significant barriers associated with the nature of public transport provision.

The costs and services of public transport need to be reviewed from the

perspective of the LTU. It is vital that those seeking employment are

provided with appropriate access to those areas providing employment

opportunities.

8.4 One respondent has recommended that a joint study be undertaken by the

bus companies, the DOE and the T&EA into ways of tackling the transport

difficulties of those relying on public transport to reach jobs in certain areas

and that a special guidance service for the long-term unemployed and a

scheme under which placements for the long-term unemployed should be

procured from the private sector and direct labour organisations in

comparable units in the public sector. They are also keen to have

established an interdepartmental group to examine benefit /low wage/

taxation interface problems.

26

8.5 The major issue of redesign of the benefits system must be addressed to

ensure that wages are more than the total benefit income to a person's

household.

27

IV. WELFARE TO WORK

1. INTRODUCTION

1.1 The New Deal for young people and long-term unemployed adults is the

first major element of the Government's Welfare to Work programme. At

present almost 180,000 young people throughout the UK have been

unemployed and claiming Jobseeker's Allowance for six months or more.

When the New Deal is introduced it will help young people who have been

unemployed for six months or more, it will help all young people who reach

six months unemployment, and it will help more than 250,000 people into

work over the full potential life of this Parliament, at a cost of £3.5 billion

funded from the windfall levy on the excess profits of the privatised utilities

of which Northern Ireland will receive £140 million.

2. NEW DEAL TASK FORCE

2.1 A Northern Ireland Task Force is to spearhead the New Deal initiative

which aims to assist thousands of unemployed young people to move from

welfare to work.

2.2 The Task Force, led by Bill McGinnis OBE, Chairman of the Training and

Employment Agency and Sperrin Metals, will play a pivotal role in providing

advice on key issues of programme design and policy, marketing the New

Deal to employers and supplying an independent audit of progress and

success.

28

2.3 The new body will include representatives from employer, trade union,

education and training, voluntary and environmental sectors. Youth will

also have its say on the Task Force with the appointment of Jason Caldwell,

an A-Level student and member of the Youth Forum.

2.4 A full list of Northern Ireland New Deal Task Force members is included as

Appendix B.

3. THE NEW DEAL FOR YOUNG UNEMPLOYED PEOPLE IN

NORTHERN IRELAND

3.1 The New Deal for young people will help all those aged 18-24 who claim

Jobseeker's Allowance (JSA) for six months or more. In Northern Ireland

there are currently over 8,000 young people who have been unemployed for

over six months. But the labour market does not stand still and as some of

these young people move into employment, others will reach six months

unemployment. The Training and Employment Agency (T&EA) estimates

that 13,500 young people will become eligible for the New Deal in the first

year of the new programme.

3.2 The New Deal will start with extra help with finding work. For many, this

extra support will be just what is needed to make the transition into

employment. But it is estimated that just over 9,000 young people will need

and will benefit from one of the four New Deal options which will be made

available offering opportunities for work, education and training.

29

3.3 The New Deal will be tailored to each individual's needs and circumstances.

It will begin with an intensive period of counselling, advice and careers

guidance - a "Gateway" to the New Deal. Young people will also have

access to a range of other forms of help. For example, those who need

help to improve their basic skills will have the chance to do so before

progressing into one of the New Deal's four options for young people.

During "Gateway", the T&EA will be able to help many young people to

find jobs and move off welfare into work.

3.4 Those young people who remain unemployed will have the opportunity to

pursue a place in one of the four New Deal options. Young people will be

helped to decide which options would do most to improve their skills and

employment prospects. They will then be assisted in taking up a place in

one of the options. Young people will continue to receive guidance and

support throughout their period on an option.

3.5 The four New Deal options are:

Option 1:

A paid job with a private sector employer which will include one day a

week (or its equivalent) in education and training designed to achieve an

accredited qualification. Employers will be offered £60 per week for up to

26 weeks as a contribution towards the employee's recruitment and

employment costs. In addition, up to £750 will be provided per placement

to cover the education and training component. About 40% are expected to

take up this option.

30

Option 2:

A job for six months with the Government's new Environmental Task

Force which will include day release education and training opportunities

designed to reach an accredited qualification.

Option 3:

A job for six months with a Voluntary sector employer doing rewarding and

challenging work for the benefit of the community, with one day per week

allowed for education and training to attain an accredited qualification.

For those on Options 2 and 3 a grant of up to £400 will be paid. This will

ensure that the young people are entitled to retain all their benefits and to

have their part in the New Deal programme properly recognised. Voluntary

bodies and environmental organisations which prefer to pay a wage may do

so.

Option 4:

The opportunity, for those who need to obtain qualifications to improve

their employment prospects, to take up full-time education or training for up

to 12 months on an approved course leading to an accredited qualification.

They will receive an allowance equivalent to benefit, plus access to a grant

to help with study materials and fares.

3.6 If young people refuse or fail to take up places, there will be no fifth option

of continued full benefit - Jobseeker's Allowance (JSA) benefit sanctions

will apply. Young people who unreasonably refuse a New Deal place will

31

lose their JSA for two weeks. If they refuse a further offer at any time in

the following 12 months, they will lose their JSA for four weeks.

3.7 During their time in New Deal options, young people will continue to

receive intensive advice and support aimed at getting or maintaining a job in

the regular labour market after the New Deal period. The latter stages of

each of the options will therefore include intensive help with job search and

jobs/careers advice and guidance, for every young person who needs help.

3.8 Young people who return to claimant unemployment after their options will

receive further intensive help to get back to work as quickly as possible -

and a wide range of measures to help young people into employment and

training will be available for those who need it. This is an entirely new

approach to employment programmes. It will entail:

- an advisory process for every young person who returns to claiming

JSA soon after completing a New Deal option. It will include, according

to the individual young person's needs; further vocational guidance; the

agreement of new employment goals and job search action plans;

continued supported job search and the chance to take up a place in a

Jobclub;

- extra help through a range of measures designed to increase the numbers

of young people who get jobs quickly after New Deal options. The

range will include recruitment and training packages offered to

employers, help for those young people who wish to set up business on

their own; access to modern apprenticeships;

32

- special provision for those young people who continue to lack the

necessary skills to find work. This will include immediate access to

training in basic employability or key skills.

3.9 This unique approach recognises both that many young people will have

benefited considerably from their New Deal options and will move quickly

into employment whilst others will continue to need further intensive

education, training or other support.

3.10 In Northern Ireland pilot projects for the New Deal for 18-24 year olds was

aimed to come on stream this year and the full programme will commence

in April 1998.

4. THE NEW DEAL FOR THOSE OVER 25 WHO HAVE BEEN

UNEMPLOYED FOR TWO YEARS OR MORE

4.1 The New Deal will provide additional help to increase the employment

prospects of those aged 25 and over who have been unemployed for two

years or more. From June 1998 the New Deal will offer throughout

Northern Ireland payments of £75 per week for 26 weeks to employers

who recruit people aged 25 and over who have been unemployed for two

years or more.

