The Intermediate Labour Market...2 The Intermediate Labour Market Network (established in 1998) has...

The Intermediate LabourMarketA tool for tackling long-term unemployment

Bob Marshall and Richard Macfarlane

The Joseph Rowntree Foundation has supported this project as part of its programme ofresearch and innovative development projects, which it hopes will be of value to policymakers and practitioners. The facts presented and views expressed in this report are,however, those of the authors and not necessarily those of the Foundation.

© Joseph Rowntree Foundation 2000

All rights reserved

Published for the Joseph Rowntree Foundation by YPS

ISBN 1 902633 78 4

Work and Opportunity Series No. 20

Cover design by Adkins Design

Prepared and printed by:York Publishing Services Ltd64 Hallfield RoadLayerthorpeYork YO31 7ZQTel: 01904 430033; Fax: 01904 430868; Website: www.yps-publishing.co.uk

Contents

PageAcknowledgements v

1 The Intermediate Labour Market approach 1The growth of ILMs 1What is an ILM? 1The aims of the study 3Outline of the study 4

2 The rationale for the ILM approach 5The labour market rationale 5Maximising ‘insertion’ into the labour market 6Filling the jobs gap 7ILM performance 7Policy directions 8ILM as a regeneration tool 8

3 ILM programmes in Britain 10The survey 10Scale and distribution 10Lead bodies 11Objectives 14Targeting 14Operational and policy issues 14

4 Setting up an ILM 17Partnership 17A lead body 18A delivery infrastructure 19A dedicated manager 22

5 Managing ILMs: what works and why? 23Objectives: people need to be clear what they want an ILM for 23Target groups: know who the ILM is for 23The work activity: know what it is you want to do and why 25Recruitment: get the right people for the right job 25The provision of training: getting the balance right 26Terms and conditions: making it clear that it is a job 26A waged programme: how important is the wage? 27Jobsearch: it is all about moving on 29Systems and monitoring: knowing what you are doing 29Quality and performance: managing through contracting 30

6 Funding ILMs 32The funding package 32Training and employment programmes 32European funds 34Regeneration funds and ‘Best Value’ 35Service-related income 36Worktrack: the first fully funded ILM? 37Achieving sustainability 37

7 ILMs: are they value for money? 40Comparison with other labour market approaches 40Retention and drop-outs 40Job outcome rates 40Durability of employment and income growth 43Assessing the cost per ‘outcome’ 44Conclusion 47

8 Summary and conclusions 49Current ILM activity 49The ILM role in labour market policy 50Conclusions 52

References 54

63

The authors are grateful to Jane Dawson ofCommunity Consultants for assistance incarrying out the survey and the analysis of thedata presented in this report.

We are also grateful to the members of theproject advisory group for guidance, supportand direction: Greg Chammings, Paul Convery,Helen Evans, Dan Finn, Andy Hirst and also toMartin Evans and Dominic Hurley for theiradvice and support.

Acknowledgements

v

1

The growth of ILMs

Intermediate Labour Markets have an importantrole to play in helping the long-term unemployedback into employment.(House of Commons, 2000, p. xxix)

In recent years, Intermediate Labour Marketprogrammes (ILMs) have been developed as amethod of tackling long-term unemploymentand promoting community-based regeneration.They are locally based, require a multi-agencyapproach, use and develop local organisations,and typically have a high success rate.

The longest established and best known ILMis the Wise Group which has been operatingsince 1983. Although similar to some otherprogrammes (for example, the CommunityProgramme of the early 1980s), the Wise Groupset the framework for the model as it ispractised today: waged temporary work ofcommunity benefit for the long-termunemployed, with support to move into themainstream labour market. Although nowdiversifying, it has tended to concentrate onhouse insulation and landscaping work. Itcurrently offers over 700 places.

In 1994, Glasgow Works was set up as apublic partnership based on this ILM model, butcontracting with a large number of local, mainlythird-sector, bodies to deliver the ILM projects.This programme now has 450 places anddemonstrates how ILMs can deliver a widevariety of job types and services from childcareto market research.

Since then, there has been a rapid growth ininterest in establishing ILM programmes, someof it stimulated by government programmeslike the New Deal for the Unemployed

(especially the Voluntary Sector Option and theEnvironmental Task Force) and the prototypeEmployment Zones. Since 1997, ILMprogrammes of 100–500 places have beendeveloped in Manchester, Liverpool,Birmingham, Plymouth, Sheffield andNottinghamshire as well as many smallerprojects run by local authorities, housingassociations and local regeneration bodies. Thesurvey results (see Chapter 3) indicate that thereare at least 65 operating programmes, offering5,300 employment opportunities targeted at thelong-term unemployed.

What is an ILM?

The term ILM refers to a theoretical concept (alabour market) that is explained in Chapter 2.ILM activities take place through ILM projects,or groups of projects that together form an ILMprogramme. For example, Manchester has aprogramme that aims to provide every long-term unemployed person who is eligible (18–24year olds in this case) with the opportunity ofemployment in the intermediate labour market.The ILM programme managers deliver this byproviding funding for places within existingcommunity-based organisations or in discreteprojects providing, for example, town centreguides or environmental works. In other areas,there may be no programme, just one or morestand-alone ILM project.

It is important to recognise that reference to‘an ILM’ is really a shorthand way of referringto an ILM project or programme, rather than the‘Intermediate Labour Market’. This can be asource of confusion.

While there is no single definition of an ILMproject or programme, the National ILM

1 The Intermediate Labour Market

approach

2

The Intermediate Labour Market

Network (established in 1998) has identified thefollowing common characteristics.

• The main aim is to give those who arefurthest from the labour market a bridge

back to the world of work. It is aboutimproving the participant’s generalemployability. This involves targeting thelong-term unemployed (usually over 12months) or people with other labourmarket disadvantages.

• The core feature is paid work on a temporary

contract, together with training, personaldevelopment and jobsearch activities.Although some ILM operators offer theoption of a wage or staying on benefits,the majority would say that the wage isan essential ingredient (to helprecruitment, retention and progression).

• In order to limit job displacement orsubstitution, the work is in additionaleconomic activities, ideally of communitybenefit.

• Projects and programmes rely on thepackaging of funding from varioussources (e.g. New Deal, European SocialFund, local regeneration funds and

project earnings), in a way that providesoutputs and ‘added value’ for eachfunder.

The Government’s Policy Action Team onJobs reporting in 1999 recognised ILMs ascontributing to two areas of policy. Theirprimary interest was in the role of ILMs as a‘labour market intervention’, i.e. as a method ofenabling non-employed people to return to thelabour market. However, they also recognisedthat ILMs can play an important role inneighbourhood regeneration through theprovision of additional local services (SocialExclusion Unit, 1999). As indicated below, thereare concerns amongst some labour marketpolicy makers that an emphasis on the provisionof local services will result in programmes thatproduce poor ‘labour market’ outcomes.However, this concern is not borne out by thisstudy which shows that 77 per cent of ILMs see‘getting the long-term unemployed (LTU) backto work’ as their main objective (see Table 1).Only 14 per cent of programmes see theprovision of local services as the main priorityand only 3 per cent see ‘creating new jobs’ (i.e.filling the ‘jobs gap’) as their main priority.Indeed, the most common ‘second priority’ was

Table 1 Main objectives of ILMs

Ranked as 1st priority Ranked as 2nd priority(%) (%)

Getting the LTU back to work 77 9Work of community benefit 14 31Providing training/skills 6 32Creating new jobs 3 14Setting up social enterprises 2 11Maintaining people in activity 2 11

3

The Intermediate Labour Market approach

a labour market aim – ‘providing training/skills’ rather than local services. The joboutcome results back up this emphasis onprogression.

The aims of the study

As indicated above, despite strong local interest,rapid growth and success in terms of outputs(see Chapter 2), there remain concerns about therole of ILMs as part of national and localemployment strategies. These include thefollowing.

• They are difficult to set up andadminister, and require the developmentof a local delivery structure. Does themanagement capacity exist to undertakesuch a complex and demanding set ofactivities if ILMs are to be expandedacross the country (Campbell et al., 1998)?

• At a gross cost of about £14,000 per placeper year, they appear expensivecompared to other approaches (Robinson,1997).

• The work activity may be too removedfrom the real labour market to be ofbenefit to the unemployed (Layard,1997a).

• They may allow people to ‘settle in’ andnot progress to the mainstream labourmarket fast enough (with a suggestionthat ‘wage levels should be nearer thebenefit level to make workers impatientto get into regular jobs’ (Layard, 1997b).

• Where they are used to boost demand inareas suffering from shortages of jobs,

they may risk separating the long-termunemployed from the open labour marketand damage their chances of getting a job(Social Exclusion Unit, 1999).

• They do not address the basic problem inmany areas, which is the lack of suitablejobs rather than the deficiencies of theunemployed (Webster, 1997).

This led the Policy Action Team on Jobs torecommend the use of ILMs ‘In support ofpeople for whom other … [labour market] …interventions have failed’ (Social ExclusionUnit, 1999, p. 95).

However, these criticisms are based largelyon theory since there has been nocomprehensive study of ILM activity prior tothis study. In this context, it is important toexamine what has been achieved and identifythe critical factors in maximising theeffectiveness of the ILM approach so as toincrease the replicability. Although there is agrowing body of evidence that the ILMapproach does work, there is not yet a fullunderstanding of why it works. This is thepurpose of this study, which specifically aims to:

• set out the rationale for the ILM approachin the context of current labour marketand regeneration strategies in Britain

• provide information on the range of ILMprogrammes and approaches nowoperating

• identify what makes a successful ILMproject or programme work and why

• examine the outputs and value of ILMsrelative to other labour market initiatives

4


• provide a framework for policy making,and identify what could be done to makeit easier to set up and give stability toILMs.

Outline of the study

The study has included a survey of 65 ILMoperations in England, Scotland and Wales. Thisaimed to map the current scale of ILM activityand allow the development of a typology. Inaddition, 11 ILM programmes were examined indetail. These were in Manchester, Bolton, Wirral,Sheffield, Nottinghamshire, Newham,Southwark, Birmingham, Plymouth, Glasgowand Ayrshire. They were chosen to reflect a

range of factors such as the lead body, models ofoperation and different local labour markets.These are not presented in detail but thematerial gathered from these case examples hasbeen used to inform the discussion and findingsthroughout the study.

Chapter 2 looks at the rationale for the ILMapproach and Chapter 3 describes the mainsurvey results. The three following chapterslook at the setting up and management of ILMs(Chapter 4), what works and why (Chapter 5),and funding of ILMs (Chapter 6). Chapter 7evaluates performance and looks at value formoney, and Chapter 8 presents someconclusions and policy implications.

5

There are a number of reasons for consideringthe ILM approach in the welfare to work andregeneration agendas. These are based on aninterpretation of how the labour market works,especially in relation to the long-termunemployed, a consideration of the unevendemand for labour in Britain and the growingevidence of the higher performance and bettervalue for money which ILMs can achievecompared to other programmes. They also linkstrongly into some of the Government’s policydirections such as ‘making work pay’, thedevelopment of ‘intermediaries’ and a joined-upapproach to neighbourhood regeneration.

The labour market rationale

Figure 1 illustrates the ILM concept. This isbased on the premise that there are people so farremoved from the mainstream labour marketthat they do not participate in it and have littleinfluence on it. Employers draw labour from theshorter-term unemployed, new entrants,women returners or from farther afield

(commuters). This explains why there can beareas with high numbers of job vacancies (forexample, in city centres) adjacent to areas oflarge-scale long-term unemployment. This canresult in skill shortages and even wage inflationalongside high rates of long-termunemployment and relatively low rates ofeconomic activity.

The objective of an ILM programme is toprovide a parallel (intermediate) labour market,within which the long-term unemployed cangain enough ‘employability skills’ to competeeffectively in the mainstream labour market.Even if they subsequently lose their job, theywill be sufficiently employable not to return tothe excluded ‘bottom’ group. Thus, the totalpool of employable labour will increase and thelong-term unemployment rate will fall.

However, to achieve this objective, an ILMprogramme needs to be of a scale that isrelevant to levels of long-term unemploymentlocally, and it needs to be sufficiently robust tomaintain itself at this scale over a number ofyears.

2 The rationale for the ILM approach

Figure 1 The ILM concept is about keeping the labour market ‘active’

Unemployed

Intermediate labourmarket

Long-term unemployed

The labour market

6


Maximising ‘insertion’ into the labour

market

Providing employment opportunities for all is thesingle most effective means of tackling povertyand social exclusion … When people in thebottom fifth of income distribution gain work, thechance of them moving out of low income is veryhigh. (Social Exclusion Unit, 1999, p. 29)

The ‘work first’ approach of US welfare towork programmes has gained some supportwith the British Government, the idea being thatattachment to the labour market by securing ajob, even a low level and insecure job, is the bestway for the long-term unemployed to start tomove on.

