PRIME Initiative

Yesterday’s official employment figures showed a significant increase in the number of people aged over 65 who are in work, something that we at PRIME have been monitoring for some time. 

Up until this month, ONS had been reporting employment rates for older people based on State Pension Age, ie women over 60, and men over 65.  However, now that we are facing changes to the age at which people can start to draw their Pension, ONS are using the new measure of 65+ for both sexes. 

As the chart shows (click to enlarge), economic activity rates for ‘pensioners’ have been rising steadily over the period of the recession whilst they’ve been pretty flat for younger age groups.

Whilst on the face of it this may seem to be good news, we still face some major challenges. 

We currently have almost 3 million people aged between 50 and current Pension Age who are out of work^†, costing the UK economy over £72 billion a year.

Since August 2008, the number of unemployed over 50s has risen by 51%, compared with 36% for the under 50s^†.

A disproportionate number of over 50s are becoming long-term unemployed, and the prospects of re-employment are not encouraging for the huge number of public sector workers who are projected to lose their jobs over the next few years.

A combination of demographic change and changes to State Pension Age will bring an estimated 3.6 million extra older people into the workforce over the next 20 years, but unless steps are taken to address the higher levels of worklessness experienced by the 50+ age group, only half of these workers will have jobs.  For the others, we may be simply shifting them from drawing their State Pensions to claiming an ou-of-work benefit.

At this time when Government is putting together the specifications for the new single Work Programme to tackle unemployment, we cannot afford to miss the opportunity to build in tailored, effective measures to help a significant number of the 3 million workless over-50s back to work.

With almost one-in-five of the over 50s who are in work being self-employed^††, these measures must include help to make the transition from employment or unemployment to self-employment. 

^†source: ONS Labour Market Statistical Bulletin July 2010

^††source: ONS Annual Population Survey, September 2009

Peter Bennie

Director of Development

PRIME

How facts are reported often affects how people respond to them. So the changes made this month by the Office of National Statistics in how it reports age in its main labour market figures is a welcome development.

The most important change in the newly released August 2010 ONS labour market statistical bulletin relates to the way women are treated. Previously men and women over 50 were treated differently, with separate male 50-to-64 and female 50-to-59 female reporting categories.  Women over 60 were considered as having retired from the labour market.

Now both men and women are reported in the same age bands, making direct comparison between the genders much easier. ONS will be doing this with historic data too, all the way back to 1971. For now though the most immediate side efect is to boost the 50-to-64 workless figures, since woman over 60 can now be included.

Source: AgeUK, based on ONS Labour Market figures

This change is entirely legitimate.  It just recognises the reality of modern life: many women aged 60-to-64 need to earn a living.

Not only is the state pension they receive (from the age of 60 at the moment but rising in steps from next year to 65 by 2020) reduced if they had taken time out to look after a family, but family life no longer guarantees financial security in the way it was once asumed to do. Many older women nowadays find themselves suddenly on their own after the break up of a relationship. Divorce in its many modern forms still often leads to poverty, for one or both of the participants, just like it always has.

Going back to the newly released ONS figures, what can they tell us? The big picture is that there are now 3,605,000 people, men and women, aged 50-to-64 who are workless. That is over 32 per cent, or fractionally below one in three.

Long term unemployment amongst the over 50s is rising. Amongst the registered unemployed some six per cent of the over 50s have been out of work for over two years, whereas the figure for the under 50s is half that at three per cent.

The number of over 50s that have been out of work for over six months and claiming Jobseekers Allowance has risen by over 22,000 in the last twelve months.

This is borne out by PRIME’s experience. Nearly 20 per cent of the people who contact us for help have been workless for over two years.

So what needs to be done?

Here are five suggestions.

Top five ways of tackling older unemployment

1. Reduce the delay in getting older people onto back-to-work programmes. Jobcentre Plus still seems to operate a six-month rule for the over 50s. This means they won’t put you on New Deal programmes until you’ve been waiting on benefit for six months. The delay is bad for everyone, but is particularly damaging for those wishing to work their way off benefit by setting up a new business, since that’s going to take quite a while anyway.