33

V. COMMITTEE'S CONCLUSIONS

1. INTRODUCTION

1.1 Despite the fact that short-term unemployment rates in the local economy

have fallen to the level of those in the rest of the United Kingdom, long-term

unemployment remains a major problem in the Northern Ireland labour

market. While long-term unemployment rates in Northern Ireland have also

declined, they remain twice those of the UK. Unemployment has become a

way of life for too many people.

1.2 The Committee's conclusions on a number of the key issues relating to

long-term unemployment were presented to the Forum on 18 July 1997 in

its Interim Report on Long-Term Unemployment and a summary of the

Committee's recommendations contained in that report is included in the

Introduction to this Final Report.

2. INTEGRATED APPROACH

2.1 The Committee notes the recent link forged at Ministerial level between the

Training and Employment Agency and the Department of Education and

accepts the need for greater employment awareness in schools.

2.2 The Committee is looking to all sections of the community - employers,

trade unions, voluntary organisations, local authorities, colleges and training

providers - to work in partnership to offer both young people and the

long-term unemployed the chance to work, to earn and to be independent.

34

3. ACCESS

3.1 The Committee is concerned about the imbalance of poverty and social

deprivation in rural areas where unemployment tends to cause greater

hardship and notes that existing arrangements for targeting social need do

not always meet the needs of people living in these small deprived areas.

3.2 Lack of access to mainstream training/employment programmes remains a

significant factor to be overcome and the Committee considers that the

Training and Employment Agency should encourage local delivery of

innovative measures to improve access eg through the Local Economic

Development Units of District Councils.

4. CULTURE

4.1 The Committee feels that existing training programmes do not go far

enough to tackle the psychological and cultural impact of being unemployed

for a long period of time.

4.2 The Committee also considers that the new Welfare to Work programme

may encourage ageism and create a "second-class" group amongst the

long-term unemployed who will be relegated to environmental and social

schemes eg ACE. In this regard the Committee considers that success with

young people is at least to some extent dependent on successful

employment programmes with their parents.

35

4.3 The Committee considers that there is a need for a more co-ordinated

approach to tackle long-term unemployment with greater linkages between

the Department of Health and Social Services and the Training and

Employment Agency.

5. TRAINING AND EDUCATION

5.1 More could be done to provide training which would help prepare the

unemployed to have a reasonable chance of being recruited in new or

expanding industries. Those amongst the unemployed who are willing

should be trained in skills relevant to the demands of the industries in their

area.

5.2 Efforts should be made to promote the option of self-employment and the

training and help that is already available. There is scope for an integrated

approach between LEDU, T&EA and the Department of Education.

5.3 The Committee is of the opinion that the education programme in schools,

from primary level upwards, should be tailored to the requirements of the

modern working environment. A greater emphasis should be placed on

careers teaching, offering a balanced careers advisory service in all work

disciplines to assist young people in identifying suitable careers.

5.4 The Committee feels that a more pro-active approach is required in order to

involve employers, with financial assistance from Government, in taking on

trainees from amongst the long-term unemployed.

36

5.5 Traditional skills/crafts should be preserved and encouraged as they are in

other European Union countries like France where colleges throughout the

country encourage the retention of traditional crafts especially

stone-masonry and wood-carving.

6. JOB CREATION AND ASSISTANCE TO INDUSTRY

6.1 The Committee considers that greater assistance should be made available

to industry as an incentive to provide secure employment for the long-term

unemployed.

6.2 The Industrial Development Board should consider the possibility of

offering grant assistance to potential inward investors who are prepared to

draw a percentage of their new workforce from the ranks of the long-term

unemployed.

6.3 The Committee is concerned about the implications of the 'New Deal' for

existing schemes such as ACE and there is a need to consider ACE as

contributing to the improvement of the social economy with programmes

being directed towards the more seriously disadvantaged. Although

introduced at a time when unemployment was very high, the Committee

feels that there is a continuing role for ACE schemes.

6.4 The Committee is concerned about the short term impact which the New

Deal proposal to offer employers £60 per week for up to 26 weeks to

contribute to the costs of recruiting and employing young people is likely to

have. When the 26 weeks period ends there is no guarantee of subsequent

37

employment. The Committee considers that it is essential to monitor the

process to ensure that proper training is being provided and that there

should be some commitment to providing permanent jobs. The Committee

feels that there are potential weaknesses in the proposals, for example, in

some cases 26 weeks is not considered adequate to enable a young person

to achieve NVQ standard and consideration should be given to extending the

scheme to a secondary phase.

6.5 LEDU and IDB should be encouraged to examine other European models

with regard to job creation, for example, "Enterprises d'Insertion" - a

Government-assisted programme in France to encourage new enterprises

which are established by unemployed people for the benefit of the

unemployed.

6.6 The Committee is also concerned at the proposed reduction in the Public

Expenditure Plans for 1999 for industry, energy, trade and employment.

This would reduce long term prospects for those in 'Welfare to Work'.

7. PARTNERSHIPS

7.1 The development of local partnerships, involving all the key players, to

address long-term unemployment is to be encouraged. Innovative

community led initiatives should complement existing Government initiatives

if the problem of long-term unemployment is to be successfully tackled.

38

7.2 The Committee considers that there is a need to create additional sustainable

jobs within the public, private and voluntary sectors and a greater degree of

private sector involvement in the consultative and job placement processes.

39

8. EXTERNAL ISSUES

8.1 The Committee feels that external issues such as child care provision, the

'benefits trap' and any potential minimum wage for part-time employees all

have a direct impact on long-term unemployment and could either

contribute to the solution or exacerbate the problem.

8.2 One of the factors affecting returnees to work is the lack of provision of

affordable child care. This needs to be addressed.

8.3 The Committee considers that the major issue of redesign of the benefits

system must be addressed to ensure that wages are more than the total

benefit income to a person's household.

9. WELFARE TO WORK

9.1 The Committee examined the Government's proposed new 'Welfare to

Work' programme and considers it to be an ambitious scheme which it is

hoped will prove to be effective in enhancing the future prospects of the

unemployed. However, members have expressed a number of concerns

and reservations about the programme.

9.2 Since 'Welfare to Work' is a UK-wide initiative the Committee is concerned

that its delivery may not be tailored sufficiently to the particular structural

needs of unemployment in Northern Ireland. While long-term

unemployment rates in Northern Ireland have declined they nevertheless

remain twice those of the United Kingdom and new jobs tend to go to new

40

entrants or returners to the labour market, rather than to the long-term

unemployed.

9.3 While generally accepting the need for some form of benefit sanctions to be

applied to those who unreasonably refuse to take up a suitable option the

Committee is concerned that the "New Deal" will do little to ensure that the

unemployed are not discouraged from working because of a 'benefit trap'

resulting from a disparity between benefits and wages.

9.4 The Committee also has reservations about the proposed timescale for

training existing staff to provide guidance and advice on the new Welfare to

Work programme and for recruiting and training new staff. The Committee

is concerned that especially in the early stages of the 'New Deal' quality of

service and advice to the public may suffer.

41

VI. SUMMARY OF RECOMMENDATIONS

1. There is a need for a more co-ordinated approach to tackle long-term

unemployment and the Committee recommends that employers,

trade unions, voluntary organisations, local authorities, colleges and

training providers should work in partnership to offer the long-term

unemployed the chance to work.