However, there is evidence from the US andfrom Britain’s New Deal that merely finding ajob in the mainstream labour market will notguarantee long-term attachment to the labourmarket. People drop out or are sacked, havepoor skills enhancement and limited incomegrowth. Only 58 per cent of jobs gained by NewDeal (18–24) leavers have been sustainedbeyond 13 weeks (Bivand, 2000). This evidence

is replicated in the ILM projects where mostoperators argue that it can take six to ninemonths or more for ‘employability skills’ tobecome embedded. Data for Glasgow Workssupport this view (see Table 2).

This suggests that a comprehensive re-engagement package is more effective inachieving sustainable labour market insertionthan a minimal approach. Recent US evidenceshows that programmes focusing on job search,early employment and education and trainingmore often increased employment and earningsthan those focused solely on one of these (USCongress, 1999). Additional measures toenhance longer-term skills and deal withchildcare and transport issues have also beensuggested (Jobs for the Future, 1999).

ILMs combine ‘work first’, albeit in atemporary job, with this more comprehensiveapproach. ILM experience has shown that thebest way to engage people who are very‘distant’ from the labour market is to offer awage and meaningful work. From there,progressions in terms of skills development andconfidence follow. The emphasis is on work

Table 2 Progression and retention of employment by leavers (based on a survey of all those who had

left the programme over a two-year period)

Leavers to a job Still in a job (at survey date)Duration on programme (%) (%)

0–3 months 46 143–6 months 51 426–9 months 74 569–12 months 67 53Max. contract 42 67

Source: Cambridge Policy Consultants, 1996b.

7

The rationale for the ILM approach

disciplines and employability skills, but thepackage includes training to a qualification,personal support, career planning and aftercaresupport.

Filling the jobs gap

Since New Labour was elected in 1997, there hasbeen a debate about whether unemployment isa result of a mismatch of labour demand andsupply (plus, perhaps, discrimination), orwhether unemployment is still the result of alack of jobs, at least in some areas. The fact thatthe total number of vacancies estimated by theDepartment for Education and Employment(DfEE) (at three times those notified to JobCentres) and the number of registeredunemployed are about equal, and this is broadlythe case over most travel to work areas, has ledsome in government circles to suggest that theproblem is no longer one of shortage of jobs butof barriers to employment which can beovercome (House of Commons, 2000, pp. 13–17). The provision of childcare, the WorkingFamily Tax Credit, providing driving lessons,etc. are examples of policies based on thispremise.

This argument is countered by others in twoways. First, most unemployed people are onlylikely to be able to take entry-level jobs, whichare substantially those notified to Job Centresand are segmented from the rest of the labourmarket. So, is it realistic to assume thatmultiplying these by three reflects jobs availableto the unemployed (Gregg and Wadsworth,1997)? Second, local experience would indicatethat registered unemployment is a poorindication of the real level of inactivity in thelabour force (participation in the labour market

can vary from below 60 per cent to over 80 percent across the country) and that in some areassuch as the redundant coalfields of NorthNottinghamshire or in cities like Liverpool orGlasgow the competition for the jobs availableis still severe. New job vacancies tend to be inthe lower paid service sector and are often part-time. The longer-term unemployed, older, maleapplicant, for example, has little chance ofsuccess against women returners or newentrants, even if he can be persuaded to forsakethe relative security of benefits to apply in thefirst place. Travel to where jobs are can take upto three hours each day and reduce net take-home pay to below the minimum wage (Houseof Commons, 2000).

Where there is a ‘jobs gap’, the role of anILM programme may be to keep peopleemployable and reduce further exclusion. Ifdesigned so as to provide an attractive andcomprehensive support package (perhaps withwork tasters and placements), it may encouragepeople to participate in the labour market andlead to a successful progression to ongoingemployment, at higher wage levels and withprospects for further advancement. If there areinsufficient jobs for the progression to beachieved, the ILM programme will at leastmaintain the labour force at a reasonablyemployable level until the local economyimproves.

ILM performance

The relative success of different approaches tothe long-term unemployed and value for moneywill be covered in detail in Chapter 7, but at thisearly stage it is worth noting that the growingevidence that the ILM can achieve good to very

8


good performance rates has been a major factorin the interest in and adoption of the approachacross Britain.

Properly targeted and managed ILMs can beshown to achieve up to twice the job entry rate(at 60 per cent plus ) and, more significantly,much longer lasting and better quality outcomes(longer retention of jobs, higher income levels)than many alternatives available.

Along with their ability to attract, motivateand retain, without compulsion, those who maybe sceptical of or reluctant to participate in moretraditional training courses or schemes offering‘benefit plus’ only, they appear an attractivealternative to local managers and politicianswho want to achieve the best for their area.

Policy directions

The UK Government’s strategy of ‘making workpay’ is about encouraging people to take thejobs available, even if low paid or temporary,and deals with some of the disincentives byensuring a minimum wage supplemented byWorking Family Tax Credit, Childcare TaxCredit and other benefit measures (along withsanctions for non-participants).

ILMs have essentially anticipated anddeveloped this approach by providing entrylevel jobs at or just above the minimum wageand, because people are off benefit from thebeginning, start them on the road to managingin this new system. In some ways, they canprovide even greater encouragement to labourmarket entry because of the training and othersupport packages incorporated (e.g. childcare,driving lessons) and the jobs on offer are usuallyvery local.

In 1999, the UK New Deal Task Force began

to promote the concept of ‘intermediaries’,which like ‘work first’ is borrowed from USexperience. These are agencies with strong locallinks to the unemployed and excluded groups.They provide a bridge to employers and supplythe support structures to enable theunemployed to succeed in getting the availablejobs. Intermediaries are characterised as bodieswhere ‘work norms, such as punctuality, attire,and presentation are emphasised from theoutset’ and a significant research finding is thatit is the quality of the initial job placement(wage levels, opportunities for advancement)which determines retention (New Deal TaskForce, 1999b).

In the context where the UK Government isnow increasingly concerned about the deliveryof New Deal programmes, especially poorperformance of the New Deal Options, it islooking to US models of this type. And yet, inBritain, ILMs already provide good examples of‘intermediate’ delivery agents targeting thesame groups, having a similar approach andachieving good results (Social Exclusion Unit,1999, p. 92).

ILMs as a regeneration tool

Finally, it is important to consider the beneficialimpact of ILM projects on local regeneration, forexample, through the work undertaken whichwould not have happened otherwise or wouldhave cost the public sector to provide anyway.

What has not been measured in detail todate is the ‘multiplier effect’, i.e. the benefits tothe participants’ households and communitiesthrough increased incomes and spendingpower, health and wellbeing, and the change inthe local culture to one of work and not welfare.

9

The rationale for the ILM approach

For example, there are about 1,000 ILM places inGlasgow, which create about £6m in net wagesper year. The ILM wage is about twice theaverage level of benefit so we can assume anaddition of around £3m into households everyyear. About 70 per cent of participants live inthe poorest parts of the city. Over 65 per centgain a job and most do not return to welfarewithin a year.

The Wise Group study of 1996 calculated thereduction in fuel bills for those having theirhomes insulated as £840,000 per year: 67 percent of those receiving home insulation reporteda weekly saving on their energy bill of up to £5in 1996 (McGregor et al., 1997). In GlasgowWorks, the most significant and the easiest ‘localeconomic impact’ to measure was the additionalearnings of those parents who sent theirchildren to the ILM after-school schemes:

£450,000 per year in two of the poorest housingestates in Glasgow (Cambridge PolicyConsultants, 1997b).

Other impacts are more difficult to measure,but no less real, such as reduced crime in areaswhere a sports centre for youngsters was set up,reduced school truancy and exclusion as a resultof an education project, savings in care budgetsfor the disabled and so on (Cambridge PolicyConsultants, 1997b).

There have as yet been no other detailedevaluations that enable the economic and socialbenefits of ILM projects to be calculated, butthese examples show that these ‘by-products’ ofan ILM approach can have significant economicimpacts that can be targeted at regenerationareas. Such impacts are not achieved by mostother labour market initiatives.

10

The survey

As part of this study, a questionnaire was sent toover 400 organisations including all New DealVoluntary Sector and Environmental Task Force(ETF) contracting bodies (250), 50 major housingassociations and all members of the UK ILMNetwork, to find out the scale and extent of ILMactivity in the early part of 2000. The replies(over 100) covered most of the majorprogrammes known to be operating and manysmaller ones.

Organisations were asked to reply only ifthey targeted the long-term unemployed or aspecial excluded group, paid a wage on atemporary job contract, offered a package ofsupport including training and engaged in workof community benefit (including placements).Those who replied but, after checking, did notprovide a wage have been excluded. Theanswers are for discrete programmes and soprojects within these which also replied havebeen excluded to avoid double counting. Tenrespondents were in the process of starting newprogrammes in 2000/01 and have also beenexcluded. The base is therefore 65 separate ILMprogrammes operating in 1999/2000.

Although not exhaustive, these resultsprovide the first comprehensive picture of ILMsin Britain.

Scale and distribution

The total number of places (jobs) filled by the 65operating programmes was 5,300. This gives anaverage of 81 per programme, but the range isfrom very large programmes (Manchester at 460filled places) to as small as two places (Table 3).

The majority (71 per cent) offer up to 12

months’ contracts, with 23 per cent up to sixmonths and 6 per cent over 12 months. Theaverage length of stay on established ‘12-monthcontract’ programmes is 36 weeks. If weestimate an average 30 weeks’ stay for all theprogrammes in this study, this would producethroughput of around 9,000 people per year.

There are clusters of activity throughout thecountry (Figure 2) mainly in the big cities andthe other older industrial areas of the North,Midlands and Scotland. This reflects the scale oflong-term unemployment in these areas.However, most parts of Britain have someactivity. London, despite its high numericallevels of unemployment, has seen limitedgrowth so far, but there is strong interest inSouthwark (which has a programme), Lambeth,Hackney, Haringey and Greenwich. Themajority of programmes (85 per cent) havebegun since 1997.

The range of activity is extensive.Environmental work, landscaping, constructionand insulation account for 47 per cent of thetotal number of places offered in distinctprojects and 8 per cent of placements offered,with about half of all the programmes offeringsuch work. This reflects not only the

3 ILM programmes in Britain

Table 3 Numbers of ILM programmes and

places, 1999/2000

No. of places No. of programmes

1–24 2725–49 950–99 15100–199 8200–399 3400+ 3Total 65

11

ILM programmes in Britain

‘traditional’ Wise Group type activities but alsothe growth of ILMs associated with the NewDeal Environmental Task Force. However, asTable 4 shows, the majority of places are in otheractivities including childcare, town centreguides, IT activity, sports and community work.

Seventy-one per cent of places are in discreteprojects set up and managed as ILM operationswholly or mainly employing ILM participants.

The remainder (29 per cent) are placements withother bodies where the ILM people may be justone part of the workforce.

Lead bodies

There is a wide range of lead bodies includingTraining and Enterprise Councils (TECs) andLocal Enterprise Companies (LECs), local

Figure 2 Clusters of activity

North England

DurhamSunderlandManchesterHullWirral/LiverpoolSheffield

Scotland

FifeArgyllGlasgowAyrshireEdinburgh

Midlands

NottinghamshireBirminghamCoventryWales

NW Wales (indevelopment)Swansea

London

Hackney (indevelopment)LambethSouthwark

Plymouth

Southampton

Highlands

12


Table 5 Lead bodies

Lead body % of organisations

ILM operator 22Training provider 8Environmental initiative 5Voluntary sector body 20Housing association 6Local authority 17Other (TECs/LECs) 22

Table 4 Types of ILM activity

No. of places in No. of places in % of programmesdiscrete projects placements offering activity type

Childcare 169 81 29Homecare 36 98 15Recycling (general) 104 27 20Recycling (white goods) 73 16 12Recycling (furniture) 42 19 12Construction 565 178 40Environment 813 153 54Landscaping 705 91 49Heat insulation 250 34 28Crime prevention 57 23 15Town centre guides 150 55 17Health 15 15 3Sport 55 31 14Information technology 152 36 28Call centre 146 12 11Community work 126 208 28Administration 200 258 45Advice work 107 91 15Transport 1 62 15Other 194 101

13


Figure 3 Lead bodies

Top down

Bolton

Birmingham

Notts

Liverpool

Plymouth

Teeside

Localauthorities

Employmentzones

Glasgow

Wirral Manchester

TECsLECs

Bottom up

GroundworkEnvironmental Voluntary

sector

Sheffield

Housingassociations

Hyde

Banks of the Wear

British Trust forConservationVolunteers (BTCV)

EmploymentService ?

authorities and housing associations (see Table5). Only 22 per cent are organisations whosemain purpose is to operate an ILM; 25 per centare voluntary sector bodies or environmentalinitiatives.

