Improving employment outcomes
Speech by Mark Hoban MP, Minister for Employment.
Reform
This year marks the beginning of a radical overhaul of Britain’s welfare system.
The introduction of Universal Credit will make work pay, at each and every hour…
… allowing us to start dealing, once and for all, with a culture of entrenched worklessness and welfare dependency.
4.6 million people -12% of the working age population - on out of work benefits.
1 in every 5 households with no one working, and 2 million children living in workless families - a higher proportion than almost any country in Europe.
This level of ingrained worklessness cannot simply be put down to the present state of the economy.
It points towards the failings of broken system - as my colleague Lord Freud has explained, a system where people cannot move into or progress in work, for fear or losing out.
This Government is taking vital steps to reform the welfare state, reducing complexity and restoring work incentives.
This will be a huge cultural shift for claimants.
But it will also be a huge cultural shift in terms of the labour market, and how the Department works.
So as we reach crucial milestones for delivering these changes, it is right that our employment support keeps pace.
Employment figures
Even in an immensely tough economic climate, the latest labour market figures show that it is possible to make progress.
In recent months, we have seen more people and more women in work than ever before.
Unemployment and youth unemployment falling.
Over 470,000 unfilled vacancies at any one time.
And more than 1 million more jobs created in the private sector since the election.
So whilst we are not complacent, and do not underestimate the challenge…
… these are promising signs that the steps we are taking to tackle unemployment are having an effect.
Labour market interventions
I believe Jobcentre Plus does a fantastic job in helping people back to work.
I have been struck by the motivation and commitment of our advisers, and the headline results are well known.
Over 70 % of Jobseeker’s Allowance claimants leave benefit within the first 6 months.
The Jobcentre Plus offer is closely targeted at helping this group - people claiming JSA who are either out of work entirely, or working less than 16 hours.
This Government has increased and broadened the employment support available, moving from a one-size-fits-all approach to one increasingly focused on the barriers faced by individuals.
From the Work Programme, to the Youth Contract, and the Innovation Fund, all this is about more tailored, flexible support…
… harnessing the knowledge and expertise of those in the private and voluntary sector, as well as Jobcentre Plus advisers…
…in order to give claimants the best prospects of getting a job.
Universal Credit
Under Universal Credit, the number of claimants subject to this intensive jobsearch regime will be extended by up to 1 million…
… driven by increased take-up and a focus on each individual looking for work rather than just the main claimant in a household.
As in JSA now, those who can work but are unemployed or working very few hours will required to look and be available for work, with face-to-face fortnightly signing.
But for others…because Universal Credit reworks the boundary between out of work and in work benefits… their responsibilities can no longer be set simply according to which benefit people are claiming.
Instead, individuals will face a set of responsibilities appropriate to their capability, circumstances and work potential.
Self-employed
Take self-employed claimants.
The tax credit system as it stands allows people to exploit a hobby, by claiming to be self employed, and top up their income through tax credits.
They can earn nothing, subsidise their income through state support…
… without any expectation that they increase their earnings and move towards self-sufficiency.
This flies in the face of a principled welfare system.
Under Universal Credit, we are closing the loophole.
To stop individuals from under-reporting their earnings or living off benefits whilst making little or nothing from self-employment…
… we will expect people to earn a minimum level of income from self-employment when assessing their Universal Credit award.
The system will also better support those entrepreneurs who are taking steps to make a living from their business.
All newly self-employed claimants will receive a Universal Credit award based on their actual earnings…
… with appropriate conditionality so that they can devote their time and resources to developing their businesses, incentivising them to make it a success.
From dependence to independence
From 2014, we will establish Universal Credit as the primary means of support for those who are in work, as well as those out of work…. replacing working tax credits altogether by the end of 2017.
Until now, this group have had no work-related expectations placed on them at all.
There is no encouragement for people in low paid work to increase their hours or earnings.
Once people move into some work they are largely forgotten - with little or nothing in the way of labour market interventions to help them progress.
Yet once Universal Credit is fully implemented, we estimate that there could be around a million people who are working but could do more.
It is my belief is that where they are able, those in the welfare system should be on a journey.
A journey which helps them move from dependence to independence.
On this basis, it is right that we consider how conditionality might help people…
… move up the earnings scale…
… reap the rewards from improved work incentives…
… and become more self-reliant.
Universal Jobmatch
This is ground-breaking territory, with real scope to develop innovative solutions.
Universal Jobmatch, for example, is already transforming the way claimants access our services - with online job searching through DWP on a scale never seen before.
The system can already be used by people in employment, to find a better job or more work - and there is an exciting opportunity to develop this further.
Automatic job matching means the system works 24/7 to find jobs that fit with people’s skills set or supplement their existing employment…
… so their CV is working for them even whilst they sleep, a revolution from the old way of noting down vacancies in newspapers, or coming into jobcentres and using “jobpoint” machines.
Universal Jobmatch also provides information on individuals’ job search activity, including their CV and application history…
… enabling us to segment different claimant groups, in work as much as out of work - identifying those who are highly self-motivated to find work, and those who are not.
This, in turn, will revolutionise the way Jobcentre Plus interacts with claimants - with scope to move much more of our contact online especially valuable for those who are in work but we think could earn more.
Exciting prospects
Once Universal Credit is rolled out, part-time workers could also receive monthly statements telling them how much better off they would be if they increased their hours…
… or texts telling them how progressing in work would mean more money in their pocket.
An online calculator could also allow claimants to find out within seconds how much better off they would be from boosting their hours.
These are just some of the ideas we are considering.
We know there are many more possible options.
But as DWP moves increasingly towards digital by default, the rapid pace of technological change presents a real opportunity…
… both to radically alter the way we interact with people, and transform the services we offer.
Call for ideas
At present, even across the globe, there are almost no examples of existing practice…
… no evidence about what works in terms of supporting people in work to progress.
Yet employers already use training very successfully to improve their employee’s skills and earnings and grow their business as a result.
Behavioural economists and social psychologists are already expert in understanding people’s behaviours, and encouraging a positive response.
So the question for us is we harness this knowledge, as well as that of others in the field…
… from think tanks, welfare to work providers, academics, charities, application designers and those at the sharp end of delivering existing services.
We need an opportunity and a forum to answer some challenging questions:
How best can we support employed claimants to progress in work?
How best can we work with employers to promote training, development and progression opportunities?
How best can we monitor and evaluate any new interventions, testing that they have the desired effect?
Today we are sending out a call for ideas - the more innovative and radical the better.
I urge you, and the others beyond this room, to bring your ideas and answers to the table now.
Your input is vital.
We look forward to hearing from you.