2. The Robinson indicators are no longer accepted as an accurate

barometer and arrangements must be made for targeting social need

taking into account poverty and social deprivation in pockets of

deprivation and in rural areas.

3. The Training and Employment Agency should encourage local delivery

of innovative measures to improve access to training/employment

programmes.

4. Training programmes should understand and tackle the psychological

and cultural impact of being unemployed for a long period of time.

5. The long-term unemployed should be trained in skills relevant to

industries in the local area.

6. The option of self-employment should be encouraged and promoted.

42

7. The education programme in schools should be tailored to the

requirements of the modern working environment.

8. A more pro-active approach is required to encourage employers to

take on trainees from the long-term unemployed.

9. Traditional crafts/skills should be preserved and encouraged.

10. Greater assistance should be made available to industry as an

incentive to provide sustainable employment for the long-term

unemployed.

11. IDB should offer grant assistance to inward investors who are

prepared to draw a percentage of their new workforce from the

long-term unemployed.

12. ACE should be encouraged to contribute to the improvement of the

social economy with programmes being directed towards the more

seriously disadvantaged.

13. The 'New Deal' arrangements should be carefully monitored to ensure

that proper training is being provided.

14. LEDU and IDB should be encouraged to examine other European

models with regard to job creation.

43

15. Innovative community led initiatives should complement existing

Government initiatives to help solve the problem of long-term

unemployment.

16. There should be more private sector involvement in the consultative

and job placement processes.

17. The lack of provision of affordable child care should be addressed at

community level in association with employers and Government to

release potential employees into the labour market.

18. 'Welfare to Work' should be tailored to the particular structural

needs, socially and geographically, of unemployment in Northern

Ireland.

19. The 'New Deal' should be designed to ensure that there is no

disincentive to the unemployed caused by a 'benefit trap'.

20. The proposed timescale for training existing staff to provide guidance

and advice on the new 'Welfare to Work' programme and for

recruiting and training new staff should not be allowed to affect the

quality of service and advice to the public.

44

APPENDIX A

MEMBERSHIP OF

STANDING COMMITTEE E

(THE NORTHERN IRELAND ECONOMY)

Ulster Unionist Party - Mr D Nesbitt - Chairman

Mr R Stoker

Mr J Clarke

Mrs M Steele

Democratic Unionist Party - Mr St C McAlister - Vice-Chairman

Mr S Wilson

Mr W Snoddy

Mr M Carrick

øMr E Poots

Alliance Party - Mr S Neeson

Mr S McBride

*Mr P Osborne

NI Women's Coalition - Ms M McWilliams

*Ms N Heaton

Labour - Mr M Curran

*Mr W White

*Mr M Dummigan

Ulster Democratic Party - Mr G McMichael

*Mr D Adams

Progressive Unionist Party - Mr H Smyth

*Mr B Hutchinson

* attend the Committee on behalf of the party under Rule 14(4)(a) of the

Forum Rules of Procedure.

45

ø attended the Committee on a number of occasions on behalf of

Mr S Wilson.

46

APPENDIX B

NORTHERN IRELAND NEW DEAL TASK FORCE

Chairman: Bill McGinnis OBE, Sperrin Metal Products Ltd

Employers: Mary Donelly, Short Brothers plc

Karen Hargan, Desmond & Sons Ltd

Howard Hastings, Hastings Hotel Group

Trade Unions: Jim McCusker, NIPSA

Jim McKeown, NATFHE

Voluntary: Paddy Doherty, Derry Inner City Trust

Rev Harold Good OBE, NIACRO

Quintin Oliver, NICVA

Alan Watt, WISE Group

Environment: Brendan McSherry, Northern Ireland 2000

Education: Raymond Mullan, Newry/Kilkeel Further Education

College

Youth: Jason Caldwell, Northern Ireland Youth Forum

Ian Walters, Chief Executive of the Training and Employment Agency,

Mr Peter Holmes, Deputy Secretary at the Department of Education and

Ms Mary McKee of the Youth Council will serve as ex-officio members of

the Task Force.

47

APPENDIX C

DISTRICT COUNCILS ASKED FOR VIEWS ON LONG-TERM

UNEMPLOYMENT CONSULTATION DOCUMENT

1. Antrim Borough Council

2. Ards Borough Council

3. Armagh City and District Council

4. Ballymena Borough Council

5. Ballymoney Borough Council

6. Banbridge District Council

7. Belfast City Council

8. Carrickfergus Borough Council

9. Castlereagh Borough Council

10. Coleraine Borough Council

11. Cookstown District Council

12. Craigavon Borough Council

13. Derry City Council

14. Down District Council

15. Dungannon District Council

16. Fermanagh District Council

17. Larne Borough Council

18. Limavady Borough Council

19. Lisburn Borough Council

20. Magherafelt District Council

21. Moyle District Council

22. Newry and Mourne District Council

23. Newtownabbey Borough Council

24. North Down Borough Council

25. Omagh District Council

26. Strabane District Council

48

RESPONSES RECEIVED FROM

DISTRICT COUNCILS

C(1) Ballymena Borough Council

C(2) Banbridge District Council

C(3) Coleraine Borough Council

C(4) Cookstown District Council

C(5) Craigavon Borough Council

C(6) Down District Council

C(7) Larne Borough Council

C(8) Lisburn Borough Council

C(9) Moyle District Council

49

APPENDIX D

OTHER ORGANISATIONS ASKED FOR VIEWS ON

LONG-TERM UNEMPLOYMENT CONSULTATION

DOCUMENT

1. Belfast Centre for the Unemployed

2. Bryson House

3. Confederation of British Industry (NI)

4. Enterprise Ulster

5. Fermanagh Community Work Programme

6. Lenadoon Community Forum

7. NI Association of Community Based Training

Organisations

8. NI Chamber of Commerce

9. NI Committee of Irish Congress of Trade Unions

10. NI Council for Voluntary Action

11. NI Federation of ACE Schemes

12. NI Growth Challenge

13. Strabane and District Community Work Programme

14. Ulster Community Conference

50

RESPONSES RECEIVED FROM

OTHER ORGANISATIONS

D(1) Bryson House

D(2) Confederation of British Industry (NI)

D(3) Enterprise Ulster

D(4) Fermanagh Community Work Programme

D(5) Lenadoon Community Forum

D(6) NI Committee of Irish Congress of Trade Unions

D(7) NI Federation of ACE Schemes

D(8) Strabane and District Community Work Programme

51

NORTHERN IRELAND FORUM

FOR POLITICAL DIALOGUE

_____________

STANDING COMMITTEE E

Thursday 25 September 1997

_____________

MINUTES OF EVIDENCE

Mr G Loughran (Department of Economic Development)

Mr I Walters (Training and Employment Agency)

on

LONG-TERM UNEMPLOYMENT

The Chairman: First of all, thank you very much for coming. This has been a rather

long-standing engagement and a lot has happened since we first thought of meeting with you to

discuss these matters.

This is one of these rooms where everything we say is recorded and held in evidence

against us, as they say. The meeting is also open to the public. You received a letter giving some

indication of what we wished to discuss. We have produced an interim report — I emphasize the

word “interim” as it was drawn up indicating our conclusions rather than the in-depth analysis

which we would like to build in to our final report. Then we had some months off at the time of

the Westminster election. We had just got back into it again when we had the summer recess.