Figure 3 attempts to categorise the leadbodies into ‘top down’ where the main thrust

has come from strategic players such as localauthorities and ‘bottom up’ where the initiativeis more community or voluntary sector based.The main finding is that ILMs can besuccessfully operated by a wide range of leadbodies. The Employment Service is not a leadbody for any ILM.

Teesside

14


Objectives

As discussed earlier (and shown in Table 1),there is a strong emphasis placed on ‘getting thelong-term unemployed back to work’ as theprimary objective of the ILM, with 77 per cent ofrespondents putting this as their first priority.‘Providing a community benefit’ and ‘providingtraining’ were the main second choices inranking of objectives. Interestingly, ‘maintainingthe target group in activity even if they do notget a job’ – the filling the jobs gap objective –was placed bottom on the priority list by 43 percent of respondents.

Targeting

Most programmes offer places for 18–25 yearolds (81 per cent) and the majority of places (71per cent) are for this group (see Table 6). Thisreflects the use of New Deal and the morelimited funding sources for the over-25s. Someprogrammes have other specific targets (e.g.

postcode areas, ethnic minorities or loneparents), but usually as secondary targets.

As noted earlier, the majority (71 per cent)offer contracts of up to 12 months (see Table 7)and 78 per cent provide a weekly package of 31hours or more (see Table 8), with work as thecore along with training – 88 per cent toVocational Qualification (VQ) Level 2 or above(see Table 9). Most provide additional supportsuch as childcare, literacy and numeracy help,and benefits advice. Almost half offer drivinglessons, known to be a significant contributoryfactor to successful jobseeking.

Operational and policy issues

The most significant operational problemsexperienced by current programmes (see Table10) are the lack of a secure funding stream forILMs and other related financial issues.Administration of the paperwork associatedwith funding is the second main category.

Table 8 Hours per week

% of programmes

26–30 hours 2231–35 hours 45Over 35 hours 33

Table 7 Contract length

% of programmes

Up to 6 months 236–12 months 71Over 12 months 6

Table 6 Target groups

% of programmes % of places

18–25 year olds 81 71Over 25 year olds 61 29

15


Table 9 Other support

% of programmes

English for speakers of other languages (ESOL) 14Literacy/numeracy 65Training to VQ Level 2 88Childcare 55Travel allowance 63Driving lessons 45Jobsearch training 95Welfare/benefits advice 50

Table 10 Problems experienced

Overall Ranked as Ranked asscore main second main

(Low score problem problemmeans (No. of (No. of

more of a respondents) respondents)problem)

Securing funds for following years 2.2 40 17Obtaining setting-up funds 2.7 33 12Managing cash flow 3.0 18 16Admin./paperwork (New Deal) 3.0 20 20Recruitment 3.3 13 15Drop-outs 3.3 12 22Obtaining appropriate training 3.4 8 16Benefits (for participants) 3.6 10 12Local authority support 3.9 8 10Attracting suitable supervisory staff 3.9 9 5Attracting suitable management staff 4.0 7 10Getting New Deal/ES support 4.0 3 9Getting TEC/LEC support 4.0 8 11Premises 4.1 6 7

16


Fewer programmes seemed to suggest thatattracting good managers was an issue althoughthis is often seen as a major problem in settingup. Equally, although attracting New Deal/Employment Service (ES) or TEC/LEC supportmay appear to be an issue in setting up ILMs,this does not emerge as a major problem withrespondents.

The main changes or improvements thatILM operators would like to see are, notsurprisingly, a reduction in the complexity offunding and the burden of paperwork (see Table11). These are factors that deflect them fromtheir main objectives.

Further replies to an open question aboutwhat else would help ILMs concentratedaround the promotion of the concept anddeveloping a support structure. The following

are a selection of responses made by more thanone programme, in order of frequency:

• greater promotion and awareness of ILMs

• better networking of ILMs and supportagencies

• the complexity requires explanation andcapacity building

• committed and talented staff are essential

• allow enough time to set up

• a good practice guide is needed

• rural areas have different issues – needunderstanding

• strategic management of ILMs in eacharea is needed.

Table 11 Desired improvements

Improvement No. of responses

More cohesive, simpler funding 30Reduce paperwork 11Longer contracts (i.e. over 6 months) 7Improve cash flow/payments times from New Deal 7Reduce benefits trap/low wages 6Allow overlap of benefits into employment 5Improve ESF payment delays 4More flexibility by training providers 3Clients do not always want to train, but this is required 3ES should be more flexible 3Clearer rules on holiday, sickness, etc. 2More flexibility in LA Best Value contracts 2Greater knowledge and support from Government 2Mixing ages is a good idea 1Personal Job Accounts a good idea 1No benefits sanctions for those who leave ILMs 1

17

Four key factors have been identified in settingup a successful ILM: developing a robustpartnership, gaining the support of a lead body,establishing a delivery infrastructure and thequality of the managers.

Partnership

Most of the more successful ILM programmes inBritain (in terms of scale and sustainability) arebased on a strong local partnership, typicallyincluding the local authority, the TEC/LEC andthe voluntary sector.

The main reasons for creating a strong localpartnership are to:

• secure funding, e.g. core funding fromlocal authorities, inclusion in bids forregeneration money, the underwriting ofEuropean funding applications andcontracts to deliver New Deal or WorkBased Learning for Adults

• obtain work activity, e.g. contracts todeliver local services.

There are many examples of projects thatrely on public sector support. In Glasgow, theWise Group has received council contracts forhome insulation and landscaping work valuedat several million pounds per year for the last 15years. Elsewhere, town centre guide schemes(Liverpool, Plymouth, Wirral, Manchester)could not have got off the ground without agood relationship between the ILM deliverybody, City Centre Partnerships and in somecases the Police and the Tourist Authorities.Partnerships may take time to develop butinvestment in these pays off.

BoltonWise – an ILM partnership

BoltonWise (BW) operates a 90-place ILM

programme in activities ranging from

landscaping and town guides to classroom

assistants. Most participants are over 25 and

BW gets up to 60 per cent job outcomes. It took

two to three years of local discussions to get

support and to set up. Wise Group was

brought in to help sell the idea locally and

because of their experience – ‘you know what

you know, but you do not know what you do

not know’.

The project champions were the directors of

several Bolton Metro Council departments and

this support has been maintained, although

support at this level does not reduce the need

for good relationships with officers at lower

levels who may not share the Director’s

commitment and merely ‘want a good job

done’.

There is an intimate relationship between BW

and the Council, which, for example, provides

payroll services, acts as a banker and writes

European Social Fund (ESF) applications. The

Council views BoltonWise as an agent which

can achieve its objectives both in service

provision and also in ‘inclusion’, but sees the

use of a separate body as adding value by

being able to tap into more resources. BW

benefits because, if it was not integrated into

the Council in this way ‘it could suffer like any

other voluntary body’, e.g. if grants are being

cut. Through the partnership with the Council,

the ILM problems are shared problems.

False starts or collapses in ILM programmescan sometimes be ascribed to the breakdown of

4 Setting up an ILM

18


partner relationships. In 1999, an attempt to setup an ILM programme in Halton (Runcorn andWidnes) foundered on a misunderstandingabout funding commitments between the localauthority and the lead housing association. Theclosure in 1999 of the longest established ILMprogramme in London (NewhamWise) mighthave been avoided if the positive relationshipswith the Council had been maintained.

NewhamWise

NewhamWise (NW) operated in East London

from 1993 to 1999 with up to 150 participants

mainly carrying out heat insulation and

environmental work, much of it on contract

with Newham Council.

During 1999, NW found itself in serious

operational and financial difficulties because

some of the work it contracted to do was at too

high a specification and could not be done by

ILM ‘trainees’. To complete the contracts,

private companies had to be hired with the ILM

workers sometimes ‘standing around watching

them do it’. This pushed costs well above

incomes and meant that NW did not deliver on

training outputs. There was a high ratio of

permanent staff (over 40) to ILM workers (ratio

1:4) so overheads were high. NewhamWise

suffered from all the workload and cashflow

problems of a small building company, and job

outcomes in 1999 were low.

The original ‘vision’ of the Council and NW

converged, but over time the relationship

became more of one of a client–contractor.

When the difficulties arose, NW was held to its

contract terms and was eventually forced into

voluntary liquidation. The partnership was not

close or strong enough to avoid this outcome.

A lead body

Partnerships are not noted for actually gettinganything done. For this, there needs to be a leadbody. Setting up ILM programmes is risky. Timeand resources have to be put into developmentwork and funding applications, core staff haveto be hired and there is the ever-presentproblem of cash flow, so a willing banker isneeded. The development process can take upto a year and it will be a further year before anyresults in terms of job progressions (i.e.outcomes) are seen; a leap in the dark whichneeds a bold and committed leader, often oneperson in a key organisation.

The Glasgow Development Agency set upGlasgow Works in 1994 with an untried modeland with only the experience of The Wise Groupto go on. Manchester TEC took a big risk in 1998by converting a small, untested pilot ILM (WorkOptions) into a large programme for all the NewDeal Voluntary Sector and ETF referrals in itsarea.

Manchester – taking the lead

Manchester TEC with its four partner local

authorities took a decision in 1997 that all the

Voluntary Sector and ETF New Deal places

would be delivered as ILM waged places. The

TEC took on the job of encouraging delivery

agents in Greater Manchester to participate.

The TEC senior management realised that

someone had to employ the core staff (15 or

so) and set up the systems to make it work and

to underwrite cash flow, and took this on itself.

The programme has 400–500 filled places at

any one time and costs over £6m per year. It

offers a wide range of activities, many as

19

Setting up an ILM

placements with the voluntary sector. Faced

with the challenge of mandatory referrals from

New Deal, Manchester TEC has also taken the

lead in setting up a special ILM project and

employing these New Dealers itself.

One of the disadvantages of the TEC taking

such a strong leadership role in delivery is that

the local authorities gradually felt less

ownership and a lack of ability to influence

overall strategy, and the voluntary sector may

view any bureaucracy and inefficiencies in the

system as the ‘TEC’s fault’ rather than these

being seen as a shared problem.

The Plymouth ILM programme (100 places)is a case where a confusion of leadership andlack of a champion in the right place resulted inproblems. There was already enthusiasm for theILM concept within the City Council and thevoluntary sector when the PrototypeEmployment Zone (EZ) came along in 1998, andthe opportunity was taken to develop an ILMprogramme within the EZ framework.

However, the delivery agents all reported a lessthan enthusiastic response from the EZmanagement. With nowhere else officially toturn to, the projects on the ground found theirfirst year difficult and there was little strategicplanning for their continuation when EZfunding was coming to an end during 1999.Despite this, they produced good outcomeresults and are now developing a support bodyled by the City Council.

A delivery infrastructure

Gaining local support, providing leadership andfunding will not, by themselves, guarantee thesuccess of ILMs. They cannot be willed intobeing, even by local champions (and certainlynot by government departments). A robustdelivery infrastructure must either be in place orbe developed.

Table 12 illustrates the range of deliveryarrangements reported in this study. There aretwo distinct models (see Figure 4), plus anumber of hybrids.

Table 12 Operating structures

Operating structure % of programmes

Central body manages the work and employs the workers(‘Wise Model’)

Central body manages the programme but other organisationsmanage the work in distinct ILM projects and employ theworkers (‘Works Model’)

Central body manages the programme and employs theworkers, but these are on placement with other organisationsfor their work activity (often only one or two per organisation)

As above (central body manages the programme and theworkers are on placement with other organisations), but theplacement organisations employ the workers

44

33

13

10

20


The first approach can be termed the ‘WiseModel’, where one organisation accesses thefunding, employs the management,administrative and supervisory staff, employsthe ILM workers and carries out the work. TheWise Group has successfully transferred thismodel to Bolton and Coventry.

Unless bought in as a package with good‘partnership’ support, this approach relies onthe existence of a well-established body that iswilling to develop its capacity in this(sometimes new) field of labour marketprogrammes. The Groundwork Trusts, with atrack record of getting environmental workcontracts and taking on volunteers and others,and with core staff already employed, have beenwell placed to move into this area and they haveseen the most rapid growth. Other examples arehousing associations (e.g. Hyde inSouthampton) and local agencies like One Plus

which is a voluntary sector body providingchildcare in the west of Scotland.

