Decisions Facing Rachel Reeves on 8/5/15 (15: Are Soft or Hard Skills Best for Jobseekers?) #GE2015

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Number 15: End the Dispute as to Whether Soft or Hard Skills Provision is Best for Jobseekers

The resolution of this long running dispute is not one for DWP alone, but there is evidence that employers, when seeking new staff, rate soft skills over hard skills when deciding whom to employ. Therefore, arguably most of the money spent on hard skills training for those out of work does little or nothing to help them get into work. Why not, therefore, focus Government spending for those out of work on soft skills and, given that such provision is relatively cheap, plough the remainder of the money into supporting the development of skills in SMEs.

Incidentally, the Voluntary and Community Sector and niche private providers are well placed to deliver effective, flexible and personalised soft skills support in accessible, welcoming community venues, unlike the usual suspects.

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Decisions Facing Rachel Reeves on Friday 8th May 2015 (14: Is DWP Fraud Washing Its Face?) #GE2015

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Number 14: Is DWP Fraud Washing Its Face?

A good few years ago now, I attended a briefing being delivered by Marks and Spencer. I was working alongside colleagues helping to fill vacancies at stores opening at the (then) new Fort Retail Park. A manager had come along from M&S to tell us about her company and their recruitment methods.

We found the presentation useful and detailed enough that we had few questions. However, the manager had referred to something called shrinkage. A colleague asked what this meant. The manager described shrinkage to us as a retail sector euphemism for theft by customers and staff. My colleague became rather agitated when she realised that during the presentation she had been told that M&S tolerated shrinkage of up to 5% at store level! Only if it went over 5% would M&S send in the heavy mob. Businesses tend to lose shrinkage in their bad debt provision.

DWP, even today, cannot get social security fraud above 0.5% of the total budget. Now the public sector is always being told to be more like the private sector so should DWP disband its fraud teams? Perhaps the staff should join Her Majesty’s Revenue and Customs to investigate tax fraud? Certainly, there is an argument for scaling back DWP’s fraud staff as the savings they claim as a result of their activities are mostly notional.

However, as it would be politically risky to disband DWP’s fraud teams, perhaps they might concentrate their efforts on tackling collusive employers and professional criminals, instead of expending a lot of effort on the small fry?

A collusive employer is one who knows someone is committing social security fraud and, partly employs them for that reason. They may well allow an individual time in which to sign on and help them work around other requirements placed upon them by the Jobcentre. An employer willing to collude is more than likely to be committing tax fraud, not complying with Health and Safety legislation, not paying the National Minimum Wage and so on. A DWP crackdown on collusive employers would arguably be of greater benefit to taxpayers than its current operations.

There are organised and not so organised criminals who are using social security payments as capital for their activities. We had a gang within a stone’s throw of the Jobcentre where I worked. They were to our knowledge, working and signing, running a ‘chop’ shop; drugs dealing and engaging into anti-social behaviour (and not just in the Jobcentre). They knew we knew and they knew we knew that they knew, as did the police, Trading Standards, Inland Revenue … No one would do anything unless they were confident that they could charge the gang and put them away. I contend that tackling this sort of fraud would be a better return on the taxpayer’s investment in DWP’s fraud teams than its current activities.

Decisions Facing Rachel Reeves on Friday 8th May 2015 (13: Digital by Default) #GE2015

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Number 13: Digital by Default

I have already posted on this topic, The War On Welfare, Digital by Default and DWP! And, although these are not the latest Digital Divide figures, Beyond the Barriers: UK Internet Access Quarterly Update, 2013 Q4 (The Digital Divide), they do show the challenge facing Government and DWP, in particular, when it comes to making the move to delivering government services online an inclusive one.

In the interest of equity for all, Government must recognise that some people, whatever level of help they receive, will never be able to fully access those services it delivers online. As a consequence, a new SoS will need to make sure that DWP not only recognises this fact, but ensures that individual inter-actions between its staff and clients are conducted in the light of it.