2. Waive tuition fees for the sort of vocational courses that would enable workless older people to get back into work through self-employment. The state really is the only player capabe of having a positive impact here. Banks are very reluctant to lend to older people who need the money for a vocational course, or indeed any course. But you’re not going to be able to work as a locksmith, caterer or gas fitter without the qualificatons.

3. Get rid of poverty traps in the welfare system. Housing benefit is a particular problem for anyone thinking of starting a business, since it hard to find out when exactly the money will stop if you start working. People need to know when their business needs to be earning enough to replace the benefits they have coming in. Not knowing is a major disincentive to starting. If we want to encourage entrepreneurial behaviour ideally people need to know that if the worst happens and their business fails they can at least go back to the same level of welfare support they are on now.

4. Keep funding business support for new start-ups in the UK. The over-50s are an entrepreneurial group, but most of those who find themselves out of work haven’t been entrepreneurs all their lives. They need basic help, including business mentoring in the early stages and free business health checks in the first couple of years of trading.

5. Improve the visibility of existing help for out-of-work adults - and in particular those wishing to work their way off benefits. People who have been working all their lives don’t know all about the benefits system and often find it depressing. They will inevitably get to learn about Jobcentre Plus, but their chances of hearing about about other sources of free or low-cost practical help for self-employment (often sponsored by local councils) is much less.

So these are PRIME’s suggestions.  All five could all be wrapped up in a New Enterprise Fund for the over 50s, since they do reflect many of the government’s stated aspirations for a “Work for Yourself”  programme.

Hopefully the arrival of a new government on the scene representing not one but two political parties will mean a new openess to good ideas.

But what’s a bit depressng about the list above is that so many of the ideas closely echo recommendations we made back in 2004 in PRIME’s report “Towards a 50+ Enterprise Culture“.

PRIME does its bit on point 5 above with our online support directory, which lists of sources of reputable practical help around the UK that we know about. But considering it is often tax payers’ money that is ultimately paying for many of these schemes it’s surprising there’s no centrally maintained up-to-date list the public can refer to.

The number of older workers trapped in long-term unemployment has rocketed to a ten-year high - soaring by over 50 per cent in the last year alone. Planned changes to working age benefits could drive this figure even higher, warns Age UK today.

PRIME’s Director of Development, Peter Bennie, said that against this increasingly challenging backdrop for older workers, it is important that those who become unemployed look at what help there is to find other ways of working, including self-employment.

Earlier when interviewing Andy Harrop from AgeUK, BBC Breakfast’s Sian Williams seemed dubious about the opportunities for unemployed over-50s to set up in business.

As we know at PRIME, this can be a viable option for many people – currently 18% of working people aged between 50 and State Pension Age is self-employed^† – and research shows that business survival rates are almost four times better than for younger people.

We, like AgeUK, are also concerned about the disproportionate number of over 50s who are becoming long-term unemployed, and the prospects of re-employment for the huge number of public sector workers who are projected to lose their jobs over the next few years.

Since August 2008, the number of unemployed over 50s has risen by 51%, compared with 36% for the under 50s^††, and the cost of 50+ worklessness now stands at £72 billion per annum.

At this time when Government is putting together the specifications for the new single Work Programme, we cannot afford to miss the opportunity to build in tailored, effective measures to help a significant number of the 3 million workless over-50s back to work, particularly as the changes to Retirement Age will bring even more older people into the workforce who would otherwise be drawing their State Pension.

These measures must include help to make the transition from employment or unemployment to self-employment. The AgeUK article “Number of 50-plus workers trapped in long-term unemployment rockets to 10-year high” can be downloaded from

http://www.ageuk.org.uk/latest-press/50-plus-workers-trapped-in-long-term-unemployment/

^†source: ONS Annual Population Survey, September 2009

^††source: ONS Labour Market Statistical Bulletin, July 2010

Thousands of young people from jobless families could be destined to join their parents in the dole queue, warns a report from PRIME’s sister charity, the Prince’s Trust and Qa Research today.