The second approach can be termed the‘Works Model’ where a central organisationdevelops the programme, accesses much of thefunding, may employ some core staff, and thencontracts out the delivery (and employment ofthe ILM workers) to a range of otherorganisations in the community. Based on theGlasgow Works example, most of the new,larger ILM programmes have taken this form(Manchester, Liverpool, Plymouth,Nottinghamshire, Sheffield). The advantage isthat a variety of delivery bodies (includingsmall voluntary organisations) can be tried out,local capacity is developed, the programme islikely to get off the ground faster and a widevariety of work activities can be built upquickly.

Figure 4 Models of ILM structures

One companySecures fundingManages and employsILM Workers

‘Wise Model’

Central funderManages programmeonly

‘Works Model’

Receives contracts for worke.g. Bolton Groundwork

Places workers with local bodiese.g. Wirral (part)

Contracts to others to set up andmanage new projects whichemploy ILM workerse.g. Liverpool, Plymouth

Placement of ILM workers inexisting organisations whichalso employ theme.g. Manchester, Sheffield

21

Setting up an ILM

Pentra – a hybrid model

Pentra is an ILM body in Wirral sponsored by

Cheshire East and Wirral TEC. It was set up in

1999 and has about 90 places (mainly for over-

25s) with an anticipated outcome rate of about

60 per cent.

Pentra employs the core development and

administrative staff, and directly manages about

half of the places (e.g. the town centre guides).

It contracts the delivery of other projects to local

bodies such as Wirral Community Transport,

although Pentra remains the employer. This has

allowed a rapid development where there was

no obvious local provider but also the growth of

other delivery agents in Wirral. A potential

difficulty with this model is the ‘distance’

between the employer (Pentra) and the ILM

worker who is managed by someone else.

The aim is for Pentra to become an independent

company with the local authority and

Employment Services as key stakeholders.

The contracting out or ‘Works’ type modelsmay require a change in culture for many of thedelivery bodies because running ILMs is nottheir core business. Good support, managementinformation and monitoring systems areessential. Reminding these delivery bodies thatthe aim of the ILM is to get the person out andinto another job as soon as they are ready is aconstant requirement (what employer wants toget rid of their best workers?). Many of the newprogrammes which have rapidly developedsince 1997 underestimated the amount ofsupport that delivery bodies need right from thebeginning.

Some lead bodies such as Birmingham City

Council decided to limit their ILM numbers andtest out a limited number of providers beforeexpanding.

Birmingham – testing capacity and limiting

risk

The small pilot ILM developed by Birmingham

City Council in 1997/98 (34 places) chose three

very different bodies to try out delivery: a

college, a training organisation managing a

café as a social firm , and a voluntary sector

advice and a support body (Birmingham

Settlement) with a track record in training and

in managing projects. Council officers felt that

a big programme with new structures was too

much risk and the ‘traditional’ ILM approach

(such as in Glasgow) was ‘a pain to set up and

pain to dismantle’.

All three delivery bodies produced good

results with different ILM target groups (70 per

cent+ outcomes). The Settlement developed a

model of placing administrative workers with

the voluntary sector and private companies –

almost like a temping agency. The college

project relied on getting construction contracts

and the café had limited expansion potential.

The placements model seemed to be the one

with the most prospect of rapid development

and they also developed good management

systems.

This model was expanded in 1999 to 100

places and in 2000 will be expanded to 300

places. It is flexible, being placement oriented,

and manages with very few core staff. Growth

can occur by franchising the model to other

organisations. Over 50 per cent of the

participants are from black and ethnic minority

groups.

22


With this core experience, Birmingham now

feels it can also use the ILM approach to help

pump prime community enterprises and

support more project-based ILMs such as

childcare.

In addition to a clear delivery infrastructure,setting up an ILM requires the identification ofsuitable work activity, appropriate training to beaccessed and administrative systemsestablished. The ILM participants are employees

and need their wages paid, grievances heardand sometimes they need to be disciplined. Itcan come as a shock to voluntary sector bodiesor training providers to realise they now havenew members of staff to keep busy (oftenoutnumbering their previous ‘core’). Inaddition, the emphasis on progression tomainstream jobs often requires new attitudes and

a changed culture in organisations. These pointswill be picked up in more detail in Chapter 5.

A dedicated manager

The quality and experience of the managers ofILM projects are the final, crucial, ingredientsfor successful development. Managers have thedifficult job of running a service (really a smallbusiness with all the entrepreneurial skills thatthis requires), hiring, supporting and coachinglong-term unemployed people, encouragingthem to move into other jobs and managing theservice delivery with 100 per cent+ staffturnover every year. Organisations which havetried managing ILM projects by extending theportfolio of existing staff have found it does notwork (except where the ILM workers are just afew placements). Normally a dedicated personis needed. When asked, the most successful ILMprojects can usually point to the manager asbeing the key factor (‘she is the best kept secretin Birmingham’). Others, where there have beendifficulties, will acknowledge that they rushedinto it, employed the wrong person or have notgiven them enough support.

23

Although there are a variety of operationalmodels and most ILM programmes are fairlynew, there is enough common experience tobegin to identify what works, what is morelikely to lead to success and what will causeproblems.

Objectives: people need to be clear what

they want an ILM for

The results of the survey of the main ILMoperators show that they are clear that the mainobjective is about increasing the employmentchances of long-term unemployed (Table 1).However, how this is best achieved requires aknowledge of the local labour market. Is thefocus on getting excluded groups such as ethnicminorities into available jobs (in London orBirmingham) or dealing with a slack labourmarket in ‘job gaps’ areas such as Liverpool orNorth Nottinghamshire?

Although ILMs can also be used as aneconomic development tool, to create smallsocial enterprises or commercial activities,provide new services or improve theenvironment, these objectives are secondary.Newham is an example of where an ILM bodyforgot the primary purpose, moved too far inthe direction of being a construction companywith high staff to trainee ratios, for example,and got into terminal difficulties.

Target groups: know who the ILM is for

Clarity about who the ILM can best help isimportant. An ILM job offers work, wages andsupport to move on those who have beenunsuccessful to date. Essentially, it is aboutrebuilding the participants’ belief that they can

hold down a job and giving enough solid workexperience to impress a potential employer.

An ILM approach will not help someone:

• who does not really want a job but isbeing forced on to a ‘scheme’ to avoidtheir benefits being cut

• whose benefits situation, domestic orpersonal problems are such that they willneed a great deal more sorting out beforethey are ready to seriously think aboutwork.

This does not imply that ILMs do or should‘cream’ the best participants. An ILM approachwill not achieve good value for money ifdirected at those who are already fairlyemployable and who need just a short skillboost.

Low drop-out rates and successful progressare most likely to come from a good matchbetween people’s expectations and interests andthe work offered. If the main group to betargeted is lone mothers, for example, then awide variety of interesting work with flexiblehours, limited travel time and good childcareshould be offered. If it is unskilled men, thenattracting participants by offering manual orsports activity work can be tried, but lateroffering the chance to take computing. As oneprogramme manager said ‘we need tohoodwink them into manual jobs first and thentransfer them’.

The flexibility of ILM programmes allowstargeting by gender according to localcircumstances. Although many of theconstruction and environmental projects attractyoung men, and thus can reach groups thatother programmes struggle with, projects can

5 Managing ILMs: what works and why?

24


also offer a wide range of activity (see Table 4)which attract women and those men who seework in IT, administration or care services asmore attractive.

Equally, projects can be constructed whichattract people from ethnic minoritycommunities if these are not coming forward insufficient numbers. In Glasgow, a special projectwas set up to provide links between the(mainly) Asian community and health serviceswhich increased participation and outcomerates from this group.

Knowing the target group enables the projectto provide the right level of support and workdiscipline. One strand within the GlasgowWorks programme (Access Works) was targetedat those over 35, all two years+ unemployed.They had many problems (the majority seeingage as a barrier) but did want to get back towork. The support structures and workplacements developed by this project weregeared to both the personal issues presented bythis group and the attitudes of employers tothem, with a 68 per cent positive outcomesuccess rate (University of Glasgow, 1998).

The original instinct of many ILMs has beento target the longer-term unemployed (over oneyear) but since the New Deal many have startedtaking people who have been unemployed foronly six months without trying to identify whowithin this group are most likely to becomelong-term unemployed (e.g. those with pooreducation levels). This is likely to increase thedeadweight (63 per cent of all unemployedleave the register within six months and 82 percent within 12 months anyway) and reduce theoverall value for money of an ILM programme(Cambridge Policy Consultants, 1996a).

More seriously, those programmes which

have embraced the New Deal and acceptedmandatory referrals may not be able to providethe range and intensity of support andmanagement that some of these participantsrequire. The high drop-out rate and pooroutcome rate of the waged Voluntary SectorOption and ETF programmes in Southwark, StHelens and Knowsley (all below 20 per centrecorded outcomes) in their first year ofoperation may be an indication of this.

The lesson here is not to conform with whatthe funding sources prescribe, but to constructthe model which best meets the local aims andcircumstances, and fit the funding to it.

ILMs should be designed to reflect the ‘real’labour market and yet many have only over-25s(e.g. in Employment Zone areas) or under-25s(New Deal). Almost all respondents wouldprefer to have a mix but feel restricted byfunding regimes. In North Ayr, two separateage-group projects were set up with differentfunding streams. One had difficulty recruiting.With hindsight, they could have been merged.

Single Regeneration Budget (SRB) and muchESF funding is area targeted. This can causemajor recruitment problems; trying to geteligible people from a small catchment areainterested in a specific job vacancy is verydifficult, especially for small projects. InManchester, this caused serious recruitmentproblems in the early Work Options pilot.Providing a variety of job opportunities andgetting agreement to have only limited localtargeting (say 50 per cent of recruits) can be away out of this.

The lessons here are that the type of workactivity determines who will be recruited, so itis important to design the work activity and itslocation to be attractive to the target group.

25

Managing ILMs: what works and why?

The work activity: know what it is you

want to do and why

Apart from attracting the right target group, thework activity of an ILM project is also asignificant factor in its overall success. It needsto be of a type that can be done by relatively lowskilled people, but also offer sufficient varietyand content to develop transferable skills. Thiswill reduce drop-outs and help job outcomes.

Many unemployed are sceptical of ‘schemes’doing repetitive and valueless work, orplacements where all they do is thephotocopying. The benefit of work is not justthe wage but that the individual feels they aredoing the same kind of work that otheremployed people do. Successful projects areones where participants can meet or serve thepublic, use a telephone, progress in the use of IT,are given increasing levels of responsibility andare very busy all the time. The best way toensure real work is to have a real customer(individual) or a contract to complete on time.Placements within other bodies can providegood work experience provided the host bodyhas thought out what additional work is to bedone.

‘Good ideas’, by themselves, do not alwaysproduce good projects. For example, a projectaimed at servicing computers in voluntarybodies in South London found there was not thedemand. A concentration on environmentalprojects is not likely to develop the transferableskills needed for the growth sectors of retail, ITor hospitality. However, a project that providesa valued local service will get the support of thelocal partners, find it easier to attract fundingand be more sustainable. Examples of ILMprojects that meet these criteria are town centre

guides, call centres and IT support, youth work,some environmental work, childcare. There areclusters of ILM projects in these fields (Table 4).

Create – benefits all round

Create is an established 36-place programme

in the high unemployment area of Speke in

Liverpool. It refurbishes white goods

(refrigerators, etc.) and sells them at low prices

through a local shop or donates them to low-

income families (over 2,000 units per year).

The average length of unemployment of

Create’s workforce is four years and the job

outcome rate is 64 per cent.

The multiple benefits of this operation mean

that Create gets support from the City Council

(regeneration), Dixons, Electrolux and Thorn

(donations of appliances and management

support) Landfill Tax credits (recycling) and

local companies such as Littlewoods

(charitable aims).

Recruitment: get the right people for the

right job

The whole philosophy of the ILM approach isthat it is a job – like any other – and not atraining place or an option on a scheme.

Recruitment is best done by advertising as ajob in Job Centres or newspapers and outreachvia local communities. Those programmes thathave kept to this approach have the most chanceof getting people who will stick to the work andprogress. The pilot in Birmingham and much ofGlasgow Works and Wise Group are like this.People apply for the job that interests themwhen they are ready.

