“Shocking inequality” as unemployment among young black people surges to 41.6%

• DWP unable to explain “shocking inequality” as unemployment among young black people surges to 41.6% in pandemic
• Unemployment in young white people increased from 10.1% to 12.4%

In a report published today the Public Accounts Committee says DWP is unable to explain “shocking inequality” in UK employment figures that has greatly worsened in the pandemic, and is also unable to properly assess or improve the impact of its own policies and spending.

When the COVID-19 pandemic hit there was an unprecedented surge in people claiming benefits. DWP “drastically increased its spending on employment support programmes from £300 million in 2020-21 to £2.5 billion in 2021-22” and hired 13,500 new work coaches to support new claimants on the front-line. But the Committee says ongoing problems targeting work coach skills and DWP’s “focus on getting people into any form of employment” undermines its “ambitions” to support disabled people to work and people on low pay to progress.

As at 31 May 2021 there were still 2.4 million jobs on furlough and as yet the increase in unemployment has “not been as sharp as feared”, but the Committee says any second surge in new benefit claims and unemployment as the furlough scheme comes to an end could “disrupt DWP’s ability to provide employment support”.

Some groups have already been affected significantly and disproportionately. The impact on young black people particularly acute, with unemployment rising to a “shocking” 41.6% in the last quarter of 2020, compared to an already high 24.5% a year earlier. In the same period, unemployment in young white people increased from 10.1% to 12.4%

While the “context around employment programmes has moved on… the Department for Work and Pensions has not adapted its programmes or changed its plans”. Though it aims to reduce the “scarring” impact of long-term unemployment amongst young people with its major new Covid employment support schemes, it is “impossible to measure its effectiveness” as DWP doesn’t publish regular performance data.

The ‘Plan for Jobs’ announced in July 2020 included £1.9 billion Kickstart scheme for young people. At that point, the Office for Budget Responsibility (OBR) was expecting a 10% peak in unemployment in quarter 2 of 2020, and furlough was expected to end in October 2020.

The OBR now expects unemployment to peak at 6.5% in the final quarter of 2021, while the furlough scheme will not end until September 2021. The Kickstart scheme is due to end in December 2021, with employment prospects still uncertain.

Dame Meg Hillier MP, Chair of the Public Accounts Committee, said: “In response to the pandemic, DWP has increased spending on employment programmes a staggering eight-fold in the space of a year. But there is a lack of curiosity about the impact of the policies it’s implementing.

“When we are talking about the long-term prospects of a generation of our young people, and the extraordinary differential in job losses among young black people this needs serious attention now or a whole generation will be scarred. This needs to be a real focus now to avoid embedding inequality of opportunity over decades.”

PAC report conclusions and recommendations

1. The Department designed its employment support programme in response to the pandemic expecting a significantly different labour market to the one that emerged. It is difficult to understand or predict the full impact of the pandemic on the labour market. As at 31 May 2021, there were still 2.4 million jobs on furlough, and gathering employment data when interviews cannot be collected face-to-face is also more challenging. Nevertheless, the context around the Department’s schemes has moved on since the early days of the pandemic. The Kickstart scheme, for example, was announced as part of the government’s Plan for Jobs, which the Chancellor announced in July 2020. At that point, the Office for Budget Responsibility (OBR) expected unemployment to peak at 10% in Q2 2020 and furlough was expected to end in October 2020. The OBR now expects unemployment to peak at 6.5% in the final quarter of 2021, furlough will not end until September 2021, and the Office for National Statistics reports that job vacancies in most industries are now above their pre-pandemic levels. However, the Department remains committed to funding 250,000 Kickstart job-starts by the end of December 2021, closing it to new applicants at the point unemployment is expected to peak.

Recommendation: The Department should monitor the emerging impact of the pandemic on the labour market closely and adapt its programmes quickly as the full impact on different groups becomes clearer, to ensure that it provides employment support where and when it is most needed

1. Any second surge in new benefit claims and unemployment as the furlough scheme comes to an end could disrupt the Department’s ability to provide employment support. At the start of the pandemic, the Department moved around 10,000 extra staff into claim-handling roles to respond to a surge which reached over 100,000 new claims a day at its peak. The Department has also hired 13,500 new work coaches and in doing so has returned work coach caseloads to pre-pandemic levels. The Department believes that it is now better equipped to respond to any further wave of benefit claims when furlough ends and that it could again respond by diverting resources towards benefit administration. However, the Department effectively switched off many of the usual conditions attached to people’s benefits entitlements to manage the first surge in claims, meaning claimants could not meet their work coach, and employment support was not provided. Responding in this way in the event of another claimant surge may not be an option: if people are expected to return to work once furlough ends, the Department will reasonably be expected to maintain its employment support offer.

Recommendation: By October 2021, the Department should write to us with an explanation of how its contingency plans will ensure it can continue to provide its employment support alongside administering new claims in the event of a second surge in new claims, and avoid the scarring effect of unemployment and disruption to the recovery.