PRIME’s Director of Development, Peter Bennie, said that the report underlines the need for Government to take a more targeted approach in tackling 50+ worklessness as many older people who have suffered job losses in the recession will have children in the 16-24 age group. 

If we exclude full-time students from the official unemployment figures, rates of worklessness for those aged 50 to State Pension Age stand at 29.3%, that is almost one-in-three out of work, compared with 22.3% for people aged 16 to 24^†

PRIME is particularly concerned about the disproportionate number of over 50s who are becoming long-term unemployed, and the prospects of re-employment for the huge number of public sector workers who are projected to lose their jobs over the next few years.

Since August 2008, the number of unemployed over 50s has risen by 51%, compared with 36% for the under 50s, and the cost of 50+ worklessness now stands at £72billion per annum.  The negative impact of workless parents will only add to this cost. 

At this time when Government is putting together the specifications for the new single Work Programme, we cannot afford to miss the opportunity to build in tailored, effective measures to help a significant number of the 3 million workless over-50s back to work, particularly as the changes to Retirement Age will bring even more older people into the workforce who would otherwise be drawing their State Pension.

As 18% of working over 50s are self-employed^††, these measures must include help to make the transition from employment or unemployment to self-employment.

The Prince’s Trust report “Destined for the dole?” can be downloaded from

http://www.princes-trust.org.uk/about_the_trust/what_we_do/research/destined_for_the_dole.aspx

^†source: ONS Labour Market Statistical Bulletin, July 2010

^††source: ONS Annual Population Survey, September 2009

Olderpreneurs are not being put off by the recesion. A higher proportion are going ahead and giving self-employment a go than five years ago.

These are among the preliminary results of a follow-up study PRIME is currently conducting. We are ringing a sample of 500 clients who contacted us between six months and 18 months ago to find out what has happened to them. The timing makes these people clients of the recession, which is generally held to have started in the second quarter of 2008.

2010 preliminary results

We did a very similar follow-up study asking many of the same questions at the end of 2005. The results showed slightly fewer over-50s starting than now, and many more giving up.

2005 results

We plan to analyse the results more once we have completed the fieldwork in the next few days. But one contrast between 2005 and now is that more of those giving up then cited getting offered a regular job as the reason - 29 per cent in 2005 versus 21 per cent now. So though the recession does not seem to be dampening enthusiasm for self-employment, it is still diminishing the chance of getting offered a conventional job from an employer.

There is a big element of necessity behind older entrepreneurship - at least among PRIME clients (as a charity we concentrate our efforts on the unemployed and those facing redundancy).

Government plans to scrap the default retirement age from October 2011 are to be welcomed. Our sister charity Age UK estimates that around 100,000 older workers were pensioned off against their will in 2009 as employers used forced retirement as a shortcut to shed jobs. So potentially the new policy will contribute to an immediate reduction in the number of older people who find themselves unemployed.

However, this is only one measure. There is a lot more that government can do to meet the challenges of an ageing workforce and spiralling pensions costs.

Over the next 20 years, the UK will see an extra 3.6 million* over-50s in the ‘working age’ population, but as things stand, one-in-three people in that age group is out of work. Click for details

The cost of over-50s unemployment is currently £72 billion a year, and as this age group increases from being a quarter to a third of the workforce, there is risk that these costs will increase massively.

The Coalition’s proposed new Work Programme provides the opportunity to put in place carefully thought-through support that creates sustainable work solutions for older people, including self-employment.

Let’s hope the opportunity is taken.

USEFUL LINKS

BBC coverage of ending of fixed retirement age in UK has good case studies of people forced out early

Detailed coverage at our PRIME Business Club web site of the pros and cons and what small businesses that employ people have to do.

Give your opinion to BIS. The government’s consultation on this proposal is open till the end of October 2010.

