The new DWP Ministerial team has arrived as storm clouds gather. Stephen is spending more time with his family; whilst Priti is promoted. In their place we have a surfeit of Damians and a Penny, all settling down to bulging in-trays.
On the surface, all looks good. The latest labour market stats continue to demonstrate the rather perplexing ‘jobs miracle’ which is a gift to government. The employment rate is at a record high of 74.4%, whilst unemployment has dipped under 5%, the lowest level for over ten years. As the membership body for employment support organisations, we too obviously applaud the news. After all, our member organisations have helped this along, having supported well over one million people into work in recent years.
But now – sigh – there’s Brexit.
Now, there’s no point going into the pros and cons of our collective referendum vote, whilst you would have to be clairvoyant to foretell its full economic impact. However, it is fairly safe to assume that it is likely to have some form of effect on the economy and the UK jobs market, which even Brexiteers accept it is likely to be negative for a while. The question is, just how negative is it going to be?
At the moment we know there’s mixed messages in the economy, but those crucial confidence measures are showing employer nervousness. If the labour market does take a downward swing it’s probably fair to assume that it will be young people and those with the greatest skills deficit that will suffer the most. These groups will need help to prevent long term scarring effects and an upward swing of the benefit bill.
Neither civil servants or ministers are stupid. They know that the economic outlook might change substantially over the next period. However, we’re currently at a really critical juncture. Government investment in employment support is about to be cut radically. There appear to be two main reasons for that. First, the labour market has been doing well which means that government believes it has a ‘peace dividend’ – it can invest less as there is less demand. Second, there is rather touching faith that Universal Credit (UC) will prove a game changer, tempting more people back into work because the financial incentives line up. Our belief, alongside many other commentators, is that UC is an improvement, but won’t change the world; first, because of the cuts to taper rates and second, because people respond to a complexity of factors and not just financial incentives.
These issues, along with ongoing tight budgets, disability benefit cuts, uncertainty about European funding, unravelling of employment law based on EU directives and goodness knows what else, now sit in the new ministerial in trays. And it’s hard for ministers. They are asked to make important decisions just days into the job.
If the ministers follow the current direction of travel, DWP funding for employment support will be cut by maybe as much as 80%. The current Work Programme and disability programme, Work Choice, will be replaced with something called the Work and Health Programme, at a fraction of the size of its predecessors. Combined authorities might make up some of the shortfall, or they might not. What we don’t want though, as a country, is to cut away capacity in employment services if we are going to need them in one, two or five years’ time.
So we’re asking ministers to think carefully. The focus on disability and health is important and shouldn’t be lost. However, we also need to consider the scale of what we might need as well as its specialism.
These support services came under the spotlight recently at ERSA annual awards. Winners included Mencap’s work with young people with learning disabilities; Ingeus for its experimental music programme which involved jobseekers writing and recording a song about their experiences; and the work of Pluss, a specialist disability provider, which has a third of its staff with a disability.
These are vital services which transform people’s lives. Not all are funded by government; I’m not trying to pretend they are. But government funding is an important component of many of them. So as the ministers wade through those bulging in-trays, we’re asking them to think hard. Is this really the time to downsize government funding for employment support? Are we really confident about our economic future? And if the storm were to hit, will we be prepared to weather it?
Kirsty McHugh, Chief Executive, ERSA