1. We are concerned that the Department does not know why the unemployment impact of the pandemic has hit groups such as young people from minority ethnic backgrounds harder. In March 2021, the Office for National Statistics produced striking statistics showing unemployment for young black people aged 16-24 had increased from 24.5% in the period October-December 2019 to 41.6% over the same period in 2020, while unemployment for young white people increased from 10.1% to 12.4%. The Department could not readily explain this shocking inequality. The Department has relatively few programmes targeted directly at people from minority ethnic communities, and instead expects work coaches and providers to tailor their national programmes to individuals. Shortcomings in the Department’s data on diversity and disadvantage among Universal Credit claimants presents a potential barrier to evaluating the effectiveness of its schemes for different groups robustly. The Department also lacks unemployment data on other disadvantaged groups such as homeless people and rough sleepers, and people with issues related to drug and alcohol addiction, and it does not have data ‘flags’ to identify disadvantaged people within the benefit system.

Recommendation:

The Department must obtain good-quality diversity data for all claimants and ensure that its evaluations of all of its employment support programmes include an assessment of the impact for different groups, whether employment support schemes are reaching and working for everyone, and ensuring that no groups are left behind.

The Department should work with the Office for National Statistics to provide more regular statistics on the claimant count and unemployment rates broken down by ethnicity and age. We expect an update on this work when the Department next appears before us in September.

1. The Department’s focus on getting people into any form of employment risks neglecting its wider ambitions around supporting disabled people to work and supporting people on low pay to progress. The Department’s current focus is on minimising the impact of the downturn on unemployment, particularly on young people and the long-term unemployed, to reduce the ‘scarring’ effect of unemployment.Over the longer term, the Department has said it wants to address issues such as social and economic inequalities, health and disability issues, and in-work progression.The Department, along with the Department for Health and Social Care, ran a consultation from July to October 2019 seeking views on the different ways in which government and employers can reduce ill health-related job losses. The Department committed to producing a Green Paper on the topic and this, and the consultation response, were eventually published on 20 July 2021 after we had asked the Department about timings in our evidence session. The Green Paper notes that the long-awaited National Disability Strategy will be published shortly. The Department also established a Commission to review the evidence base and make recommendations around support for people in low-paid employment to progress. This consultation ended in December 2020 and published on 1 July 2021.

Recommendation: The Department must now use the consultation and the Health and Disability Green Paper to clarify how it will support disabled people and people with health conditions, and publish the National Disability Strategy. The Department must also respond to the recommendations made by the in-work progression Commission to support people in low-pay employment to progress. In doing this, the Department needs to set out how it will tackle the long-term effects of the pandemic on the jobs market, disabled people, and in particular those who suffer from long Covid.

1. The Department is not sufficiently transparent about the impact and take-up of its schemes at a local level. We recognise that good-quality evaluations can be challenging to deliver, and that measuring the impact of a programme can take years. We are pleased that the Department is developing its plans to evaluate its new support schemes. However, we also know that the Department’s evaluations of its employment support for disabled people are behind schedule. Without clear evidence about what programmes are effective, it becomes more difficult for the Department to make informed decisions about how to allocate resources.While the Department does publish some selective statistics on some of its support schemes, these are not sufficiently timely, regular or detailed enough about aspects of performance such as local take-up of schemes to fully serve accountability and public trust.

Recommendation: The Department should produce a quarterly statistical publication and regular data updates on measures such as the take-up, participation among different groups, and job outcomes of its schemes including at a granular, local level. We will be questioning the Department on what progress it has made when it next appears before us in September.

1. The Department does not make the most of local authorities’ and employers’ in depth knowledge of local needs and priorities. Experts such as local authorities and employers have in-depth knowledge of local needs and priorities that can make employment support programmes more effective. However, the Department is not using local expertise to the extent that it could, and risks a disconnect between its national view and local stakeholders’ priorities. Local authorities value their relationship with the Department and local jobcentres, but have also experienced a lack of clarity on the links between employment and skills provision nationally, short-notice changes to the Department’s policy and programmes, and inconsistent engagement with the Department. The Department does not share its ‘district provision tool’, which lists the employment support provision available within local areas, with local partners, meaning that local partners cannot identify gaps in provision or duplication of effort. The Local Government Association considers that a more localised approach would deliver better outcomes by targeting all funding streams at local communities’ needs, while the Co-op group calls for a more collaborative approach between businesses, local education providers and the government.

Recommendation: The Department should seek regular structured feedback from local authorities and employers on its employment support and:

- Involve them in the design and commissioning of schemes;

- Publish its district provision tool so others can see and comment on and complement the range of local provision; and

- Ensure its employment support meets the needs of the local economy.

1. The quality of claimants’ experience with the Department and whether they receive the right support will depend on the Department’s ability to integrate the additional 13,500 new work coaches into its organisation and manage their performance effectively. The Department’s employment support is mainly accessible to people on benefits via their jobcentre work coaches. Work coaches have considerable discretion to tailor their support to individual claimants, and they need a range of skills and a lot of knowledge to match claimants to the right employment support package. This can even include checking a claimant’s business idea and referring them to a mentor for the New Enterprise Allowance scheme, which can provide money and support to help people start their own business. The National Audit Office has previously found that the Department cannot know if it is providing a consistent service over time, or between jobcentres, and that the Department does not systematically gather feedback from claimants on the quality of service they receive. Embedding a very large number of new work coaches and ensuring they offer consistently high-quality services to claimants will be extremely challenging in such a system.

Recommendations:

The Department should commit to undertaking and publishing a full evaluation by the end of 2022 of how well its work coaches provide employment support and how consistently they apply their judgement.

The Department should gather and use systematic feedback on claimant’s satisfaction with their work coaches, the service at the jobcentre, and how the jobcentre could be improved.