Buried away in the detail of the Chancellor’s budget report is notice of the end of a very valuable incentive for those struggling to work their way off benefit. From April 2012, the 50-plus element will be removed from Working Tax Credit. This means PRIME clients won’t be able to get it any more. This could mean a cut of £1,965 in their income in the first year back in work.

Working Tax Credit is a kind of reverse income tax that you should get if your household income falls below a certain level. For the newly self-employed it provides a useful safety net, as it means you know your income won’t fall to zero even if your net profit does. In the early stages of a new business this is very reassuring, as the risk of low or negative income from the startup is real.

Since the 50-plus element is only available to those who are returning to work after previously being on benefit it seems a very odd thing to cut. And it won’t save much for the public purse, since you’ve only ever been able to claim it for your first 12 months back in work. After that it ceases automatically anyway.

The Chancellor hopes to save £35 million in the tax year 2012-2013 by this measure, and £40 million a year thereafter.

Lets’s hope all of this money returns in some way to those striving to get themselves back into work by their own efforts. It’s a very strange thing to remove one of the few forms of financial assistance that was already well-targeted at those actively trying to work themselves off welfare dependency.

On a more positive note the Chancellor announced that the personal income tax allowance is to rise from April 2011 by £1,000 to £7,475, removing some 880,000 people on the lowest incomes from having to pay income tax at all. Eventually he hopes to raise the allowance to £10,000, but gave no definite date.

This measure should help many self-employed people, since most are set up as sole traders and are taxed primarily through income tax, filling in the self-employed self-assessment form.

There’s more about the budget on the resources area on PRIME’s other web site, PRIME Business Club.

Working Tax Credit - current maximum rates per year
(what you actually receive tapers off as your income rises. The Chancellor has also changed the taper “withdrawal rate” too, up two per cent to 41 per cent, so in future you will lose money faster).

 
Latest Working Tax Credit rates and thresholds

Full budget report on HM Treasury site (as big PDF) Stuff about ending the 50-plus back-to-work element is budget policy decision 41 in table 2.1 on page 48.

I was asked to be an “expert” on a BBC Radio Scotland call-in programme on pensions and retirement. I was there to talk about finding an income by starting your own business. I suspect there was a feeling that starting your own business was a way of the retired developing a satisfying life style, but the very articulate callers made it clear that poor pensions, despite a lifetime of payments, was a major gripe.

My fellow expert, Dan Hyde, the pensions reporter on www.thisismoney.co.uk, found himself, against his better judgement, defending the pensions industry. My other co-expert, Frances Fay (www.francesfay.co.uk), author of the Good Retirement Guide found herself under attack with the familiar line “It’s alright for you”. I was luckier thanks to a jaunty octogenarian who had created his own business driving trucks around and was clearly loving it.

But just when you leave the bus-stop three buses going to your destination pass you by. Immediately after the programme three pieces of research on pensions self-presented on my computer screen.
The first was reported in the Mature Times. Retirement specialist Partnership reported that 77 per cent of all the annuities they dealt with were for pension pots of around £30,000. This would buy £40 per week to top up the state pension of £97.65 (assuming you were entitled to it all – many women now in the 50s are not). This is roughly a quarter of the UK average male and female wage of £500 per week. No wonder the callers to BBC Radio Scotland complained!

But then came Ernst & Young’s report for the 2020 Public Service Trust at the RSA entitled “The Deficit: A longer Term View” http://www.2020publicservicestrust.org/publications/
Basically they were saying that an ageing population along with the cost of climate change and three other public expenditure drivers would ensure that the UK had an unsustainable budget deficit. If I understood the argument, the cost of state pensions and welfare for an ageing population, alongside the other public expenditure drivers, would mean that the UK had to borrow more and more from the money markets because we would not be able to meet the budget deficit from higher taxes or public expenditure cuts. The message is that unless we start to make difficult choices, “we’re doomed”.

