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The crisis in the Eurozone and indications of worsening global economic conditions could hardly make for worse news for the Coalition. From the United States Congress to the TUC Conference, the cry of ‘jobs’ is getting ever louder. Getting down unemployment in the face of strong economic headwinds will be extremely challenging On the supply-side, there is actually a broad consensus on how to do this: target appropriate, timely support at those who need it to get back into sustainable work – but without wasting taxpayer money by providing such support for those who do not need it.

Such a system has long been advocated (most conspicuously in Paul Gregg’s 2008 report Realising Potential) but never adopted. Instead, Jobcentre Plus continues to identify claimants who require additional support primarily on the type of benefit they have been claiming and the length of claim – the greater the length, the greater the support.  This is being replicated in the Coalition’s new Work Programme.  The main argument in defence of this approach is that it will give ample time for the claimant to find a job without the cost of private providers. But it means that those who are furthest from the labour market have to wait up to a year to get the help they need. By this time disadvantages have deepened, motivation has been sapped and significant new barriers to work will have arisen.

Jobcentre Plus’ approach to employment support remains stuck in the labour exchanges of the 1920s – impersonal, highly bureaucratic and very poor at matching jobs, people and demand for skills.  Policy Exchange’s new report advocates a much more targeted approach.  The first step is gathering more information on claimants.  Most obviously, this means asking the unemployed more questions about their needs and circumstances – rather than (as at present) administrative data based around benefit eligibility. But it also means using more sophisticated techniques pioneered in the private sector. With as little as a postcode, credit rating agencies and insurance companies can make extremely accurate predictions about an individual’s likely behaviour. There is no reason why these techniques should not be used to predict how long a claimant will be on benefits and target appropriate support from day one of a claim.

However, it should be noted that we are not downplaying the role of jobcentre advisers – indeed, we argue they are far too weighed down with paperwork, arbitrary targets and poor incentives - we must allow advisers more discretion over the interventions they make.  Equally it should be stressed that Jobcentre Plus is actually quite effective at providing a standardised service – but we must recognise that it has proven poor at providing employment services.  These should be provided independently – either by mutuals, charities or the private sector – by people who have developed the skills and expertise to deliver them.

Developing this new approach will involve creating a completely new agency – CommunityLink – which will act as the government’s primary point of contact for citizens to access a whole range of supporting social services - like childcare, skills and careers advice. Joining up these services will save money too - in Australia, Germany and the Netherlands administrative savings have been twenty percent and overall costs been cut by up to half. We estimate efficiency savings alone for the UK will amount to £700 million – not including reduced welfare rolls, greater tax revenues and savings for public services like the NHS and the police.

We do not suggest that these reforms will solve the unemployment problem alone. These techniques will take years to perfect – we suggest they are piloted at first.  But a recognising the need to reform our outdated jobcentres would be an excellent start.

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Written by Ed Holmes   
Wednesday, 28 September 2011 14:58

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Dr Elaine McMahon CBE, Chief Executive and Principal, Hull College, Chair, Association of Colleges Sustainable Futures Group



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