We are now hoping to draw together a final report.

In the meantime, before we commence the discussion this morning, if you have any

comments regarding our interim report it would be very much helpful and very much appreciated.

We will see where the conversation flows from that and then we ask you to take questions from

around the table.

Have you any general comments about the interim report?

Mr Loughran: Yes, we would like to make some general comments.

52

May I start, first of all, by thanking the Committee for the opportunity to talk with you

this morning. We welcome the Committee’s interest in this particular subject and its very good

response to the Agency’s consultative document. I am going to ask Mr Walters to deal in a little

bit more detail with your response. I think your approach is a very sensible one. You have

avoided the temptation to believe that there may be some panacea for dealing with problems of

long-term unemployment. There is none of course, and you have recognized that this is a very

complex subject.

There is no such a thing as a homogeneous group of long-term unemployed people. You

have people who are unemployed who are different in various ways, with different problems and

different characteristics. In your interim report you have recognized that fact and brought

forward a series of what I would regard as very sensible proposals for a range of measures.

Given that we are not talking about homogeneous groups of people, it is obvious that a range of

measures is necessary.

Mr Walters: Thank you, Mr Chairman, for allowing me the chance to come back to talk

to you again. The last time I was here we were talking only about one particular aspect of this

subject.

The whole subject of long-term unemployment is one which occupies a major part of the

Agency’s time and the allocation of resources. We are spending about £40 million on provision

for the long-term unemployed this year. To some extent the consultation document which we

published this year and to which, as Mr Loughran has said, you very kindly and very

constructively responded has been taking place against a changing background. The consultation

document was prepared and launched under the previous Administration. Since then, of course,

we have had a general election and a new Government which has brought forward major

proposals under the heading of Welfare to Work — alternatively titled the New Deal. We are

heavily engaged in that. Incidentally, the Northern Ireland New Deal Task Force is meeting for

the first time this morning. I have just left that meeting to come here. There is a massive amount

of work going on in that field. But it does set our approach to the question of long-term

unemployment in a somewhat different context.

The other change, of course, is that the economy of Northern Ireland has continued to

perform well with unemployment falling and employment increasing. The number of long-term

unemployed in August 1996 was 45,000 approximately and that had fallen to just over 30,000

by last month. Those are perhaps the principle changes — although not the only changes —

which are going on and against which work on long-term unemployment is going forward. To

some extent our work on long-term unemployment and the review has been partially overtaken

by Welfare to Work and the New Deal. At the moment our approach is to get the New Deal as

settled as we can. Then we will aim to complete the work on the review and mesh future,

additional provision for the long-term unemployed with the New Deal.

53

Coming specifically to your response, I would be happy, if you wish, to go through your

recommendations in detail and respond to each one of them. If you do not want to go into that

kind of detail now, I would be very happy to write to you after this meeting.

The Chairman: If you could write to us it might be easier. I am mindful of time and the

wider discussion we wish to have. If that is not too difficult a task — and I mean that genuinely

— how long would it take you to do that so that we could build that into our final report?

Mr Walters: I could do that within a week.

The Chairman: Much appreciated.

Mr Walters: Suffice to say, I do not think there is any great difference between us. We

accept, either in whole or at least in part, just about every recommendation; many of them are

covered, in terms of the actions that you are suggesting, by actions which are being taken in the

context of the New Deal.

The Chairman: As I said earlier, that interim report is really just a list of

recommendations. They are neither prioritized nor dealt with in great detail. We appreciate, as

you indicated to us, that it is not an easy problem.

Mr Loughran: There is one area which I do not think we can specifically deal with and

that is the whole question of the benefits trap. As you know, social security benefits are not a

matter for the Department of Economic Development, but if you wish us to respond to the

benefits issues, I think it might take a little bit longer.

Mr Walters: On that question my response would be that, as Mr Loughran has said,

there is not a great deal that we and the DED can do about that. Of course, the Government have

said that they want to look at the whole benefit structure. The principle of parity between

Northern Ireland and the rest of the United Kingdom has applied and I am not aware of any

thinking which would change that. But I would have thought that this whole question of the

benefits trap, which, of course, affects not just Northern Ireland but also affects other parts of

the United Kingdom, may come out of the work which is being taken forward in London.

The Chairman: We have discussed the benefit trap in deliberation. Before I ask Mr

McAlister to kick-off with a question, were you indicating, Mr Hutchinson, that you wished to

make a comment?

Mr Hutchinson: In relation to the benefit trap, I think it is part of the

Department of Economic Development’s responsibility. We are talking about jobs

which pay low wages or part-time jobs. What I am interested in hearing

Mr Walters saying is that if you look at the drop in unemployment rates it has not

really done anything in relation to poverty. That suggests to me that they are either

54

part-time jobs or jobs which pay low wages. This is problem that we have. Therefore, I think

that the DED needs to be looking at that in terms of the types of jobs that are encouraged. That

was what we mean when we talk about the benefit trap. What we are saying really is that the

DED has a responsibility in terms of levels of wages and whether, in turn, those levels of wages

can deal with the other issues like poverty.

Mr Loughran: I take that point. We are not trying to escape the

responsibility of dealing with the problem of the benefit trap. It is outside our

scope to deal with benefits per se, but we recognize the problem. We have done

quite a lot of work on this ourselves to try and identify the extent to which there

may be a disincentive to people who are unemployed. It is probably true to say

that we are looking at people with a number of dependents. That is where the

impact seems to fall most strongly and there is a problem there. As Mr Walters

has said, this is something which, increasingly, the Government is recognizing and

are seeking to deal with.

Having said that, while it is true that quite a lot of new jobs might be

part-time, it is also true to say that there has been a considerable growth in

full-time work in recent years. The IDB has generated 16,500 new jobs in the last

three years, LEDU has generated 10,000 new jobs in the last three years and all of

these jobs are full-time jobs rather than part-time jobs. We do not deal, as you

know, with, for example, the retail business — that is outside DED’s scope. If

you look at the performance of the manufacturing sector, which is almost entirely

made up of full-time employment, there has been a remarkable growth in

manufacturing employment in the last three years from just under 100,000 to

104,000. This is almost against the rub, as it were, because, as manufacturing

output has increased in recent years, that has tended not to be accompanied by

increases in employment but rather by increases in productivity and the

introduction of new technology in place of people. Manufacturing employment

expanding, in any jurisdiction, is an interesting achievement and particularly so

here to see the number going up for the first time.

While I am not denying your point that there can be a problem with

part-time work and benefits, we are trying to look at the performance of the

economy overall. I think there has been a significant growth in full-time

employment as well.

The Chairman: The only comment I would add there is that the full-time

growth along with part-time in the growing economy — and we are the second

most rapidly growing economy as a region within the United Kingdom — has

affected only the short-term unemployed. That level is down to the United

55

Kingdom average, so that is where the slack has been taken up. Long-term

unemployment here is still dramatically different from that in the rest of the United

Kingdom. It is down from 45,000 to 30,000 but that is relative within Northern

Ireland. Our relative long-term unemployed position within the United Kingdom

remains unchanged. Therefore, that is the bit we wish to address.