Then up pops a message from the International Longevity Centre with a research review on the future of retirement (http://www.ilcuk.org.uk/). The review reported on a survey of 280 people aged 50 – 69, finding that of those above SPA (state pension age) and still working, one in three was self-employed. However only 56 per cent of the self-employed had a pension compared to 72 per cent of those who had been or were employees. What is clear is that the self-employed retire much later. This accords with PRIME’s own anecdotal evidence.
What do we make of all this? Well in my view the chances of improved pensions over the next decade or so are just about zilch. If anything there will be continued pressure to keep the state pension as low as possible. Just raising the retirement age is not going to help – already almost one person in three between the ages of 50 and SPA is workless. Pretending people are able to work longer is a self-delusion.

As a nation we need to change our view of older people and their contribution to the labour market. If we want to help older people to continue to be active in the labour market, increase individual and national wealth and reduce the cost of an ageing population, we just have to invest in self-employment support for older people.

I grew up in a household where every time someone complained about something, my father said “Well why don’t you do something about it?”.  The “it” in the question was usually something as minor as third-world poverty or nuclear disarmament.
 
So having worked as a supplier in the business support sector for the last 18 years, I could not resist getting involved in the discussion sparked by Doug Richard’s provocative Enterprise Manifesto.
 
It’s easy to slag off the existing business support system. Indeed, that’s what we in the UK have a habit of doing. We moan. Then the politicians beat their chests and spend lots of taxpayers money creating a marvellous new approach, then we go round the loop again.

The old hands of the business-support industry label this “The Three Cs” ….. meaning that you expensively close the old organisation, then open up a new organisation across the road, rehiring the same staff but buying new Carpets, Curtains and Computers each time.
 
So what would I do if I was in charge?
 
Here are a three ideas:
 

1. Move to three UK providers.

At the moment, England puts most of its investment into one monolithic system: Business Link. This, like the UK’s education system, is in a state of constant change. Business Link was originally split into 82 units, each of which invented its own business-support systems (commissioning unique software, etc). Once these 82 were running smoothly, the 82 were scrapped in favour of nine units, with nine different systems this time, all run “by the private sector” (i.e. by short-term contractors) but all answering to one central set of objectives and metrics.

Meanwhile Wales and Scotland have each invented their own systems for business support, and have similarly changed these countless times.

This tinkering will never cease, because Soviet-style central planning will always lead to disappointment and yet another attempt at a new central plan by the next politician in charge.
 
Now ask yourself, why are the UK supermarkets so brilliant at giving the customer what the customer wants? It is because Tesco, Sainsburys and Asda compete to win customers. They find out what customers really want, then provide it cost-effectively to every town in the UK. (Hmmn, I can sense some readers’ hackles rising as I write this bit… )
 
We need a similar set-up in business support. I can imagine three or four companies (such as Serco and Exemplas) becoming superb as a result of such intense national competition. Rather then creating regional monopolies, we need a handful of national competitors which are rewarded in line with their success. How would I measure success? No room to explain it all here, but I believe that we could come up with a better system than the current one.
 

2. Mandate these big providers to use small suppliers

I never cease to be bowled over by the dynamism of the small business sector. These guys are truly hungry! The same goes for some of the smaller charities. It’s often a case of delivering excellent service or having no job next year.
 
And while public sector procurement is hugely biased in favour of (low risk) large suppliers, private sector procurement is far more open to small businesses.
 
When I think of training courses, or mentoring programmes, or websites , or online tools, or back-office systems, I can  always think of a small supplier who would be excellent… especially if they were given the chance to supply a national organisation (as proposed above) over a long period of time.
 
In fact I can imagine both the national business support providers and their small suppliers becoming world class, and supplying overseas customers, just as our private schools and leading universities educate students from around the world.
 

3. Encourage online suppliers

I count myself very lucky, as my company is one of the two main publishers behind the business advice on the massively successful www.businesslink.gov.uk website.
 
But this website leaves precious little room in the marketplace for the private sector websites. I think it should proactively partner with the private sector and I would include our own specialist websites in the list www.startupdonut.co.uk, www.marketingdonut.co.uk and www.lawdonut.co.uk.
 