Decisions Facing Rachel Reeves on Friday 8th May 2015 (Number 12: Universal Jobsmatch) #GE2015

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Number 12: Universal Jobsmatch

DWP commissioned the world’s experts in designing jobsearch/jobmatch websites and then saddled them with a specification designed to achieve opportunities for sanctions at the expense of effective jobmatching.

Re-commission this company and make them work with a design group made up of jobseekers, employers and Jobcentre staff to design a new system. Between them, they should be left to put together a package designed to make the UK’s largest virtual labour market a reality for these three key stakeholder groups. Ensure that the group includes a representative sample of jobseekers, employers and Jobcentre staff. The latter should be drawn from big city, town and rural offices. None should be above Band D and all should have worked with employers, not just referred people to them.

In addition, resurrect all the quality checks for employers placing vacancies on UJ as part of a beefed up employer service. DWP has suffered severe reputational damage from its light touch approach to vacancy handling via UJ. We are just lucky that no one has been severely hurt, if not killed, because of this lax regime. There were some, thankfully few, incidents with dubious employers before UJ came in. DWP should exercise a duty of care to all those using UJ, employers and jobseekers, to ensure that it is not exploited by anyone using it. I include employment agencies amongst potential abusers. Do this right and DWP rebuilds trust with both jobseekers (many of whom are not on JSA) and good employers, many of whom may well be wary of using UJ.

Decisions Facing Rachel Reeves on Friday 8th May 2015 (11: Effective Partnership Working) #GE2015

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Number 11: Effective Partnership Working

Just do it! Moreover, by partnership, I do not mean, in DWP speak, a contractual arrangement with a provider or supplier. I am talking about real working in partnership across all sectors, particularly the Voluntary and Community Sector, that builds up mutual respect and support.

I could write a small book, well pamphlet, on partnership, how to do it (and not), the benefits (and the costs) and the goodwill that flows from just getting out into the local community (and, by extension, labour market).

If you do partnership work right (and I think I was getting there by the end) then the sum of the parts becomes greater than the whole. Partners may still agree to disagree, on occasion, but that is often an improvement on their not agreeing to be in the same room together.

Again, for DWP to go back to where it was before May 2010, it requires a culture change and recognition of the value of officers like me. We had over decades built up credit and goodwill for DWP in Birmingham and Solihull through partnership work. However, after May 2010, one got the impression that we were a bit of a nuisance, even perhaps an embarrassment. We had got into the habit of seeing the bigger picture and (off the record) we had been involved, some of us at least, in guerrilla warfare with the usual suspects. You will not be surprised at our reaction when the list of Work Programme providers was announced.

It will not be easy for DWP to regain trust through partnership work, but as a colleague (who defected to Pertemps) once said, “If it was easy then it wouldn’t be us doing it!” Rather sums up the work of most of the real public sector, in my opinion.

Decisions Facing Rachel Reeves on 8/5/15 (No 10: Reasoned Approach to Promoting Self Employment) #GE2015

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Number 10: Time to Take a Reasoned Approach to Promoting Self Employment

Self-employment is not all it is cracked up to be, particularly if you write to the Prime Minister saying that you are aiming to be the next Richard Branson. And believe me, they did and said they signed up fully to the enterprise culture too. They usually ended their letters by asking Mrs Thatcher for a grant to help set up their business. I blame our schools for not explaining enough about the meaning of irony!

About ten years or so ago, Birmingham City Council hired a firm of reputable consultants (yes, they do exist) to review its spend on enterprise support. The consultants’ report came to a very definite conclusion that the City got a bigger return from every pound spent on support to existing businesses, mainly SMEs than it got from encouraging new business start-ups. Logically, the City should switch the bulk of its resources to the former. I have no idea what happened to the report.

The survival rate, Esther McVey, for new businesses is very low and, I suspect the attrition rate is highest amongst those started by young people. Sir John Harvey Jones (the one and only Troubleshooter, Sir Digby Jones) said, in my hearing, that young people were, in his experience, least likely to do well in making a new business a success. He counselled against anybody doing it until they had put their children through university and paid off their mortgage. The chap had an awful taste in ties, but he was full of empathy for those trying to make a go of being in business.