Mr Hutchinson: While I accept everything that Mr Loughran has said,

there are two important points which need to be made. First, the biggest urban

area within this country is Belfast. Everybody recognizes that and we need to be

dealing not just with Belfast but with other areas. From the figures you quoted

7% of inward investment has gone to Belfast. That is a very small percentage

and it has created very few jobs.

Secondly, the last study done of IDB and LEDU jobs proved that the

lifespan of those jobs is 2·8 and 3·4 years — they disappear after the grants

disappear. We need to be looking at this in a holistic picture. From my point of

view — and I think that we have had this discussion — we need to be making

sure that we actually invest in indigenous companies to help them grow and not

just promote inward investment and so forth until you get it right. I think that we

went too far inward rather than going in the opposite way to indigenous.

Mr McAlister: I want to go to Welfare to Work: a really fundamental

question — or a foundation question, as I would put it — is why we have Welfare

to Work. I would like to know whose brainchild it is. We all know that it comes

from a Labour Government but I would like to know if you can say specifically

where it comes from. On one of the ACEs they have used material, survey,

information, and the reason why I ask that part in the question is that this

Committee has been alarmed to find that both government departments and even

the Government themselves have made changes or proposed changes without any

relevant information or up-to-date information. That has astounded us. So I want

to know who was consulted. What is the prime motivator for change. Is the

journey really necessary? How is the £140 million to be broken down? Is it by

type of scheme, by age group, year by year or has that, in fact, been agreed at this

stage? We would like to have a basic understanding of what you understand

Welfare to Work to be, where it is coming from, what it will be and where it is

taking us.

Mr Walters: The idea of Welfare to Work has come from the

Government. The programme was trialed prior to the election. The present

Labour Government (then in opposition) considered 18 to 24-year-olds to be the

56

lost generation. The Government is very anxious to get people who are out of

work in this target group — of whom there are a great many throughout the

whole of the United Kingdom, and particularly in Northern Ireland — into jobs,

and the Government has set out this Welfare to Work initiative as one of its top

priorities in achieving this aim of getting them back into employment. The

Government has been informed by data from research conducted by the Labour

Party prior to the election, and by various studies on long-term unemployment, on

the problems of youth and deprivation and many other such studies which have

been conducted over the years.

Work is presently underway in actually designing the components of

Welfare to Work. A key role has been given to the National Task Force which

has met twice, I believe, in London. Northern Ireland is represented on that Task

Force by the Agency’s Chairman, Bill McGinnis, who also chairs the Northern

Ireland Task Force which, as I said earlier, met for the first time this morning.

That Task Force includes representation from a great many sectors, including

employers, the trade unions, the voluntary sector, and, of course, youth itself.

That work will proceed in the months ahead. A lot of work has been done but

there is much more to do, and so it would be wrong to try to speculate on the

precise shape of that programme when it is rolled out with effect from 1 April

next year.

The £140 million that is available to Northern Ireland as additional monies

has been allocated on the basis of Northern Ireland need, and it is not a provision

which is calculated on a pro rata population. The money will be available over the

life of the Parliament. Judging by past experience, all new programmes take a

little while to work up so I reckon that the bulk of expenditure — although some

money is now available to put demonstration models on the ground between now

and April, and the Minister has announced two or three this morning — will,

realistically, be incurred from the middle of next year onwards.

There are five main components to the new deal in terms of where the

people will go. The first — and arguably the most important — is the Gateway

which will offer 18 to 24-year-olds a period of intensive guidance and counselling

which could last as long as three to four months. The aim will be to get as many

of those young people at the Gateway stage into the jobs which are currently

available. As you know — because we discussed it the last time I was here —

one of the ironies of the situation is that there are companies in Northern Ireland

who are finding it somewhat difficult to recruit people. I believe that this new

programme gives us a new chance to try to match those companies seeking to

recruit with those people — particularly 18 to 24-year-olds — who are looking for

57

jobs. Those that do not go straight into jobs will be offered one of four options:

the figures I am about to quote are approximate and subject to change, so I would

not want you to take these as being absolutely rigid. The aim will be to get

approximately 40% of them into employment through the employer option;

approximately 24% will go into the full-time training and education option which

can be full-time education and training for six months or maybe even up to 12

months, but again I stress we have still got to design the programme; 12% will be

offered places through the voluntary sector option; the fourth option will offer the

remaining 24% an employment position with training in the environmental task

force.

Mr McAlister: Would I be right in saying that the real motivator of this is

this 18 to 24-year-old age group?

Mr Walters: That is the prime target group. However, I must not

overlook the second target group which comprises those aged 25 and above who

have been out of work for more than two years. They will be offered an

employer option. In terms of the sequence of events, we are concentrating at the

moment on the 18 to 24-year-old age group, but work on the 25 years and above

will follow.

Mr McAlister: So those over 25 can be confident that somebody is

interested in them.

Mr Walters: Very much so. Over the last 12 months, we have done some

pilot work with employers in Belfast and also in the north west aimed at getting

the long-term unemployed into employment, and I am pleased to say that we have

had some success. A major part of the pilot has been counselling, forms of

training aimed at trying to restore self-confidence and self-esteem and, to pick up

your point, to encourage people to believe that they can get a job, and that the

labour market and employers have not finished with them.

Mr Loughran: I would just add that the £140 million which you mentioned

is, of course, additional to what we are already spending, so that there is no

suggestion that young people are going to become the exclusive beneficiaries of

such future programmes to deal with this problem. The other point is that the

subsidy that will be available to employers who take on a person over 25 will

actually be higher than that available to employers who take on a young person

between 18 and 25. So in that sense there is a recognition that those who are

older are of considerable importance in the overall scheme of things.

58

Mr Carrick: Mr Walters has touched on what I consider to be a very vital

element which is that if the programme is to be successful there must be positive

matching of supply and demand.

I get the impression that addressing the unemployment issue, in terms of the

social and economic impact on individuals — particularly in respect of the

long-term unemployed — is only one element of the equation.

The other side of the equation is of course the provision of an economic

culture, whether it is in terms of inward investment or the expansion of indigenous

business. Do you think that sufficient thought will be given to the second side of

the equation in terms of providing existing employers with the incentive to enter

into the programme wholeheartedly? Is co-operation being sought from existing

employers in a positive manner rather than just marketing some new deal? Are we

really reaching out to the employers, as partners, to get them actively involved.

What measures are afoot to address that?

Mr Walters: The answer is yes, we are.

We have already had direct contact with several major employers. We have

also had approaches from employer-representative organizations who want to get

involved and are ready to support us. For example, I made a presentation on the

Welfare-to-Work programme to the Small Firms Committee of the CBI on

Monday evening. We have been approached — which I think is very encouraging

— by employers who want to get involved. Over the next two to three months,

we will be organizing a series of seminars and focus groups and much of that

activity will be aimed specifically at employers. So, the answer is that I think we

have made a good start in getting employers on board. There is a lot of

enthusiasm and a lot of willingness out there and we will take full advantage of

that.