There is a danger that the introduction of the

26


New Deal with a compulsory Gateway period,referral by Personal Advisors and thetransformation of jobs into ‘opportunities’ bythe Employment Service have changed thisclarity of focus. Where programmes areaccessing New Deal money (now the majority),several have found their relationships with thelocal Job Centres strained on this point. There ismore chance of mismatch – those who turn upfor interview may be less enthusiastic andprojects may feel more obliged to take thosereferred. What should be seen as a job (albeittemporary) can turn into a place on a ‘scheme’.Most ILM managers would agree that projectswork less well if people are forced into them.Like any other employer, the manager musthave the final say on who gets a job.

The provision of training: getting the

balance right

The bulk of the activity in an ILM project has tobe work and a normal work pattern has to beestablished. The survey found work activityaccounted for more than 60 per cent of thecontract hours in 78 per cent of programmes.ILMs are not training courses for a specificcareer. Although some participants will want toprogress in their specific job and will seek togain qualifications, others are unsure and arestill testing the job market. However, it shouldbe noted that ILMs can achieve twice the rate ofVQ qualifications than comparableprogrammes, usually because of their intensityand duration (Cambridge Policy Consultants,1996b).

One of the main difficulties projects have isaccessing suitable, flexible training. Collegesstill tend to operate fixed course timetables that

do not fit easily into the roll-on, roll-off natureof ILM recruitment. Equally, insistence offunding regimes such as New Deal on VQ-based training can mean that inappropriatecourses can be forced on participants when amore customised, ‘pick-and-mix’ approach andon-the-job training would be more suitable.

However, some of the programmes studieddid report that the training course was one ofthe most popular parts of the package andpeople valued the qualification.

A number of ILM programmes have anadditional ‘personal development’ activity. Thisis a core feature of Glasgow Works and has beenadopted by others. Many choose driving lessonsbut it can include anything from photographyclasses, computer courses to outward bound.The aim is to increase motivation and a sense ofachievement, and to begin the process oflifelong learning.

The lesson from this is that flexibility intraining, and developing transferable skills, ismore likely to retain motivation and producejob outcomes.

Terms and conditions: making it clear that

it is a job

Many projects reported that the one thing theydid not get right to start with was creating theright balance between the disciplines of workand the support and understanding needed bysome of the participants. Absenteeism, inparticular, was not dealt with quickly or firmlyenough. Many have come to realise that theymust act like employers and require goodtimekeeping, correct dress and attitude, even onpain of docking wages. Anything less and theyare not preparing the person for work in the real

27


labour market. There needs to be a contract withresponsibilities on both sides. Projects wheremorale and performance are high have a clearappreciation of this.

Sheffield – the Youth Association of South

Yorkshire

The Sheffield ILM programme grew from the

desire of the Centre for Full Employment

(CFFE), a voluntary sector advice and

campaigning body, to take a more proactive

approach to the unemployment problem. The

opportunity arose when it took on the

Voluntary Sector Option contract for New Deal.

There are about 150 filled places with

organisations across the City; usually no more

than one or two people each, on 12-month

contracts at £123 per week. There is a high

percentage of people from the black and ethnic

minority communities and 60 per cent of

completers progress to jobs.

A typical delivery agent is the Youth

Association of South Yorkshire (YASY), which

took on eight people in the first year because it

wanted to bring in young people to revitalise

the organisation. Having a small core staff and

no experience of running an ILM project, it was

a rapid learning experience (‘we struggled’).

Recruitment via the Job Centres was difficult

and YASY would have preferred to have done

it its own way. Accessing training from a

university was a ‘tactical error’ as YASY did not

‘own the course’; it now operates its own

training. The relationships with the young ILM

workers became an issue – the realisation that

they were now employers and not youth

workers meant a different perspective on

timekeeping and work disciplines. There was a

need to clarify roles and support structures

with the central contracting body (Sheffield

CFFE), for example, over grievance issues.

In 2000, YASY feels it has learned from its first

year – improving job contracts and making

clearer responsibilities on both sides – even

changing the culture (‘ban the word ILM

worker – they are project workers’).

A waged programme: how important is the

wage?

Most would argue that the wage is an essentialcomponent in the ILM approach. Someprogrammes have allowed a choice of wages orremaining on benefits but where they do themajority of participants choose a wage.

The main argument for the wage is that itallows the creation of a normal contractualrelationship, increases motivation and reducesdrop-outs. The transition from the relativesecurity of benefits to being waged; managingmoney, paying rent, paying off debt and so oncan be difficult for some. The adjustmentneeded is better done while on the ILMprogramme, especially if support can be given(indeed, this is one of the ILM’s purposes). Thisshould reduce difficulties when in a subsequentjob.

South Lanarkshire – the effect of the wage

South Lanarkshire Council operated a small

ILM in 1997/98 providing work experience and

training in social care, paying a wage of £120

plus childcare (only two needed it) and travel.

All participants were aged over 25, just under

28


50 per cent male and unemployed for between

two and eight years.

When asked to rank the most significant

factors in applying for the ILM post, 90 per cent

said ‘the work opportunity in a social care

setting’, with ‘the wage’ being second in

importance with 62 per cent. When asked what

kept them on the programme, both these were

given equal top weighting by 75 per cent of

participants. The job outcome rate was 90 per

cent.

The level of the wage has produced somedebate. Some argue that the minimum wage(£130 or so) is too low and a more ‘decent’ levelshould be paid. Many ILMs in Liverpool havepaid £160 or more. However, in Glasgow, aproject, placing ILM workers with employers,initially paying up to £180 per week in order toattract older participants, subsequently reducedthis to £140 and found that it did not make adifference in attracting people. It was otheraspects of the package, such as the supportprovided and the opportunity to be consideredby employers, which mattered (University ofGlasgow, 1998).

More importantly, at the higher level, somepeople found that their earning power beyondthe ILM was such that there was no incentive tomove on. One project in Ayrshire paid a rate £30per week higher than another nearby becausethat is ‘what [they] could get funding for’ withno relation to the local job market. They thenfound that people were reluctant to leave.

With proper in-work benefit advice, no oneshould be worse off on an ILM wage and mostpeople without dependants are in factconsiderably better off. The Working Family Tax

Credit (from April 2000) and the transformationof the benefits system into a comprehensiveemployment credit system for everyone (or atleast the over-25s) by 2003 will ensure areasonable income level both on an ILMprogramme and afterwards (HM Treasury,2000).

There is a debate about whether London is aspecial case, given the high level of housingcosts, and that maintaining people on benefits isthe only answer here. NewhamWise in 1998/99offered six months on benefit and then anoptional transfer to a wage. The majority choseto remain on benefit. The early drop-out ratewas 69 per cent and the job outcome rate in 1999was 28 per cent. In Southwark, in 1999, a choicewas given from the start and about 60 per centopted to stay on benefit (all 18–24 year olds).The drop-out rate is also high and the joboutcome rate here is also low to date (below 20per cent).

Other programmes surveyed in this studyindicate that waged programmes with the sametarget group doing similar things are producingbetter results. Hyde Housing Association offerswaged and unwaged programmes. Its retentionrate for those on a wage is 80 per cent comparedto 41 per cent for unwaged and the job outcomerate to date is six times better for the waged.CoventryWise gets 70 per cent outcomes fromits waged participants and 30 per cent fromthose where people remain on benefits plus.QMat in Bury reported a similar differential of60 per cent outcomes from its waged project andonly 10 per cent from its New Deal benefits plusprojects.

Although a causal relationship betweenpaying a wage and low drop-out and higheroutcome rates may not be proven, these figures

29


should give rise to some caution aboutabandoning wages for funding or other reasons.By maintaining people on benefits, are projectmanagers really sure they are helping thetransition from welfare to work?

Jobsearch: it is all about moving on

The majority of programmes consulted in thisstudy regretted not starting jobsearch earlier.New projects can get too involved in recruiting,organising the work and training to worryabout it. If they are offering a 12-month contract,the need seems a long way off. Participantssettle in, do not see their colleagues moving onto jobs and leave it to the very end to look forother work.

Recognising this, some programmes have setup structures to encourage move on. GlasgowWorks set up a centralised job-matching service,which starts interviewing participants at Month3 and then with a more intensive approach fromMonth 6. In the larger projects, there arededicated job placement staff. Manchester hasintroduced employment staff to work with theplacements and Sheffield has links with thelocal Careers Service to provide this. WiseGroup has always had jobsearch as an integralpart of the weekly programme.

For those ILM programmes where theparticipants are also on New Deal, the PersonalAdvisor assigned to each person by theEmployment Service is also charged withproviding this service. However, this stops at sixmonths (end of New Deal period) and, as wehave seen (Table 2), the most productive periodfor successful job entry is between six and ninemonths for a 12-month ILM contract period.

The objective is to create a culture of moving on

and successful job progression. Starting at Month 1does not make much sense because people arethere because they are not yet employable. Aperiod of confidence building is necessary.Equally, it is wasteful and demotivating tothrow inappropriate jobs at people – they needto feel they are moving to something better andsustainable.

The key importance of this component of theILM approach can be illustrated by theevaluation of the ACE Programme (Action forCommunity Employment), a waged programmethat ran for over ten years in Northern Ireland.This concluded that, although offering wagedwork and providing substantial communitybenefits, the programme did not appear toimprove an unemployed person’s chances offinding a job (Cambridge Policy Consultants,1998b). The reasons identified were the absenceof key elements of good practice such asrelationship to mainstream jobs, a culture ofprogression into them and management‘dynamism’.

Systems and monitoring: knowing what

you are doing

There is no doubt that the main operationalproblem experienced by ILM programmes is thevolume and complexity of the paperworkrequired by the different funding regimes (seeTable 10).

Most have seriously underestimated the timethey need to put management systems in placeand the staff training needed to keep on top ofthis. This can even result in claw-backs ofmoney or loss of anticipated payments becauseof unsigned timesheets and training plans ormissing forms. Glasgow Works lost £100,000 of

30


potential income because of poor paperworkreturns from its project providers in its first yearof operating New Deal ETF/Voluntary Sectorprogrammes. A concentrated effort was neededto eliminate this problem.

Nottinghamshire: developing capacity and

getting systems in order

The Nottinghamshire ILM (Bridge to Work) is

led by the County Council. It was set up

because of the ‘need to do something’ as a

result of the massive increase in male

unemployment following the decline of the

coal industry.

Not wanting to set up a big central

organisation, it adopted a more enabling

approach starting with delivery via several

scattered Groundwork Trusts operating in the

County. The work is mainly in energy

conservation and landscaping with about 100

places using New Deal, ESF and Coalfields

Regeneration funds. First results are showing

about 50 per cent job outcomes.

The Council recognised that there is a capacity

issue in running ILMs and so it has funded a

central development worker and is putting on a

business development programme for the

Groundwork Trusts. It recognised that new

providers need to be inducted into the ‘ILM

ethos’. Groundwork Ashfield and Mansfield,

for example, accept that they underestimated

the difficulty of getting the right core staff,

putting paperwork systems in from the start

and ‘changing the culture from a training

programme to an employment programme’.

To help the delivery agents and improve

systems and quality, the Council has

contracted with an agency (North Notts

Environmental Partnership Lead Agency)

whose job is to ensure that all the paperwork

required from the Trusts (timesheets, training

plans, etc.) is checked and in order before it

gets sent to them.

There has also been a failure by many ILMprogrammes to keep a record of what ishappening in terms of job outcomes. Whereoutcome payments are made, for example, withTraining for Work in Scotland with the WiseGroup, people are pursued and evidence issought. With New Deal where the outcomepayment is low or is achieved automatically atWeek 27, or with ESF applications where pastperformance is low in the scoring criteria, thereare few incentives to keep proper records. Evenif projects do have an idea of who has got a job,many are not tracking to find out if they arekeeping them. However, ILMs will be judged

ultimately by this and by this alone.

Quality and performance: managing

through contracting

Running an ILM project on the ground can oftenbe hard enough without adding thecomplexities of keeping records and audit trails,and managers may let this slip. However,programme managers will find it hard tomonitor performance, to take action quicklyenough or to justify closing down parts whichare not working if there is no robust informationor performance criteria by which to judge. Thiscan best be done by agreeing targets through acontract relationship.

To achieve this, ILM programmes havedeveloped contracts that include:

31


• guidelines on who is to be recruited (e.g.percentage over 25, percentageunemployed for over two years,percentage from certain postcodes, etc.)

