Keynote Speech: Dave Simmonds OBE, CEO of Centre for Economic & Social Inclusion, IntoWork Convention 2015

20 July 2015

Dave Simmonds OBE, Chief Executive of the Centre for Economic and Social Inclusion, delivered the following speech to the IntoWork Convention on 14 July 2015.

 I want to start by paying tribute to the hard work and dedication of everyone working to help unemployed people find work – improving opportunity, improving lives. It’s a sad fact that you often get little thanks. The media is always ready to have a go, claimants are fearful, and the push for performance is relentless. We should recognise more, and value more, all those who are on the front-line, trying to make this country more inclusive – providing a safety net when one is needed and opening doors to new opportunity. So to all front-line staff wherever they work – a round of applause.

New government, new manifesto commitments and the latest Budget, these set the challenges for tomorrow but first let’s reflect on the changes in the labour market, in particular, since the Work Programme opened its doors in June 2011:
• The wide unemployment measure has fallen from 2.4 million to 1.8 million today – a drop of 25%
• JSA was 1.5 million and is now 750,000 – a drop of 50%
• Youth Unemployment was 900,000 and is now 750,000 – a drop of 16% • There were 5 unemployed people for every reported vacancy, and it is now 2.5 – a much tighter labour market.
• However, the number of ESA claimants was 2.6 million and it is now 2.5 million – a drop of just 4%, but numbers have been rising since summer 2013.

This is the backdrop for our discussions at this Convention and the implementation of the labour market manifesto commitments of the new government.

First, a commitment to full employment – agree 100%, so long as its inclusive growth and inclusive full employment, as we said in our report for the TUC last year.

Second, halve the disabled employment rate gap – agree, we calculate this will mean helping almost 1 million people with health conditions and disabilities into work over the next 5 years. We set out last year how this could be achieved in our Fit for Purpose report, which many of you were involved in.

Third, a new Youth Obligation for 18-21 year olds – agree, we have always advocated ‘learn and earn’ for young people. But removing Housing Benefit is a mistake – it could end up costing more than it saves.

Fourth, an additional 3 million Apprenticeships – agree, so long as young people and the unemployed have greater access, and more Traineeships can provide increased access for the low qualified. And let’s not forget we also need to promote lifelong learning so that adults can make the best use of their talents and boost productivity.

Fifth, provide significant new support for mental health for claimants, and review how best to support those suffering from long-term yet treatable conditions – agree, so long as this is integrated with back-to-work support. Take down silos, don’t create new ones. And tread carefully before proceeding with proposed new sanctions for vulnerable people.

Sixth, devolving responsibilities to Scotland, Wales, cities with Mayors and potentially other areas – agree, whilst we know DWP is cautious, fearing a loss of performance and an increase in costs, we also know that giving more powers to local economies is a key part of the governments Productivity Plan, announced last week. I haven’t mentioned the Work Programme, or other employment programmes. That’s because they never really figured in the manifesto. Nonetheless, we know there are active discussions within DWP about what should replace current programmes after April 2017. Priti Patel has some big decisions to take, and soon.

Based on the new labour market context, the lessons from current contracts, and the manifesto commitments, we think the guiding principles for new contracts need to be: First, doing better and more for ESA claimants. Even with fewer than anticipated in the ESA Work-related Activity Group we predict ESA referrals to the Work Programme will outnumber JSA referrals at some point in the next two years (all things being equal). We also need a much better, and voluntary, offer for those in the ESA Support Group. Delivering this will need much more integration with health services, especially at the local level.

This is a major challenge requiring pioneering policies and innovative organisations to deliver. Remember, twice as many are joining the Support Group compared the WRAG group. Failing to recognise this will take us back to where we started in 2005, with the vast bulk of people on sickness benefits not getting support and poor outcomes for those that do. Second, delivering for long-term JSA claimants who are smaller in numbers, but more challenging to find work. Improving employability for people with multiple disadvantages will need more integration of services and budgets. Here we have to ask how the expanded DCLG Troubled Families programme will fit? After claims of success, it will be expanded to 400,000 over the next 5 years. It will clearly be absurd if both DWP and DCLG end up knocking on these people’s doors – if they do it will add a whole new meaning to a ‘troubled family’. Third, doing more to tackle low skills.