Mr Loughran: In several recent inward-investment cases we have

negotiated arrangements for employers to recruit a proportion of their work-force

from the long-term unemployed. So, as the labour-market situation improves, it is

easier in a sense to sell that sort of approach.

Mr Hutchinson: Is the aim of the Welfare-to-Work programme to make

people more employable, and, if so, how does it differ from what is already in

existence?

59

Mr Walters: Yes, it is. It differs very much from what is already available

through the Gateway provision. The Gateway offers a much more intensive

period of careers advice and counselling, with possibly some pre-employment

training — the kind of training in some of the pilot schemes that I have already

referred to which is aimed at self-confidence and self-esteem restoration. The

training in the New Deal will be much better structured than has been the case in

past programmes, with the possible exception of Jobskills.

Let us remember — as Gerry Loughran has already said — that we are

already well provided for in Northern Ireland in terms of the programmes which

are already being operated, to very good effect. We are encouraged when we

hear that in Great Britain work is going on to devise programmes which are

effectively copies of some that we have already. Take Jobskills, for example,

which is arguably two years ahead of what is available in Great Britain. Jobskills

will provide us with solid experience and information which will guide us in the

New Deal design work I have referred to.

Mr Hutchinson: That is the actual point of my question. We have these

schemes and, if we are going to have another one, will it be better? Will it be

beneficial in terms of making people more employable?

Mr Walters: We certainly hope so. I would be very disappointed if it does

not. That is certainly the objective.

Mr Hutchinson: So would you see the Gateway part of Welfare to Work

as being important?

Mr Walters: Absolutely critical. It is at that stage that we hope that we

can help to change the views of young people, in part, on unemployment. A lot of

people out there think, sadly, that they are never going to get a job and that is due,

in part, to their background.

Mr Hutchinson: How will it be different for those over age 25?

Mr Walters: They will be offered the Gateway as well. As you have

heard we have got £140 million extra provision so the provision available to these

people will be larger and we will be aiming to make it better quality than in the

past.

60

Mr Loughran: I would like to mention two things that are new, as far as

we are concerned. As Mr Walters rightly said, we have some pretty good

schemes here — I hope I am not being complacent when I say that but I think

that is demonstrated when you look at the results — but there are improvements

and benefits to be had from the new approach. First of all, there is going to be a

very concentrated effort to deal with 18 to 25 year-olds. We are going to try to

make sure that nobody in that age group is in a position where they are not being

offered something. That is the difference compared to what happens at the

moment in that we offer schemes but we expect people to respond to the offering.

Under the New Deal there will be a much more concentrated, focused effort to

engage 18 to 25 year-olds.

The other distinctive element is that both in the New Deal and in what we

will ultimately offer to the over-25 year-olds there will be a subsidy to employers.

That is not currently being offered in that particular format. That, too, will be

particularly distinctive and will probably engage employers in a way that has not

been the case before.

The Chairman: To bring some of these aspects together, you are

engaging with employers, you have a lot of training initiatives which have been

good, you have Gateway and you are trying to make an improved ‘offer’ to the

long-term unemployed. We met with Paul Gorecki of the Northern Ireland

Economic Council and his view is that the aspect of matching the long-term

unemployed with employers is very important. He quoted an example of 1:35 or

something like that in Sweden, whereas here it might be 1:92, that is 192 or 500

people for one adviser, which is a heck of a lot of people looking for advice. He

viewed that as being very important. It is no use having employers and having

training unless you are matching them. Have you any comment about how you

would respond to that recommendation made by the Economic Council?

Mr Walters: That is a point well made. We have not got down to thinking

in precise terms of how many —

The Chairman: But in principle.

Mr Walters: Yes, but the most important thing is quality. We are not

playing numbers games here. We will make sure that at the Gateway stage we

have got the resources that are needed and that includes additional staff resources,

whether they be inside the Training and Employment Agency or outside, if we

contract any of it out. Those are decisions to be taken. We will make sure that

61

there are the resources necessary to provide the service which the Government

has planned on the Gateway aspect.

The Chairman: We accept that quantity can, in a sense, sometimes

provide a better quality service but when you said that the point was well made by

the Economic Council, do you accept that it is a valid point that we do not have

enough advisory capacity for the long-term unemployed to channel them

appropriately? And if so, is that, or will that be addressed?

Mr Walters: The difference is in its intensity. We presently have within

the Agency a resource which is there to advise the long-term employed. The

service that they are getting at the moment is, I believe, a good one; the service

that they will get in the future will be an even better one — a substantially better

one because the period will be that much more intensive.

The Chairman: How would we view it as being better? What sort of

bench-marks would we look for to see that it is better?

Mr Walters: In terms of bench-marks and performance measures — and

I am not trying to duck the question — that is part of the work which remains to

be done. We have to set performance measures so that in the future we can be

sure that this initiative is delivering the results which everyone wants to see. If I

tried to give you an answer on that now I would be speculating.

Mr Loughran: It is true to say that if we are going to provide for large

numbers of 18 to 25 year-olds — and I think we are talking about nine or 10

thousand people who might be eligible for Gateway — and if we are going to

provide for older people who are long-term unemployed that that is

resource-intensive and we will need more people. I think that that is the point you

were making.

The Chairman: Will they be provided?

Mr Loughran: Yes. They will be provided.

Mr McBride: When you talk about the New Deal and its two parts, and

Welfare to Work, how large a part of the total Welfare to Work are these two

sections of the New Deal? Are there more down the pipeline or is this the heart of

it?

62

Mr Walters: Welfare to Work and New Deal are, in many ways, one and

the same. Welfare to Work is, perhaps, more overarching because there is a New

Deal for 18 to 24-year-olds; there is a New Deal for those over 25 years old; there

is a New Deal for lone parents and there is a New Deal for the disabled. Work is

continuing in London and it is just beginning to emerge that there will be some

additional provision for lone parents and for the disabled, on top of what we have

been talking about.

Mr McBride: That is what I wanted to get clear.

What implications are there in these schemes, for existing schemes?

Mr Walters: There are a lot of implications. As I indicated earlier, these

are issues which we have to resolve. For example, Jobskills is open to 18 to

24-year-olds and New Deal is targeted at 18 to 24-year-olds; there is scope there

for a lot of confusion. There may be an argument for steering all 18 to

24-year-olds into the New Deal so that everyone can more clearly understand it.

Mr McBride: These are things that still have to be thrashed out.

Mr Walters: Yes.

Mr McBride: Obviously, this is being driven by the national Government,

what scope is there for variation in Northern Ireland, and what consideration have

you given to our particular needs?

Mr Walters: There is a lot of scope. We have been encouraged to think in

terms of being not just flexible but of tailoring the programme to suit Northern

Ireland’s particular circumstances and needs, and we will do that.

Mr McBride: What direction do you think that might be going in?

Mr Walters: It is a little early to say. I do not want things that I am

saying to be picked up as being something which will definitely happen but for

example, and, I must stress, purely for illustrative purposes, if we were to say that

in future 18 to 24-year-olds will go into the New Deal, which means that all 18 to

24-year-olds would go into the New Deal, that would be different. That is the

kind of thing that we are looking at.