• number of starts and actual job outcomesexpected; this will require an estimate ofthe average length of stay and will act asan incentive to reduce ‘settling in’ and notmoving on when job ready

• target number still in work after sixmonths (needs a tracking mechanism)

• sample training plans and job contracts

• expected jobsearch activities and whenthey should happen

• progress review procedures and what willbe measured; one Employment Zone (EZ)ILM contract stated that a project will beclosed if found to be ‘unsatisfactory’, withno stated criteria of what this meant – arecipe for dispute

• revenue generation targets if the project isoperating as a social enterprise

• an annual business plan.

Tips to achieve a successful ILM programme

• Do not forget that the primary purpose is

progression into jobs; too much focus on

the service delivery can result in difficulties.

• Do not do just what the funding sources

prescribe. Create the model that best meets

your aims and context, and then fit the

funding to it.

• The project type will determine who you

end up recruiting, so construct the project

activity and its location around who it is you

want to target.

• Projects need to have a real customer to get

as close as possible to real labour market

conditions.

• ILM projects do not work if someone is

forced into them. ILM managers are

employers and must have the final say on

who gets recruited.

• Flexibility about training and a focus on

transferable skills are more likely to retain

motivation and produce job outcomes.

• Treat ILM workers as normal employees

from day one and be prepared to discipline.

• Wages, at the right level, appear to be

significant for retention, motivation and

progression, and should be abandoned with

caution.

• Do not leave jobsearch to the end.

• Do not underestimate the paperwork. Put

systems in place from the start and create

incentives to track job outcomes.

• Be clear on how and when a project will be

judged (e.g. what outcomes are expected)

and when reviews will take place. Use

contracts with measurable performance

criteria to enforce this.

32

The funding package

There is no single funding source for an ILMprogramme. Operators need to be creative andpackage together different sources – oftenreferred to as the funding cocktail or jigsaw (seeTable 13 and Figure 5). The survey found thatmost programmes use resources from at leastthree of the following:

• government training and employmentprogrammes such as New Deal

• European Structural Funds

• regeneration funds

• service delivery funds, i.e. payment orgrants related to the work being done.

Seventy per cent of programmes used amixture of New Deal and European funding.

Training and employment programmes

The building block of the early Glasgow Worksprogramme was Training for Work (TfW) (seeFigure 6). The Glasgow Development Agencyagreed with Scottish Enterprise a higher weeklyrate (£93) using a notional ‘transfer’ of some ofthe participants’ ‘benefits’ into the TfW budget.The aim was to demonstrate that a moreproactive use of training moneys and ‘benefits’could produce higher outcomes. It also ensuredthat this money was ‘clean’ so that it could beused to match European funds. This aim wasachieved, with Glasgow Works producing muchhigher outcomes than TfW. Although thisspecific arrangement no longer applies(Glasgow Works and Wise Group now usestandard rates of TfW), the principle of usingunemployment benefits to fund programmes

6 Funding ILMs

Table 13 Funding sources

Source used % of programmes

New Deal 18–24 82New Deal 25+ 25ESF Objective 1 15ESF Objective 2 43ESF Objective 3 38WBLFA 11TfW 11Employment Zones 12SRB 54TEC/LEC 28Local authority grants 34Local authority contracts 29Private sector 18Trusts/Lottery 18Landfill Tax 14Revenue, e.g. sales, fees 25Own funds 20Mixture of New Deal and European 70

33

Funding ILMs

has been carried forward into the most recentfunding mechanisms (for example, in the new‘Personal Job Accounts’ discussed below).

Training for Work and Work Based Learningfor Adults (WBLFA) administered by LECs/TECs are used as a source by 22 per cent of ILMprogrammes. In England and Wales, theresponsibility for delivering programmes suchas WBLFA will be transferred to new SkillsLearning Councils in April 2001. Theuncertainty and upheaval of this major changemay make it difficult for ILM managers tosustain this source of funding in the short term.

The main government programme used byILMs is the New Deal for the Unemployed(Table 13), especially the Voluntary Sector orEnvironmental Task Force Options for peopleaged 18–24. New Deal has a combination ofstart and progression fees, training monies andan additional amount (up to £60) if wages arepaid. The Manchester ILM uses this as its core(see Figure 7).

There appears to be some ambivalencewithin Employment Services (which managethe programme) about whether ILM jobs areeligible for wage subsidies under the JobsOption within New Deal, or whether they arejust temporary placements or trainingopportunities which should not be treated as ‘ajob’ and should be able to obtain the wagessubsidy funding. Since the intention of thewages subsidy is to encourage an employer togive someone work experience (a permanentposition is preferred although this is not arequirement), treating the ILM opportunity as ajob does seem valid and there are a number ofILM programmes using the Jobs Optionemployer subsidy for 18–24 year olds (£60) andfor the over-25s who have been unemployed for

Figure 5 Typical funding jigsaw

New Deal30%

ESF30%

SRB20%

TEC/LA10%

Revenue10%

Figure 6 Glasgow Works funding jigsaw

TfW12%

NewDeal13%

ESF25%LEC

20%

LA5%

Projectsources25%

Figure 7 Manchester funding jigsaw

SRB/LA11%

Other5%

NewDeal40%

ESF44%

34


over two years (£75).The fuzziness about whether an ILM job is a

‘real’ job or not also emerges in two other ways.Some ES districts allow a job outcome paymentat Week 27 if the person is still on the ILM (afterthe maximum 26 weeks on New Deal) and someTECs allow an outcome payment on WBLFAafter a few weeks on benefit, then transferringto employed status. Others do not.

Another major government stimulus to ILMdevelopment was the Prototype EmploymentZones (1998–2000). Here, there was noambiguity and a payment of £75 per week couldbe drawn down for 12 months. In addition,WBLFA and TfW could be used so the weeklyamount could be made up to over £100. Thisinitial programme has been replaced by newEmployment Zones (from April 2000) in 14areas including Glasgow, Liverpool,Birmingham and Southwark. These have adifferent financial structure and are operated byprivate companies.

The most significant feature in the new EZsis the ‘Personal Job Account’. This is a rolling upof benefits (equivalent to 21 weeks’ averageunemployment benefits) plus other trainingmoney to create a fund to be spent by the EZoperator in collaboration with the client in anyway which will enhance job prospects (training,new clothes, driving lessons, etc.). The clientmust receive their basic benefit for up to 26weeks, or until they get a job if before that, sothere is a strong incentive for the operator toquickly get the participant a job. The EZoperator will get a bonus payment for a joboutcome and a bigger one if the person is stilloff the register at 13 weeks, and can keep anyunspent Personal Job Account as profit.

The legislation required to allow the creation

of the Personal Job Account was approved bythe UK Parliament in 1999 (Stationery Office,1999, Section 60). In principle, there is no reasonwhy any ILM programme cannot now use this‘transfer’ of unemployment benefits for activemeasures programmes, although extensionbeyond the present Employment Zones wouldrequire approval by the Secretary of State.

It could be argued that this funding regimewith its flexible use of benefits and trainingmoney and emphasis on job sustainability isfavourable to ILMs. However, the financialincentive to ensure that the participant gets a jobfast may run counter to this. The maximumperiod of EZ provision is 26 weeks and a joboutcome must be within four weeks of leaving(to qualify for a bonus payment). The evidenceis that job sustainability decreases if people arepushed into unsuitable jobs too soon.

However, DfEE has accepted that a period inan ILM or other subsidised job after the first 26weeks on EZ will be disregarded and a jobwithin four weeks of leaving the ILM isacceptable. So, it is possible to construct a nine-or 12-month ILM programme (26 weeks’ EZ andthe rest from other funding) and draw downoutcome payments where a job is obtainedwithin four weeks of leaving the programme.This may be suitable for those EZ clients whoare not likely to achieve an early job outcome.

European funds

Few ILMs can be run by using governmentprogrammes alone. The other main fundingsource used is the European Structural Funds.These consist of the European Social Fund(ESF), which is concerned primarily withtraining and access to work, and the European

35

Funding ILMs

Regional Development Fund (ERDF), which isconcerned primarily with the provision ofinfrastructure and business support. Withinthese Funds, there are different programmes(described as Objectives), which are availablefor different purposes and across different partsof Britain. The programmes most widely usedby ILMs include:

• Objective 3 (Training and WorkExperience and capacity-buildingmeasures) which covers most of Britain

• Objective 2 (Community EconomicDevelopment measures) which covers arange of specified areas where there ismajor structural change (e.g. loss ofmanufacturing)

• Objective 1 (combined measures) whichcovers a number of areas of Britain andNorthern Ireland where the GDP is 75 percent below the EU average.

The European programmes pay for only aproportion of the cost (typically 45–50 per cent)and therefore must be ‘matched’ by fundingfrom other sources. All of the other sourcesdiscussed here can be used to match EU funding(although care is needed with WBLFA whichalready has an element of European funding init). However, in all cases, it is necessary to showwhat ‘added value’ the EU funding is bringingto the action, e.g. more training or guidance,longer work experience, etc. A key argumenthere is that the use of EU funding enhances theoverall package and increases retention andoutput rates. This needs to be demonstrated toprove added value. Audit trails for the use ofEU monies can also be a major administrativeheadache for ILM operators and the work and

accuracy required should not beunderestimated.

Regeneration funds and ‘Best Value’

Many backers of ILMs are interested in the localregeneration potential of the approach, e.g.:

• increasing labour market entry andreducing exclusion

• increasing the provision of local servicesand stimulating economic development.

The SRB (Single Regeneration Budget) fundsin England and Wales have therefore proved animportant funding source for manyprogrammes with ILMs being written intodelivery plans. However, one operationalproblem can be the narrow geographicalboundaries of regeneration programmes, whichcan result in difficulty in recruitment, and inmaintaining viable projects (discussed inChapter 4). The Social Inclusion Partnerships inScotland have also been used to providefunding streams for ILMs.

Local authorities and TECs/LECs also haveregeneration objectives and have been willing tocore fund ILM programmes, and providedevelopment workers and premises. Anothersource has been the Coalfields RegenerationFund, designed to help the transformation ofthese areas of high unemployment, e.g. in SouthYorkshire, Nottinghamshire and elsewhere. Anumber of environmental projects have alsomanaged to access Landfill Tax.

Many housing associations (HAs) aredeveloping policies to meet the employmentneeds of their tenants (and through this alsoimprove services and the environment). This is

36


likely to be a growth area for ILMs. ThePeabody Trust in London, Hyde HA inSouthampton, Queens Cross HA in Glasgow areamongst the current ILM operators.

The requirements of ‘Best Value’, wherepublic bodies must look beyond the cheapesttender to maximising the benefits of any projector service, are also an opportunity for ILMs.They can demonstrate added value byproviding a service and getting localunemployed people back to work at the sametime. Linking the ILM approach to privatecontractors is also a way of achieving this, e.g.some Glasgow and Manchester projects placeILM workers with private constructioncompanies after initial training. There is a linkhere with the concept behind Local Labour inConstruction schemes. The major councilhousing stock transfers occurring throughoutBritain could therefore offer new opportunitiesfor ILMs.

Service-related income

Payment for contracts done or services providedhas the greatest potential for creatingsustainable income to ILM projects, but it canalso bring its own problems. The Wise Group,originally set up to provide a programme ofheat insulation and then landscaping forGlasgow’s housing stock, is the best example ofthis. Contract and grant payments fromGlasgow City Council have reduceddependency on the ever-changing governmentprogrammes and ESF. However, this is replacedby a dependency on the Council and the WiseGroup has had to maintain a close relationshipwith the local authority; it cannot afford for thisrelationship to go wrong. Mistakes, poor

workmanship or lack of completion on time canbe expensive and can lead to the contracts beingwithdrawn.

This approach can also lock the ILM into alimited range of job opportunities and a largecore staff (design team, etc.). The Wise Grouphas in recent years recognised this and begun todiversify.

Several Groundwork Trusts, with their trackrecord of environmental works, have been ableto marry their expertise with running an ILMprogramme and negotiating a programme ofpublic sector work.

Where the ILM service supports the policiesof other bodies, it is possible to access additionalgrant funds. For example, the Job Coaching ILM(supporting disabled people) in Glasgow hasgained financial support from Social Services.Other projects have got involved in theprovision of classroom assistants, sportscoaching and so on, and attracted funding forthe service provided from public and charitablebodies.

Some ILMs have been set up with the aim ofsecuring a commercial market and becoming asocial enterprise, e.g. the recycling ILMs selltheir products where possible (white goods inthe case of Create in Liverpool). A number ofnew ILM fields such as market research, callcentres, provision of IT have this as a potential,but few have yet gone beyond 25 per cent oftheir funding from the market. One danger thatarises from this approach is that, in order tocompete in the marketplace, there may be aneed to recruit more skilled and specialist (non-ILM) staff, and to take on orders to keep thesestaff in work. This can cause tensions betweenthe focus on the progression of unemployedpeople and the commercial imperatives.