A qualification deficit is a significant disadvantage to a claimant. Meeting employer demands for ever more qualified staff is a challenge for the whole country. Employment programmes must play their part to increase productivity by boosting basic skills and improving qualifications. Improving qualifications boosts employment chances. Improving learning, improves jobs and well-being. This is particularly important for young people. There is a potential for an exciting new programme to help workless young people – many of whom have been failed by our education system. The Youth Obligation needs to deliver on this – tackling jobs and skills together. Finally, tackling low pay by improving progression. Much has been written already about the new National Living Wage, but raising the wage floor by 50p will not solve our endemic problems with low pay – where one in five workers earn below a living wage and many struggle to escape. And there is always the concern that it could lead to larger job losses than predicted. We are developing with the Trust for London new pilots to test approaches to tackling low pay, and evaluating others for DWP. As a country, we should be more ambitious in promoting Career Advancement – not just ‘making work pay’ but ‘making careers pay more’. One theme running through all of this is ‘integration’. With health, with skills, with specialist services, with local initiatives, with LEPs on the European Social Fund. Always easy to talk about integration, much more difficult to deliver. But we can’t afford not to deliver in the future, because: First, the forthcoming Spending Review will be tough – especially tough on the unring-fenced budgets of DWP, BIS and local government. We expect programme budgets to go down significantly and that there will be a wider use of PBR and Social Impact Bonds. SIBs may be able to supplement provision but they cannot replace mainstream provision. Second, the cuts in welfare will have a direct impact on the incomes of all the families and individuals we work with. It is no surprise the IFS found that the Budget hit the poorest hardest. Of course the National Living Wage for over 25s is welcome but it will not compensate for the loss of tax credits. We shall see: • Significant income reductions next April for some families • A relative decline in income for all claimants for the next 4 years • Reduced incentives to start work, especially for workless families • Reduced incentives to work more hours or even to progress in work • And, a rise in child poverty. We have always supported the principles behind Universal Credit, but the Chancellor’s changes threaten to undermine ‘making work pay’. Claimants (both in and out of work) will be uncertain, nervous and fearful. Many local authorities, housing associations and providers responded to the last reforms with increased support and advice for those most affected. We need to do that again, and re-double it – many more will be affected with consequences for children, increased demand for food banks, and more in crisis. We’ve carried out extensive research on local impacts of welfare reform, and one of our clearest conclusions has been that where we work together – across employment, welfare, housing, health and skills – we achieve so much more together than when we work apart. This is why the devolution debate is so important. Planning and delivering integrated services that meet the needs of local people, employers and the local economy. Raising productivity, rebalancing the national economy, delivering inclusive growth. Our challenge is to help deliver all three. To finish I want to say what we at Inclusion will be doing to help encourage integration. As many of you know, earlier this year we formed a Strategic Alliance with the National Institute of Adult Continuing Education, NIACE. Today I can announce that we have decided to commence the process of a full merger. Our intent is the merger will be complete by January 2016 and a new organisation will be born. An organisation which will champion employment, skills and learning, not just for the unemployed, but for all on low incomes who want to progress in their careers. Not just talking about integrating employment and skills but practicing what we have preached. There will be changes, and this is what you will notice.

First, our combined research teams will bring the benefits of increased capabilities and capacity. Delivering high standards of independent, relevant and practical research. Second, through our policy work, and our events, we will do more to champion the needs of all those out of work and those who want to progress in work.

People will ask “what will you be called” and “who will head it up”? Today, I can tell you the answer to one but not the other. There is no new name as yet but we intend to announce this in the Autumn. In the mean time we will be consulting with members and supporters on what they want to see from the new organisation. So “who will head it up?”. I can say today this will be David Hughes, the current CEO of NIACE. Having co-founded Inclusion I would, understandably, want to see our legacy both survive and improve.

I have no doubt that David is the right person to do that. However, I will be staying involved. Helping David put the new organisation on a firm footing and continuing to make my mark on policy and research. So this means after 16 Conventions, this is my last Convention as CEO of Inclusion. It has been an honour to work with so many dedicated people over the years.

We are One industry – employment, skills, health Together we have one task – sustainable jobs.

Thank you.