63

Mr Loughran: You can see the scope for integrating what we are doing at

the present time. Mr Walters has described the various components of the New

Deal; let us take one of them — the environmental work option. We already have

machinery in place for offering environmental work opportunities through

Enterprise Ulster, for example. Look at the voluntary sector which is already very

much involved in ACE and, of course, Jobskills which has become an increasingly

popular choice for unemployed people — and that is very good news when you

look at significant levels of training that are available through Jobskills. So I

would like to think that what we are doing well can be integrated into what will

ultimately be provided.

Mr McBride: The integration of the existing with the new is very much

where the debate is at, and we have a fair amount of scope to do it our own way.

Mr Loughran: I believe that we have. But, as Mr Walters said, there is

still much to be done, and I would like to think that those who are familiar with

what is already being done will encourage us to think in terms of as much

integration as possible.

The Chairman: We met with ACE and they have a very persuasive

argument that it is a social benefit, never mind an economic benefit, to have an

ACE scheme in operation. The ACE federation feels, to a certain extent, that there

is not full enough recognition given to the adaptability of that group throughout a

period of time during which they have changed, modified and tried to reflect.

Have you any comment on that?

My other point is more pertinent. The Economic Council’s view is that

funds should be transferred, for want of a better word, from ACE to others.

They would downgrade the importance of ACE for three or four reasons — the

creaming, the fact that the question was asked “Are you sure we are going to have

the unemployed employable after Welfare to Work?” One of the Economic

Council’s views is that they are no more or less likely to be employable after going

through ACE than without it. One of their arguments was that there had to be

better selective criteria. Have you any comments to help us in that dilemma?

Who might be on the right side of the balance of the argument?

Mr McAlister: I am concerned about the fact that there is a perception out

there that there are various lost generations. This scheme concentrates on 18 to

24-year-olds — and I am not saying that it should not do that — but there is a

feeling amongst people who are unemployed, and that is where it matters, that

64

nothing can be done for them. They feel that there might be some hope for that

other generation but that their generation, and others will end up either completely

unemployable or will be filtered off into temporary jobs in the voluntary sector and

the environmental sector which are, generally speaking, lower paid. I am a bit

concerned, like you, that whatever is undertaken in Welfare to Work will actually

bring that about. I am not saying it is designed to bring that about, but I want to

voice my concern now that that is what might happen a year or two down the

line.

Mr Walters: We are seeking to try to avoid that kind of situation. We

recognize the social benefits of ACE, although that was not the main reason ACE

was introduced 16 or 17 years ago. It was introduced to provide an employment

opportunity with some training, albeit limited, for those who otherwise would not

get jobs.

The work that we are doing under the long-term unemployment review is

continuing but at a slightly slower pace because of the New Deal; the New Deal

initiative is centre-stage. The New Deal caters for, as you will understand, many

of the people for whom ACE, the Community Work Programme and also

Enterprise Ulster is aiming. What we are proposing to do — and the Minister,

Tony Worthington, has reinforced that this morning at a meeting with the Task

Force — is to get the work on the New Deal at a sufficiently advanced stage so

that we can come to some conclusions and make recommendations on what

additional provision we should make for the long-term unemployed, based very

much on the long-term unemployment review and the work that has been going

on in looking at the Community Work Programme, ACE and so on. We hope that

there is going to be this extra provision now which should enable us to cater for

those people who fall immediately outside the scope of the New Deal.

The Chairman: My dilemma still remains unanswered.

Mr Walters: Sorry, I did not answer that part of your question. There are

two arguments here.

The Chairman: It is a genuine one.

Mr Walters: It is a genuine one. Both organizations believe very strongly

in the views that they have put forward. I guess the real answer will probably lie

somewhere in between. All of the points have been well made and we will take

them all into account.

65

The Chairman: If the answer does lie somewhere in between maybe it is

that ACE should remain — whatever “remain” means — but that the criteria for

admission onto the programme should be tightened. The Economic Council

seems to think that those who go onto ACE are those who are well-qualified

anyway and would, therefore, not gain much. Is it tightening criteria for the

applicability of ACE or is it shifting funds out of ACE to something else? In other

words do we need to re-invent or can we adapt what is already in existence?

Mr Walters: I think we adapt what is already in existence. If you talk to

the Northern Ireland Federation of ACE Schemes, as you have done and as we

have done, they say that, in their view, ACE has to change. That is not an issue.

It may well be — again, it is too early to say — that one of the measures which

will be adopted is that the admission criteria will be tightened but, also, that the

outcomes that we seek from such a programme will be more demanding.

Only 40% of people in ACE go into what is termed “a positive outcome”,

which is either employment, further training or education. That is comparable

with schemes elsewhere but it is not comparable with the best. There are

schemes, for example, in Glasgow which have a far higher success rate in getting

people from the programme into employment.

The Chairman: And yet they are the better-qualified that come on to ACE.

Mr Walters: Well, not always.

The Chairman: Statistics seem to indicate that.

Mr Loughran: There is some truth in that. There is a significant element,

for example, of females returning to work through the avenue of ACE.

The Chairman: I am thinking of one of the tables of the Economic

Council where it indicated the proportion of various qualifications in comparison

with the norm for the community. They had a higher than average qualification

level. If they are then not getting into work something requires adjustment.

Mr Smyth: You mentioned one-parent families. You also talked about

disabled people. Could you explain what you mean by that? It is not just the

mentally or physically disabled. There are many others who, like me, are dyslexic.

I know what I am talking about. There are people who find it very difficult,

66

especially today, when things are changing so fast with computerization and so

on; they find it difficult to cope. How would you deal with unemployed people

who may not come up to scratch?

Mr Walters: We will make special provision within the New Deal for

people who have special needs of any kind. As you say, there are so many people

from different groups who have special needs and that is going to be part of the

design work within the New Deal.

Mr Smyth: It is good to hear that.

Ms Heaton: My question related to how the New Deal was going to be

integrated with existing schemes and I think that has largely been answered. If I

may I would like to ask you a supplementary question on the time-frame for all of

this. You said that the focus for now is clearly going to be on the 18 to

24-year-olds and that you will be looking at provision for those over 25 later.

What does “later” mean?

Mr Walters: Well, we are talking of weeks. There is an awful lot of work

to be done. The aim will be to get the provision for the 25-years-old and above

group in place by the spring or summer of next year.

Mr Loughran: There is a danger here that we might inadvertently be

creating the wrong impression when we emphasize that the work is focusing on

the New Deal for 18 to 25-year-olds at this time. What we are doing at the

present time we will continue to do. This time next year there will still be an ACE

scheme. What size and shape it will be, I could not say for sure. We are also

providing a Community Work Programme, as you know, which we started long

before this present initiative as a different way of dealing with the needs of the

long-term unemployed. We will continue to offer training opportunities for people

who are over 25. I do not want the impression to be left that those of us who are

over 25 might be neglected in the future because I personally have a vested

interest in that. But that is not the case.

Mr McBride: What way do you see the funds splitting down in that

context — this £140 million?

Mr Walters: It is not clear yet. It is too early to say.

67

The Chairman: You mentioned earlier enhancing training. I know it may

be too early to say, but what have you in mind? Have you any thoughts from the

consultations you have had since your document came out in April as to what sort

of improved training you envisage for the young or for the unemployed?