37

Funding ILMs

In Glasgow, under the New Jobs forGlasgow programme begun in 1997, there is anattempt to test the use of the ILM approach tocreate new social enterprises and permanentjobs. There have been some successes. In thefirst phase (to 1999), 25 additional permanentjobs were created with a revenue income of£350,000 per year in five projects. Much of thisincome has been used to pay for the created jobsand the contribution of earnings towards thecore costs of the ILM has so far been limited(McGregor and Richmond, 1999).

Childcare is one area where revenue incomemay be a substantial source of funding (seeFigure 8). Childcare ILMs provide a localservice, attract target groups such as loneparents and provide training for a growth jobsector. With the introduction of the ChildcareTax Credit, much higher fees can be chargedthan before. So, it is possible to see the role ofthe ILM as setting up a service, trainingunemployed people and developing a more self-financing social enterprise.

Worktrack: the first fully funded ILM?

Almost unnoticed in the rest of the UK, the newWorktrack programme in Northern Ireland canlay claim to being the first fully funded ILMtype programme sponsored by a governmentagency since the Community Programme.Worktrack offers providers a fee of £150 perweek to cover the wage for 26 weeks andtraining on a normal work contract. It is for thelonger-term unemployed and the work createdmust not displace existing jobs. Additionalpayments are made for sustained job outcomes(up to £450 per outcome). The money is ‘clean’and so additional European sources may beaccessed. The programme is at 600 places inearly 2000 and has a target of 2,100 places(Training and Employment Agency, 1999).

Achieving sustainability

All ILM programmes are fragile because of theinstability of the funding jigsaw. This is causedby changing government programmes (e.g.Employment Zones), time-limited programmes(e.g. SRB), annual bidding and late payments(e.g. ESF). It also takes time to develop marketsand capacity to deliver well in order to obtainservice-related income.

The complexity of funding andadministration, and differing auditrequirements, are a barrier to entry fororganisations wishing to set up ILMs.

The main problem expressed by ILMoperators is securing year-on-year funding andresolving this was the main improvementdesired by them (see Tables 10 and 11). This canbe mitigated by reducing the reliance on justone or two funding streams (e.g. the PrototypeEmployment Zones) or one service or product,

Figure 8 Childcare Works (Glasgow) funding jigsaw

NewDeal/TfW25%

ESF25%New

OpportunitiesFund10%

Revenue(parents’fees)40%

38


and widening the target group to attractadditional other funding. The disadvantage ofwidening the range of funders is the complexityof paperwork and reporting, and possibledouble counting of outcomes.

An ideal range of ILM funding sources (inthe absence of virtually full funding as in theNorthern Ireland Worktrack programme) wouldinclude:

• a core commitment from a local bodywhich wishes to run the project andprovide the service, e.g. voluntary bodyor local authority

• a sustained environmental improvementprogramme with funding allocated andapproved

• ILMs written into SRB, other regenerationprogrammes, etc.

• projects which have a revenue or contractincome potential (sales of recycled goods,childcare fees from Tax Credits)

• ‘host body’ or private sector contributionsin cash or kind (e.g. manager’s salary orsecondment, premises or equipment).

The structure of the ILM can help maximiseand secure funding through:

• targeting recruitment (people and areas,e.g. SRB priorities)

• project themes which fit local strategies –childcare, health, education

• work trials (on benefit) to reduce drop-outs

• use of Individual Learning Accounts withfixed budgets

• placements with companies (with acharge)

• selection of projects which have revenuepotential and can build up core staff.

Operational factors which improve fundingprospects and sustainability are:

• getting good results for the target groupearly on (‘an early hit’)

• carrying out thorough evaluations andletting people know the results

• creating good PR and maintainingpolitical support

• preparation of annual business plans

• good monitoring, with correction or shutdown of projects that are not working.

Tips for ILM funding

• Plan funding applications in advance in

order to meet the various deadlines (ESF,

SRB).

• Ensure there is no double funding for the

same activities or staff.

• Double counting of outputs (e.g. job

outcomes) need not be a problem provided

it is clear in each application that there is a

package of funding and that the outcomes

are higher than would be expected from

one funding source.

• Some audit trails required by funding

sources can be onerous, so a project has to

be sure that the amount of money gained is

worth the extra bureaucracy.

39

Funding ILMs

• Keeping audit trails and providing reports in

the form required by each funder is a major

task and systems need to be in place from

the start.

• A strong lead body and ‘banker’ are needed

because there will be cash flow problems:

New Deal payments can be several months

late, ESF final payments can be over a year

late and yet expenditure is all up front

(mainly wages to be paid regularly).

• A business plan and cash flow projections,

and a risk assessment, are essential to get

the support of a ‘banker’.

• A ‘contingency plan’ and ‘wind-down plan’

are needed in case funding applications fail.

Given that most money is paid on take-up and

outputs (‘bums on seats’), efficient operational

management is the key to maximising income.

The main operational issues are:

• keeping numbers up to target – recruiting

the right people at the right time and

predicting the average length of stay

accurately

• a monthly profile of starts, leavers and

projected job and training outcomes for a

year ahead is essential

• getting the paperwork right, checking it and

sending it in on time, otherwise payments

may not be made or money clawed back

• checking to ensure that expenditure is

eligible for the different funding sources.

40

Comparison with other labour market

approaches

ILMs are only one of several approaches thataim to tackle long-term unemployment, and it istherefore important to consider the relativeperformance and value for money of ILMs. Thiswill be done by considering the followingmeasures:

• retention and drop-outs

• job outcome rates

• the durability of employment andearnings

• the cost per ‘outcome’

• other economic and social benefits.

Of the ILM programmes surveyed in thisstudy, 21 (about a third) have completed(mainly internal) evaluations and another eightintend to in the year 2000, so the body ofknowledge of performance is increasing.However, since many of these are relativelynew, the information on long-term impacts isstill rather dependent on the Glasgow Worksand Wise Group evaluations.

Retention and drop-outs

Drop-outs (people leaving to no outcome beforethe contract period is completed) in establishedILM programmes are around 20–30 per cent.This compares with over 50 per cent in TfWcomparison groups (see Table 14).

First reviews of the New Deal (18–24) areindicating low enthusiasm for the benefit plusVoluntary Sector and ETF options amongstsome of this age group and a number ofdelivery agents are exploring a waged ILMmodel as a method of reducing the high drop-out rates (DfEE, 1999).

Job outcome rates

From independent evaluations, we know thatjob outcomes are running at over 60 per cent forestablished ILM programmes (Glasgow Works,1996, 1998; Wise Group, 1997; Manchester, 1999;Plymouth, 1999 and Birmingham, 1998). Theaverage for all programmes surveyed in thisstudy for 1998/99 was 49 per cent (3,818 places)and the expected level for 1990/00 is 53 per cent(4,937 places) (see Figures 9 and 10).

7 ILMs: are they value for money?

Figure 9 Expected job outcomes 1999/2000 by ILM programme

No

. of

pro

gra

mm

es

20

15

10

5

0Over 70 60 – 69 50 – 59 40 – 49 20 – 39 Below 20

Job outcomes (%)

41

ILMs: are they value for money?

Although the ILM programmes surveyedused a range of job outcome definitions, 68 percent measured a job outcome as being onegained within 13 weeks of leaving.

The average level of job outcomes is affectedby six programmes (460 places) where theexpected outcomes in 1999/2000 are very low(less than 20 per cent). Three of them are largeNew Deal Voluntary Sector or ETF operationsoffering the standard New Deal package plus awage. They account for 71 per cent of the placesin this small group. All reported poor trackingand recording of outcomes by EmploymentServices. A fourth programme reported poorjobsearch activity and a fifth was primarilyconcerned with construction of self-build homesfor young people. If we remove these minorityof cases where the full ILM package asdescribed in Chapter 1 does not seem to be fullyoperational, the overall projected job outcomerate for 1999/2000 is 57 per cent.

Significantly, a number of those in thesurvey that were also operating non-ILMprojects for the same target group (usually for18–24 year olds on ‘benefit plus’ schemes) were

getting lower results than their ILM. Forexample, Coventry Wise achieves 70 per centwith its ILM projects but only 30 per cent forNew Deal. QMat in Bury estimates 60 per centfor ILM workers and 10 per cent for New Deal,and North Lanarkshire Council 50 per cent forits ILM places and under 20 per cent for NewDeal.

Although there are some exceptions, themajority of ILM operations are achieving resultssimilar to those reported in previousevaluations and the results of the olderestablished programmes are being sustained bythem. This suggests that 60 per cent of joboutcomes are an attainable benchmark for anILM over time.

Job outcomes from Training for Work, themain programme for the reintegration of thelong-term unemployed, were 46 per cent inScotland in 1998. However, 60 per cent did findwork at some time after leaving. Moresignificantly, for the ‘12 months plus’unemployed (a comparable group to most ILMintakes), the job outcome rate was only 37 percent (Cambridge Policy Consultants and

Figure 10 Expected job outcomes 1999/2000 by total number of ILM places

Tota

l no

. of

pla

ces

2,500

2,000

1,500

1,000

500

0Over 70 60 – 69 50 – 59 40 – 49 20 – 39 Below 20

Job outcomes (%)

42


Training and Employment Research Unit,University of Glasgow, 1998).

The evaluation of Training for Work inEngland and Wales showed that 49 per cent ofTfW participants got a job during the threeyears after they left, compared to 37 per cent ofa similar group of non-participants – anadditional impact of only 12 per cent (PolicyStudies Institute, 1999).

In the latter study, no attempt was made tolook at the effect of TfW on those who had beenvery long-term unemployed. However, datafrom one area indicate that job outcomes forpeople who are very distanced from the labourmarket are significantly less than otherparticipants in this Work Based Learning forAdults scheme (which replaced TfW in Englandand Wales in 1998) (see Table 14).

This is backed up by the Glasgow WorksEvaluation of 1996 which compared theprogramme’s outputs with a group matched byage, length of unemployment, gender andpostcode on Training for Work at the time (seeTable 15).

The rate of job outcomes for all those leaving

New Deal (18–24) Options, the nearestequivalent target group within New Deal, is 37per cent (Bivand, 2000).

These data suggest that a typical ILM projectwill achieve at least 50 per cent higher joboutcomes for the long-term unemployed thanother programmes. The best produce evenhigher increases in job outcomes.

The ILM programme job outcomes seem tobe much closer to those achieved by theTraining and Employment Grants Scheme(TEGS) in Scotland. This offers a wage subsidyto employers and is targeted at those who havepreviously been unemployed for six monthswho are living in certain areas. Seventy-six percent of participants gained employment(Cambridge Policy Consultants, 1997a).

It should be noted that 20 per cent of TEGsparticipants were also on TfW, so the outcomeimpact of each programme has to be reducedsomewhat to take account of this.

In ILMs, the main ‘soft’ outcome is increasedconfidence (to go to interviews, to travel and inassertiveness without aggression). ‘More self-confident’ was cited by 84 per cent of

Table 14 Leavers to jobs (within 13 weeks) in 1998/99 from WBLFA

Job outcome rateCategory of participant (%)

Age 24–45 34Age 46–55 27Unemployed for 6–12 months 34Unemployed for 12–23 months 28Unemployed for 24–36 months 24‘Basic Employability’ participants 12Other training participants 36 per cent

Source: North and Mid Cheshire TEC.

43


participants as the main impact of theprogramme in the evaluation of Glasgow AccessILM (University of Glasgow, 1998).Employability measures such as behaviour atwork, timekeeping, flexibility and working withothers clearly do improve (as evidenced by therate of job attainment) but are difficult tomeasure.

Durability of employment and income

growth

The Glasgow Works and Wise Groupevaluations are the only ILM studies to datewhich measure if people are staying in thelabour market after leaving an ILM. In GlasgowWorks, of those who got a job on leaving, 93 percent were still in work at 13 weeks and 90 percent were still in work after six months and at 12months (Cambridge Policy Consultants, 2000a).This latter figure contrasts with 41 per cent of allpeople leaving the unemployment register inthe same category still in work after six months.The comparison figure for those leaving TfW toa job, previously unemployed for 12 months, is38 per cent in work at six months (CambridgePolicy Consultants and Training andEmployment Research Unit, University ofGlasgow, 1998).