Esther McVey has been cock a hoop about the start up rates for DWP’s New Enterprise Allowance. Well, I have an inconvenient truth for her, you do not measure the success or otherwise of a new business start up until the end of its third year of existence. It goes like this, you expect to make a loss in the first year, you hope to break even in the second and you need to make a profit in the third. If you have not made a profit at the end of year three then that is the point where many decide to go out of business. I imagine that Ms McVey hopes to be elsewhere when the bulk of the businesses set up under NEA reach their third anniversary.

There is nothing new about this insight, though. When I started working for DWP’s predecessor back in 1986, the Division in which I worked was undertaking a review of what was then called the Enterprise Allowance Scheme. The review concluded that whilst the overall number of businesses in the economy may have increased so had the turnover. A particular example being the life cycle of window cleaners in East London, courtesy of EAS. You set up your round with your subsidy of £40 (at 1986 values) per week; you kept your prices low and put some of the established business out of work. Then your 52 weeks of £40 per week ended and a new window cleaning business started up in your patch with the help of EAS.

Scroll forward to 1998 and the launch of New Deal for Young People. There was no fifth option within NDYP. There was no self-employment option, either, until the Prince’s Trust and others got to work. NDYP assumed that those wanting to go self-employed would do so without encouragement, using existing provision and support. There was a view, akin to Sir John’s, that encouraging young people to take on debt etc had no place within New Deal. However, the Trust, as it often does, got its way, but not completely. Labour designed the Self-Employment Routeway so that it was very hard for most would be entrepreneurs to access its support. Arguably, those who went through the Routeway would probably have gone into business without its help.

A throwing ordure against the wall, in the hope some sticks, policy of encouraging self-employment has no place in any sane approach to helping people off social security. Any new approach needs to adhere to the principle behind that adopted in 1998. Fewer business start-ups, ones that are more likely to succeed than not will be good for the economy, the (mental health of the) would be entrepreneurs and the taxpayer.

As an aside, unfortunately, a number of funding regimes I have worked with have given more brownie points to business start-ups than business assists, despite the evidence I have cited above.

Decisions Facing Rachel Reeves on 8/5/15 (No 9: Refocusing Employer Support on Job Creators) #GE2015

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Number 9: Refocusing DWP’s Employer Support on the United Kingdom’s Job Creators

Here are some figures for you:

Micro Enterprises (0 to 9 employees) in the UK = 1,912,455
Small Enterprises (10 to 49 employees) in the UK = 209,710
Medium Enterprises (50 to 249) in the UK = 36,505
Large Enterprises (250 employees and over) in the UK = 8,915

I suspect that it is not for nothing that Ed Miliband has been talking a lot about Small and Medium Size Enterprises (0 to 249 employees) in the last six months or so. If each of them were to create just one job that would result in 2,158,670 new jobs (in gross terms). Not only are SMEs the driver of economic growth within the UK, they are also, where the vast majority of voters in the private sector are employed.

DWP has always had a bit of a blind spot with regard to SMEs. Many good intentions about help and support that too often have foundered on the fact that assisting a new Tesco recruit its staff results in more job entries (or off flows) than pro-actively helping an SME, for example Joe and Josephine Bloggs Engineering, fill a setter/machine operator’s position. And guess which one of the two (up until now) has had more political clout?

However, big businesses with clout are not as popular as they used to be and re-focussing support on SMEs is unlikely to be unpopular. In fact, it should be good for the economy, jobseekers, the companies themselves and tax revenues. Again, such a move requires a change of culture within DWP with a greater emphasis on pro-active support for SMEs at the expense of big companies.

Yes, large businesses do create jobs (though never as many overall as they claim), but if anyone has the resources to find the right people then they have them. I fail to see why companies paying low rates of corporation tax, practising tax efficiency and seeking lower business taxes should then be allowed to pick my pocket to fill ‘new’ jobs in their businesses so they may pay a higher dividend to their shareholders. Shareholders that I bet also practise tax efficiency.

I want to see my tax pounds going to help businesses who are rooted solidly in their local communities. Who knows, we might finally see the march of the makers, might we not?