Rory MccGwire is founder and Chief Executive of BHP Information Solutions.

If you are as interested as I am in the whole issue of how best to organise this country’s business support, you may also be interested in my blogs on this theme on the Startup Donut website:

Business regulation

Have your say! Business support – Part 1

Have your say! Business support – Part 2

Have your say! Business support – Part 3

More details are emerging of the Conservative/Liberal Democrat Coalition’s policy on issues that affect employment creation and the encouragement of new businesses. Here’s a round-up based on what’s been said in important ministerial statements today. I also include some words said before the election by the winning side that still seem to be relevant.

The official statements 24 May 2010

Jobs and Welfare
http://programmeforgovernment.hmg.gov.uk/jobs-and-welfare/

Key points seem to be: a new “Work for Yourself” programme to encourage self-employment with loans and mentoring, new locally-based Work Clubs for conventional job seekers, and a promise of faster access to back-to-work programmes for those facing the biggest barriers.
On the last point, currently those unemployed and over 50 normally have to wait at least six months before getting on a government-sponsored self-employment programme.

Business
http://programmeforgovernment.hmg.gov.uk/business/

No real detail here, but several interesting commitments. Some (unspecified) RDAs are likely to be replaced by local authority-led “Local Enterprise Partnerships”, the IR35 self-employment tax ruling will be replaced with something less hostile to genuine small businesses, and more government tenders will go online with an “aspiration” that 25% of government contracts will eventually go to small and medium-sized businesses.

Detail on corporation tax rate changes that could well affect older entrepreneurs wanting to sell up to move into retirement are still to come.

Pensions and Older People
http://programmeforgovernment.hmg.gov.uk/pensions-and-older-people/
The default retirement age will go, while the state pension age probably will increase to 66 - but not before 2016.

Conservative position before the election

“Our ‘Work for Yourself’ programme will help move people into self-employment. We will build a network of business mentors and offer substantial loans to would-be entrepreneurs, supporting self-employment and franchising as a route back into work. We will work with specialist organisations that already have a proven track record in this area, like the Prince’s Trust and the Bright Ideas Trust, to offer the best support.”

For getting workless people back into ordinary jobs (as opposed to their own self-employed businesses) the Conservatives were talking about a mixture of “Service Academies” for particular employment sectors and small locally-based job clubs. This ideas still seem to be going forward, but no new detail has emerged.

Future of RDAs

While the Conservatives have long been sceptical about the value of England’s nine Regional Development Agencies in promoting prosperity and economic growth, the man who now has the top job at the department that funds them is Liberal Democrat Vince Cable, 67.

But he wasn’t a great fan of the RDAs either. Before the election he explicitly questioned the value of having them at all in the South East and the East of England, but suggested they might have role where structural unemployment is still a problem.

The form of words used in today’s statement suggests RDAs could possibly survive in areas where they can show they are popular - and in particular if they are supported by the local authorities in their region. But that the presumption now is that many will go.

In England local authorities are elected by the people. The big weakness of the RDAs is that despite spending large amounts of tax payers money they are not elected, and with the single exception of the London Development Agency they have very little democratic accountability.

So with spending cuts now a priority they have few allies to defend them. It seems local authorities will increasingly take over any functions that are deemed worth keeping.

This will move England closer to the Scottish position, where the elected local authorities already take on more business promotion and economic development functions.

Most relevant new ministers

DWP
Secretary of State for Work and Pensions – Rt Hon Iain Duncan Smith MP
Minister of State – Chris Grayling MP
Minister of State – Steve Webb MP
Parliamentary Under Secretary of State – Maria Miller MP
Parliamentary Under Secretary of State (Minister for Welfare Reform) – Lord Freud
(What do they all do? More details may be posted on the DWP site later:
http://www.dwp.gov.uk/about-dwp/ministers/ )

BIS
Secretary of State for Business, Innovation and Skills – Dr Vincent Cable MP
Minister of State – Mark Prisk MP

Other relevant departments
Secretary of State for Communities and Local Government – Eric Pickles MP
Secretary of State for the Home Department and Minister for Women and Equalities – Rt Hon Theresa May MP
Secretary of State for Education – Michael Gove MP

This is the question that is raised in an economic analysis of the ageing of society in the UK and in a far ranging discussion paper. Both are published by BIS (Department for Business Innovation and Skills) on its mini-website www.bis.gov.uk/ageingpopulation.