Mr Walters: Well, the success of Jobskills, if I could mention that, is in

giving people skills, through the NVQ-based system, which employers need and

which they need to get jobs. Our thinking would be that in the future training

should, on the whole — not exclusively, but as far as possible — be based on the

NVQ system. It is for debate as to whether we should go for complete NVQs or

for units towards NVQs — there is argument for that. There is another argument

which says that we should concentrate on what are known as key skills —

literacy, numeracy, problem solving, team working, information technology and

communication. These are the sort of skills which employers repeatedly say are

lacking in the people that they are recruiting. We are building key skills into

Jobskills now and, incidentally, we are again ahead of the rest of the United

Kingdom in that regard. There may be a case for concentrating the training in

future provision in those areas and then allowing employers to continue the

training in the vocational areas that they need. That is just part of the debate that

is going on.

Mr Clarke: A lot of discussion has taken place about targeting employers

in the private sector. What part do you see employers in the public sector playing

in this?

Mr Walters: We do see them playing a part. There was an announcement

in London earlier this week which indicated that the public sector will play a part

in the New Deal and will offer employment places. That is the public sector in the

widest sense. That is yet another block of work which we have to undertake.

The Chairman: You mentioned earlier that it would take a little bit longer

to give us a response on the benefit trap aspect. Is there a possibility of getting a

response on your thoughts on the benefit trap? What do you mean by a little bit

longer?

Mr Loughran: I think that really depends on what comes out of London.

The tail cannot wag the dog. The benefit system is a national system. There is

very important work taking place in the social security department, as you know,

but the outcome of that I could not predict.

68

The Chairman: Have you any idea of the impact of the benefit trap in

Northern Ireland among the unemployed, whether it is low wages or whether it is

income support loss?

Mr Loughran: We have done some work on this and we would be glad to

let you see it. I think it will demonstrate, in very broad terms, that there may be

difficulties for an unemployed person who has several dependants. There is no

real evidence of there being a benefit trap in relation to single people or people who

have one dependant, for example. That is a much more difficult case to

demonstrate. If you look at the wages available in, for example, the clothing,

textile, the food and electronic assembly industries which together represent at

least 50% of all manufacturing employment, they offer good, competitive wages

and they should be capable of attracting people into work. But there does come a

point with a family of, say, four, five or six when there may be a problem. That

may be where a lot of the work on the social security benefits will have to

concentrate.

The Chairman: Have you any indication — I do not mean now — of the

numbers affected?

Mr Loughran: We can give you the research we have done on that.

The Chairman: How long would it take? I am not pushing you.

Mr Loughran: We will let you have what we have got. You can have that

in the next week.

The Chairman: Is there any way of helping us by giving us a summary of

your perception of all of that, rather than just firing a big volume or whatever at

us?

Mr Loughran: We will give you what we have got. Interpreting it is

another matter.

The Chairman: That is really what I am asking. Is there any way you

can help us? We are piggybacking you.

Mr Loughran: It is tricky stuff. We will let you have what we have got.

Some of the information is fairly straightforward in terms of understanding it.

69

The Chairman: Is it possible that we might piggyback on your services to

help us a little bit?

Mr Loughran: We will see what we can do. Let us put it like this —

when you have got it, you can ask us some questions.

The Chairman: Okay.

If I could mention that we got a fax from NIFAS about the second

imposition of cuts. With the first one there was a 25% cut until March 1998, then

a further reduction in ACE posts. Yet the fax said that it appears that the Training

and Employment Agency has failed to apply the cuts, given the level of ACE

places filled over recent months. NIFAS asked the question “Why did the agency

not introduce a freeze on recruitment between January and March 1997?” I am

just a little confused. Why are you making further cuts when you do not seem to

have implemented some others?

Mr Walters: To make it absolutely clear, there is no in-year cut here.

When the budget for ACE for this current fiscal year — 1997/98 — was

announced late last year, we made it clear at the time that the £29 million

approximately which is available to ACE this year would provide, on average,

approximately 5,200 places. As you know, the Forum — and your Committee, in

particular — has received representations from ACE schemes.

I would like to think that we have worked very hard to try to manage the

reduction in the least painful way possible. We have tried to be flexible. We did

not impose a freeze in trying to co-operate with schemes which had heavily

criticized the imposition of a freeze when ACE was cut the previous year. We

took their representations of the previous year very much into account and we did

not impose a freeze. We indicated that we would expect the reduction in ACE to

be achieved on a gradual basis to get us down to the average number, as I say, of

5,200 places this year. What happened in practice was that there was very heavy

recruitment into the ACE scheme before the start of the financial year, and the

reduction that we require has not taken place as quickly as we need it to. The

latest figures I have, which may be a week or two out of date now, show that we

have about 5,800 people in ACE. We do not have the budget to fund that number

of places, so we have to get it down. The freeze is prudent financial management

to live within the resources allocated to the programme.

70

We have talked to NIFAS and we have been very open with them and told

them the problem. They have indicated to us that they were aware of it. We have

indicated that, unfortunately, we see no alternative but to apply a freeze to get us

down to the level which, as I say, was planned before the year started.

The Chairman: That was the level you were hoping to get to in April

1997.

Mr Walters: That is correct.

The Chairman: But that has not happened and you are hoping to achieve it

by April 1998.

Mr Walters: We have to achieve it before then. We have to get the

numbers down to a level which is commensurate with the budget allocated to the

programme.

The Chairman: And you wish that to be completed in this financial year.

Mr Walters: It has got to be done. We have got approximately £29

million to provide ACE places this year. That means we have to get the numbers

down more quickly than they have been coming down so far. We have to live

within the budget and the action that we are taking is simply prudent financial

management.

Mr McAlister: My party and others are meeting with the Minister in

November and dates have been set to have a meeting on this particular issue at the

Government’s request. I know you will not have some of these structures in

place until April, but when will you have ready what you are going to do? When

do you think you will have that finalized? When will you have the thing mapped

out?

Mr Walters: I will be very disappointed if we did not have the vast bulk of

the work done by January. We have got to have everything in place before 1 April

— and that includes additional staff resources and budgets and systems.

Mr McAlister: When will you have your finished plan?

Mr Walters: It is difficult to be precise — end of this calendar year or

early 1998.

71

The Chairman: If I may just summarize what we have agreed. Mr

Walters, you will give us a summary of your response to our various elements of

the interim report. Mr Loughran, you will give us, as best you can, a concept of

the benefit trap and if we wish we can come back to you on that. We wish to

bring together all of the various facets of the deliberations we have had into a final

report that has some meaning and that reflects the various discussions we have

had and the various people we have met. There are some tensions. I do not mean

outward tensions; I mean mental tensions. We have to weigh up what ACE might

be saying, what the Economic Council might be saying as to whether or not you

are building in ACE or getting rid of it or changing funding, where Welfare to

Work fits in, how you will ensure that Welfare to Work will provide those who

are unemployed with a greater potential to be actually employable. We are

wrestling with this, and, as you rightly say, it is an on-going process. We want to

try to build our comments on Welfare to Work into our report. So that is where

we are. Thank you very much for coming. No doubt we will meet again. Thank

you.