We Can Work It out Local Employment and Skills for Economic Recovery Nick Hope and Anna Turley

We Can Work It Out Local employment and skills for economic recovery Nick Hope and Anna Turley www.nlgn.org.uk New Local Government Network (NLGN) is an independent think tank that seeks to transform public services, revitalise local political leadership and empower local communities. NLGN is publishing this report as part of its programme of research and innovative policy projects, which we hope will be of use to policy makers and practitioners. The views expressed are however those of the authors and not necessarily those of NLGN. © NLGN January 2010 All rights reserved Published by NLGN Prepared by NLGN First floor, New City Court, 20 St. Thomas Street, London SE1 9RS Tel 020 7357 0051 . Email [email protected] . www.nlgn.org.uk We Can Work It Out Contents 3 Contents Acknowledgements 4 Foreword 5 Paul Carter, Leader, Kent County Council Executive summary 7 1 A new and challenging economic context 15 2 The employment and skills system(s)? 36 3 Integrating employment and skills governance 50 4 Building the ecosystem around the individual 68 5 A Total Place approach to invest-to-save 89 6 New local economic and skills activism 97 Conclusion 119 Appendix 1 Invest to Save methodology 124 Appendix 2 Acronyms 125 Partners 126 4 We Can Work It Out Acknowledgements Acknowledgements The authors would like to extend their thanks to A4e and Kent County Council for their support and intellectual input, without which this report would not have been possible. We are also very grateful to all the people that submitted case studies, took part in interviews and attended research seminars in Manchester and London. We would like to thank Stephen Houghton, Leader of Barnsley Metropolitan Borough Council, Amanda McIntyre, Director of Employment Related Services Association, Debbie Scott, Chief Executive of Tomorrow’s People, Sue Dunn, Joint Head of 14 - 24 Innovation Unit of Kent County Council and Caroline Bostock, Local Government Business Development Director of A4e. Their insightful advice, challenge and support has been invaluable. Thanks must also go to Vivek Bhardwaj, Amy Williams and the rest of the NLGN team. Finally, we would like to give special thanks to Julie Redline and James McHugh for all their help with the research. Of course, the views in this report are those of the authors and any errors and omissions are ours alone. Nick Hope and Anna Turley January 2010 We Can Work It Out Foreword 5 Foreword As Leader of Kent County Council I am delighted to introduce ‘We can work it out: Local employment and skills for economic recovery’ an NLGN research report jointly sponsored by Kent County Council (KCC) and A4e. The report is a timely intervention into the national debate about how we can best meet the challenge of ensuring our young people and the general workforce have the skills necessary to compete in a global 21st century economy, where new economic superpowers such as a China, India and Brazil are coming to the fore. The evidence is increasingly clear that as a nation, too many of our young people and the general workforce are lagging behind in terms of skills compared to our major competitors. The risk to our economy of not getting the skills agenda right is simply far too great to ignore. At the same time, we must ensure that those who have fallen into benefit dependency are incentivised to work and are given the information, advice and guidance to access skills training so that they can successfully enter the employment market and reduce the out-of-work benefit bill that, when public money is increasing limited, is no longer sustainable. At the heart of the issue lies a structural problem with how training is currently delivered. Welfare to work services often fail to adequately meet individual skills needs and are difficult to access, whilst the skills sector generally is too fragmented, with various agencies having overlapping responsibility for young people, adult skills, young offenders, apprenticeships, careers advice etc. This lack of co-ordination and top down delivery by a multitude of unaccountable national agencies and quangos means that too little attention is paid to delivering for individual and community needs, and instead too much emphasis on national strategies and targets. The main thrust of this paper, that a more integrated approach to worklessness and skills at a sub-regional level will deliver services focussed on local economic need, deliver a more personalised approach around the individual and offer up savings is one that the no political party can ignore. 6 We Can Work It Out It is an approach that I wholeheartedly support. The only bodies at the local level that have the ability to understand the complicated and diverse needs of local economies are local authorities, who acting as a strategic commissioner can co-ordinate provision to ensure local needs are met and reduce the excessive costs of too many agencies providing similar services – often badly. Kent County Council firmly believes that we have the track record to be able to deliver the skills and welfare reform agenda at a local level. We are not alone, as many of the case studies in this paper set out, the broader family of local government, acting collectively in partnership across economic sub- regions, has the capacity and capability to deliver this national agenda. The centralised, fragmented approach to welfare reform and skills has failed for too long. Reform has been well intentioned but piecemeal. It is time for a more radical solution. Paul Carter Leader, Kent County Council We Can Work It Out 7 Executive Summary The recession has hit hard. Despite good progress in recent years that had seen the UK reach record employment levels by the summer of 2008, the labour market was not sufficiently resilient to withstand the economic earthquake that struck. Unemployment with all its far- reaching, life-shattering consequences has reared its ugly head again. We cannot afford to repeat the mistakes of the past. Previous recessions have left us with legacies of wasted lives, cultures of dependency, low aspiration and intergenerational poverty. The devastating consequences of unemployment are proven beyond conjecture. It can destroy communities and has a drastic impact on the health, wealth, happiness and long-term futures of individuals and families. As with previous recessions, this economic downturn is playing out in different ways in different places. Certain areas are being hit harder than others and within those communities particular groups, such as young people and the long-term unemployed, are facing particular challenges. We must ensure that we secure our economic recovery and long-term health and prosperity as a nation by improving the educational opportunities that people have open to them and by better supporting people into work. More than that, we must build local economies that are more resilient, with work forces that can survive future economic challenges and flux. This report makes the case for streamlined and integrated employment and skills governance, with local authorities, working closely with delivery partners and employers, driving the agenda forward in a more strategic way. To tackle the particular challenging issue of worklessness we call for a far more locally driven and personalised approach that is responsive, democratically accountable and proactive. Investment should be made in earlier intervention, keeping people in jobs, getting them back into work when they can, and preventing them falling into benefit dependency, with all its consequent human and financial costs. The first chapter of this report provides an overview of the unemployment situation we faced before the recession and the new economic context the 8 We Can Work It Out nation finds itself in. We highlight the different, indeed unique, challenges that each locality faces and how certain groups have been particularly hard hit, such as young people and the long-term unemployed. These highly localised problems need local solutions. The scale of the challenge many communities face is immense and radical action is needed because there are profound social and economic costs of unemployment that we cannot afford to pay. Chapter two considers the actions that the Government is taking to try and tackle unemployment and skills shortages. We take a critical look at the main planks of forthcoming reforms and also consider the key Conservative Party proposals. We welcome some of the reforms that are being made, but highlight how the complexity and dislocation within the system make it unfit for purpose. This chapter provides detailed scrutiny and analysis to draw out some of the primary criticisms of the planned employment and skills system. The system has been criticised for being over complicated, but new reforms threaten to make the landscape even more complex and risk creating further unwieldy relationships between a plethora of agencies. At the same time, local authorities will have greater accountability and will be under new statutory duties to ensure participation up to the age of 19. Yet other bodies will maintain some of the powers and tools needed to deliver this extension to the education leaving age. There is also the potential for sharp and disruptive cut-offs in provision and services with artificial age-lines for young people as they make the transition from 14 to 19 programmes to adult (19 plus) programmes. These do not support moves towards a more personalised and tailored approach built around the barriers to the employment and skills needs of the individual. Moreover, though the Flexible New Deal (FND) has helped to consolidate a number of existing welfare to work programmes, there are concerns that the system remains too fragmented and the commissioning process too centralised. The third chapter sets out our proposals on how these problems can be overcome and recommends a new, streamlined and better integrated model of governance for the employment and skills system.

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