You can find the relevant discussion paper here (as a PDF download) and the analysis can be found here.

PRIME would like to highlight three things:

(i) The Discussion Paper invites your input by the 30th June 2010. This is your opportunity to say what you think is important.

(ii) For the first time a paper published by the government states that almost one person in three between the ages of fifty and state pension age is currently out of work. This needs to be emblazoned from the tree-tops to counter some of the knee-jerk media response to unemployment statistics.

(iii) Self-employment for the over 50s is featured as an important labour market response. Olderpreneurship is not seen as a rather quirky side issue, but an important part of the future economy.

(iv) Wow. Someone has been listening.

The House of Commons Work and Pensions Committee has been looking at contracted employment programmes - the sort of thing people are sent on by Jobcentre Plus after they have been out of work for a while.

Jobcentre itself does not actually run these programmes, but instead contracts them out to mainly private providers. The bulk of the work is carried out by a mixture of private companies and some “third sector” non-profits. PRIME itself has sometimes been a provider in such schemes, so we know what they are like.

Most of the organisations involved, whether private or charitable, are actually looking to make a profit or surplus on providing such services. Payment to the providers is usually by results in some way. They receive a portion of the money up-front when they start training or helping a person, but the majority later - when the trainee achieves some target outcome, like ceasing to claim benefit or staying in a job for three months.

This all sounds pretty efficient, but there are some potential problems with this model. The Committee has drawn attention to them in its report - and found some evidence that bad things are happening.

Basically providers have a financial incentive to concentrate their efforts on the candidates most likely to succeed - in the words of the report to “cream off” the people most likely to help them attain their targets. Meanwhile those the provider thinks are not likely to end up giving them good or profitable outcomes are at risk of being simply “parked” - i.e. minimal effort is expended on them.

This is indeed a real risk, and it is likely that future back-to-work schemes, whichever flavour of government is in power, are likely now to follow some payment by results model. The Committee is to be congratulated on drawing attention to the problems that can result. The solution, if there is one, is to police the contracts more effectively, and perhaps to broaden the range of rewarded outcomes, so that all who go on these programmes get a fair crack of the whip.

Extract from report below.
Full report at the Parliament web site - HTML version (browsable) or PDF version.

Creaming and Parking

100. Providers are increasingly being paid by results, on the basis of the number of customers moving into work, rather than a flat fee. There are two particular risks associated with this approach. The first is that of ‘creaming’, where contractors who are paid by results are likely to concentrate their efforts on those participants who are closest to the labour market and more easily placed in a job. The second is that of “parking” where participants who are deemed furthest from the labour market will receive a bare minimum of services and are unlikely to make any progress whilst participating in a programme. In this way providers seek to maximise their profit, focusing on customers who will earn them outcome payments, while spending as little as possible on customers who will not.

101. There is evidence that creaming and parking is taking place in the Pathways to Work programme. Research by the Department found that provider staff felt that the focus on performance targets influenced their behaviour with clients, to the extent that they spent less time than required with people with multiple barriers to work (and perceived as harder to help). They also felt that they needed to encourage job ready clients to take jobs that would enable a swift return to work, rather than take lengthier routes towards jobs that they wanted.

102. In addition, most providers who took part in the research perceived that clients were, on the whole, harder to help than they had anticipated and some staff expressed concerns that this had also led to job outcome targets being prioritised ahead of clients’ well being and ability to sustain employment.

from p28, section 4, Vulnerable Groups in The House of Commons Work and Pensions Committee - Fourth Report Management and Administration of Contracted Employment Programmes

The manifest season is upon us. And the last few weeks seems to have been alive with enterprise manifestos. None of them from a political party - but all of them about enterprise.

Here are some examples.

The Genesis Senate - Britain’s Economic Revival through micro, small and and medium-sized businesses

SFEDI (The Small Firms Enterprise Development Initiative) - Making self employment and micro enterprise a viable income opportunity for all

NFEA (National Federation of Enterprise Agencies) - Enterprise, the Economy and Society

And there are more.

What they all have in common is a view that enterprise will be critical to coming out of the recession, and start-up support, advice and mentoring should be available to a far wider range of people than is currently the case. They all want to see enterprise as an equal and integral part of Welfare to Work and better advertising of enterprise opportunities in Jobcentre Plus. And they all want to see finance to start a business available to a wider range of people.

Well, PRIME has been pre-empting the enterprise manifestos.

We now have a PRIME 50+ self-employment flyer in every Jobcentre Plus in England and Scotland, and now over one third of our enquiries are from people reading about PRIME and self-employment in Jobcentre Plus.

We have a sub-contract or agreement with a major contractor in every Flexible New Deal area in England and Scotland under the first phase and we have been working hard to ensure we are in every area in the second phase. We are currently awaiting the announcement on the second phase major contractors. This means for the over 50s, self-employment and enterprise will be a key option in Welfare the Work.

We recently launched our mentoring scheme for people just starting out on their enterprise journey in Bristol, Newcastle and Belfast. We have worked closely with Her Majesty’s Revenue and Customs to train volunteer mentors and they are available now. We will be adding new areas as we roll out the scheme across the country.

And yes, we have the PRIME-Zopa olderpreneur loan scheme.

All the parties are busy telling us how they will get people back into employment and off the dole queue. They have to realise that creating the jobs comes first, and that means putting enterprise first. Without a growth in new businesses, and therefore in new jobs, the best laid welfare to work plans are doomed to failure. So the issues raised in the enterprise manifestos need to be given pride of place in each political party manifesto.

I wonder if they will.

Click to download PRIME briefing paper as PDF 295K

ABSTRACT This paper summarises the ways in which the recession has impacted on the older (50+) workforce, comparing ONS data for different age cohorts since August 2008 – the point where the UK was entering recession and marked differences in the impact on these age cohorts started to appear. The data is drawn from ONS Labour Market Statistical Bulletins from October 2008 to February 2010, which provides figures from August 2008 to January 2010.

A lavish government mentoring scheme has kicked off today with expensive ads in many newspapers. For a change it’s not just spin - over 150 major companies are backing the plan to get unemployed people into work with the support of their own mentor. There is only one problem - you have to be aged under 25 to benefit.

The scheme is the latest stage of Backing Young Britain, an even larger campaign launched back in July. Initially the emphasis was on apprenticeships, work experience and internships.

The mentoring offer has only just kicked off. The main money is coming from the Department for Work and Pensions. Companies contribute volunteer mentors, who get trained for free at taxpayers’ expense.

So it’s a well-thought-out scheme. Shame there’s nothing similar for older people.

Meanwhile here at PRIME we are starting our own more modest mentoring scheme for older people thinking about going into self-employment. These programmes do cost something to run even with volunteers as you need to vet and train the mentors, and then publicise what you are doing so the right people get to hear about it.

Fortunately as a charity we’re not completely without supporters. As yet we haven’t quite managed to get 150 organisations on board to back the mentoring project, but we have got two. Bank of America Charitable Foundation is providing the money and HMRC are first in with a team of volunteers.

Bristol is the first city to go live. We’ll be adding two more later this month.

If you want more details about getting mentoring support for yourself then contact PRIME’s Mentoring Manager Harri Harrison at harri.harrison@ace.org.uk . He’s also your man if you are an organisation that has some volunteer mentors to offer.

Get yourself a PRIME mentor in Bristol