Data for the New Deal for the Unemployed(18–24 year olds) indicate that 73 per cent of allthose moving to a job are still in work after 13weeks (from Gateway and all Options). Of alljobs gained by all leavers from New Deal (18–24), 42 per cent have not lasted more than 13weeks showing low job durability ‘more thantwo out of every five of all moves to jobs havenot produced a sustained move off benefit’(Bivand, 2000).

Of all leavers from the Glasgow Worksprogramme (including those who did notimmediately progress to a job), 57 per cent werein work six months after leaving and 55 per centat 12 months (Cambridge Policy Consultants,2000a). The outputs for the Wise Group showthat 68 per cent of all leavers progressed toemployment at some stage and that 46 per centwere in employment six months after leaving(McGregor et al., 1997).

The data suggest that participants in ILMprogrammes leaving to a job are about 30 percent more likely to be in work after threemonths than all New Deal leavers and over 100per cent more likely than the average personleaving the unemployment register or otherprogrammes to a job to still be in work at sixmonths. Most significantly, this high durabilityrate is maintained even at 12 months.

Table 15 Output comparisons between Glasgow Works and TfW (in Scotland)

Glasgow Works TfW

Drop-outs (%) 27 53Length of stay (weeks) 36 19Jobs on leaving (%) 62 20Completed VQs (all levels) (%) 30 15

Source: Cambridge Policy Consultants, 1996b.

44


An early recognition that improvements areneeded to the New Deal came with thepublication of Lasting Value: Recommendations for

Increasing Retention within New Deal (New DealTask Force, 1999a). It pointed out that there hasalways been a revolving door, with 50 per centof those in the 18–24 group who got a jobreturning to benefits within a year, and arguedthat the New Deal programme had to come upwith ways of reducing this, e.g. by extendingthe period beyond six months for some (‘manyare beginning to make real progress but are wellshort of job readiness’), and creating provisionwhich ‘mirrors the working environment’ – bothcore features of the ILM approach.

As indicated in Table 2, there is a clearcorrelation between the duration ofemployment and the length of time spent on theILM programme, with early leavers having alower job retention rate. This finding issupported by data from the Wise Group(McGregor et al., 1997).

The evaluations of Training for Work inScotland found that it ‘does not appear to besubstantially improving the quality of jobsentered by individuals leaving the schemecompared to the type of jobs typically enteredby unemployed people’ (Cambridge PolicyConsultants, 1997a) and of TfW in England andWales that it had ‘little effect on the level ofwages gained’ (Policy Studies Institute, 1999).

The average first job net earnings afterGlasgow Works were £154 per week (45 per centabove the entry level job rate in Glasgow asreported by the Job Centres) with 15 per centearning over £200 per week. Eighty-six per centof jobs gained by ex-Glasgow Worksparticipants were full time and 60 per cent of thejobs gained were estimated to be at ‘higher than

entry level’. These were not jobs that wouldhave been taken by other long-termunemployed people (Cambridge PolicyConsultants, 1998c).

A study of expected longer-term earnings ofthose who left Glasgow Works compared to asimilar group of TfW leavers (i.e. previouslyunemployed for over 12 months) showed that,12 months after leaving the programme,Glasgow Works participants can expect to be£1,568 per year better off than their TfWequivalents and, by 24 months, this rises to£2,830. This is mainly due to proportionatelymore people in more sustained jobs (CambridgePolicy Consultants, 2000b, forthcoming).

Assessing the cost per ‘outcome’

The success of an ILM project/programmeshould be measured by its ability to movepeople into jobs and to maintain and improvetheir position in the labour market in the longerterm. Therefore, the most important measure ofan ILM programme is the overall cost per

sustained job outcome, compared to otherprogrammes for the same target group.

Because they pay wages, it can be expectedthat the unadjusted ‘cost per outcome’ of anILM programme is likely to be higher than thatof more basic training programmes. The surveyindicates that the average cost per place peryear is £13,860 (37 programmes). There is a widevariation, but 60 per cent of projects have costsbelow £14,000 (Figure 11). The more expensiveprojects were delivering environmental services,which usually include the costs of constructionmaterials and sometimes design in theirbudgets. A more typical budget for amainstream ILM project or placement

45


programme will be at or below the average cost.Figure 12 shows a typical breakdown and

weekly cost per person. Most money goes onwages (£120 plus), National Insurance and otherparticipants’ costs such as childcare (57 per cent)and training. Because of this, few ILMprogrammes are likely to be able to bring thetotal annual cost per person below £10,000(assuming the average length stay at 36 weeks).

However, in comparing this with otherlabour market initiatives, it is important toensure that a comparable cost basis is beingused, and that the cost per output is adjusted totake account of varying impacts on deadweight,substitution and durability.

There are strong arguments for reducing thecost of an ILM project by the value of the goodsand services produced. This will make the costmore directly comparable with that of otherinitiatives where this cost is not included. Oneapproach is to take the income received for theservice provision, either in grants or in otherpayments. Another, where no income isreceived, is to add the additional wagesproduced, plus profit and rent (but in thesecases wages can be a good proxy). This isespecially important where the service-relatedcosts are not being funded from a ‘labourmarket budget’. Nobody would suggestincluding the production and management costsof an employer in the ‘cost per job’ of peoplegoing through private sector wages subsidyschemes like New Deal employment option andthe Scottish TEGS, so why should we includethese costs for an ILM project?

The Shopmobility example below illustrateshow this can be calculated.

Example: the Shopmobility project in Glasgow

The Shopmobility project (providing escorts

with mobile scooters for the disabled in

shopping centres) operating in Glasgow City

Centre would cost about £120,000 per year for

seven staff plus manager and overheads

(excluding equipment) if delivered through the

public or private sectors. The ILM

Shopmobility project provides this level of

service with 15 workers. The additional staff

are needed to take into account time ‘off- site’

for training and jobsearch, turn-around and the

lower level of efficiency expected from ILM

starts. This costs £180,000 per year (more staff,

lower weekly wage, higher training and

supervision costs) or £12,000 per place per

year.

The ILM project is funded from three sources:

Core public and private sponsorship £60,000

New Deal/TfW sources £66,000

ESF £54,000

The Shopmobility example illustrates two

important issues in establishing value for

money (in addition to deadweight and

substitution).

• An ILM can cut the cost of delivering a

service; in the above example, the core

funding (public/private) would have to

double to provide the same level of service

if it was not an ILM.

• It is important to deduct the value of the

service provided to arrive at the real cost of

the ‘employment’ element; in the above

example, the core funding of £60,000 should

not be included.

46


The impact of these adjustments in the

Shopmobility example is to reduce the ‘labour

market programme cost’ per place from

£12,000 per year to £8,000.

The Shopmobility example is fairly typicaland would suggest that ILMs can best add valueby providing services which would otherwise beprovided, such as in childcare, leisure or healthservices or environmental works, but where, byusing the ILM, more can be done or provisioncan be started more quickly.

Estimates of deadweight (people who wouldhave got a job anyway) are 67 per cent in TfW(England and Wales) (Policy Studies Institute,1999) and 80 per cent for TEGS (normally highfor all job subsidy schemes) (Cambridge PolicyConsultants, 1997a). The Glasgow Works (GW)evaluation attempted a cost–benefit comparisonwith the equivalent TfW group. Deadweightwas measured at 16 per cent (those who saidthat GW made no difference to them getting ajob) and for the TfW comparison group at 22 per

cent. These lower levels reflect the highproportion of long-term unemployed people inthe Glasgow Works and comparison groups,people who would not otherwise have foundwork easily.

The impact of deadweight on the ‘raw’ costsof a labour market initiative are indicated in aScottish TfW study that showed that TfWspends £2,500 for an average trainee and £5,575per job outcome (1998). However, this cost risesto £15,000 if those job outputs where TfW is nota factor are removed (Cambridge PolicyConsultants and Training and EmploymentResearch Unit, University of Glasgow, 1998).

Job substitution also needs to be considered.This is where a leaver from a programme takesa job which another unemployed person couldreasonably expect to get. The evidence fromTfW is that it makes little difference to the levelof job gained: participants mainly go into ‘entrylevel’ jobs (Policy Studies Institute, 1999).However, as we noted earlier in this chapter, 60per cent of leavers from Glasgow Works went

Wagesand NI57%

Staff15%

Training9%

Overheads6%

Materials/productioncosts13%

Figure 12 Typical ILM budgetFigure 11 Total cost of an ILM place per year

% o

f p

rog

ram

mes

40

30

20

10

0Under

£10,000£10,000 –£13,999

£14,000 –£19,999

Over£20,000

Total cost per place

47


into higher level jobs (measured by job type andwage levels, etc.) so substitution is less.

When deadweight and substitution are takeninto account, the cost per net job redistributedfor a comparable programme such as Trainingfor Work for the same target group can be up todouble that of the ILM (Cambridge PolicyConsultants, 1996b).

As can be seen from the Shopmobilityexample above, excluding the service-deliverycosts can reduce the cost per output tosomething more comparable with otherschemes, that is, £8,000 per place per year. Forexample, the New Deal Voluntary Sector or ETFOptions cost about £2,500 per person per 26-week period (providers’ fees and traininggrants) plus benefits (average £58 a week) or atotal of £8,016 per New Deal place per year.

It has been estimated that it ‘costs’ the UKTreasury £8,150 per year for every unemployedperson (in benefits and in lost tax revenue). ‘It isclear that retention in work has an enormouseffect on the outcomes from the Treasury’s pointof view. It is possible to justify quite largeexpenditures on raising employability if jobretention can be raised’ (Bivand, 1999). We havealready noted that ILMs produce more durableoutcomes than comparable programmes and so,in principle, should increase the longer-termsavings to the Treasury.

Conclusion

Attempts at value-for-money studies are fraughtwith difficulties about comparative data and theassumptions made. ILM operators trying tocalculate value for money are faced with thelack of suitable comparative data in mainstreamgovernment programmes. However, the above

material indicates that simplistic statementsabout the high cost of ILM programmes relativeto other labour market initiatives need to betreated with caution. In most cases, they will notbe comparing ‘like costs’, and will not takeaccount of the lower levels of deadweight andsubstitution, and the better durability ofemployment, that ILMs can be shown toachieve.

Nevertheless, from the evidence available,we can summarise the typical performance ofILMs compared to other programmes for the

same target group as:

• retention on programme appears to bedouble

• job outcome rates are two to three timesbetter

• the durability of employment is at least 30per cent higher at three months andappears to be up to 100 per cent higher atsix months and is sustained at 12 months

• the longer-term earnings of an ILMparticipant can be shown to be higher(about £1,500 per year)

• the gross cost per place and perparticipant is higher mainly because ofthe longer stay on programme and thepayment of wages

• the net cost per place when the value ofthe service provided is removed is similar

• the value for money in terms of longer-term savings on welfare is higher, mainlybecause of the higher level and betterdurability of job outcomes

48


• they are uniquely able to add value toother public or private investment inservices or projects producing up todouble the output for the same money.

Benchmarks for ILM performance

There is now enough information about what

ILMs can achieve to set out the main

operational and performance benchmarks

which they should be comparing themselves

against. Although it may be argued that these

cannot be applied equally over buoyant and

depressed labour markets, they are based on

evidence from the longer established ILMs as

well as from this study of more recent

developments. As most of these ILM

programmes are in slack labour market areas,

the benchmarks are not an unreasonable target

for all:

• drop-outs: 20 per cent or below

• target group: at least 50 per cent

unemployed for over two years or other

more excluded groups (to reduce

deadweight)

• job outcomes: 60 per cent into work

• proportion to higher than ‘entry level’ jobs:

50 per cent

• durability: 80 per cent of people getting a

job still in work after six months

• contribute to the provision of services which

are already resourced by the public or

private sector and increase the value of this

investment.

49

Current ILM activity

There has been a rapid growth in IntermediateLabour Market programmes stimulated by thespread of knowledge about the success of earlyprogrammes and the introduction of NewLabour’s welfare to work measures.

There are upwards of 65 discrete ILMprogrammes operating in Britain, with more indevelopment, offering over 5,300 places to about9,000 people per year. The main concentrationsare in areas of high unemployment in the Northand Midlands of England and in Scotland.

They are all local initiatives led by a range ofbodies such as TECs, local authorities and thevoluntary sector. There is no one funding sourcefor ILMs, which means that complex financialpackages have to be put together. These usuallycomprise labour market measures such as NewDeal along with European and regenerationfunds.

ILMs can meet a number of local objectivesincluding the provision of services ofcommunity benefit and form the cornerstone ofa wider regeneration agenda but the vastmajority of ILM operators are clear that themain objective is the reintegration of the long-term unemployed.

The key ingredients for the successful settingup, operation and performance of an ILMprogramme are:

• strong local partnerships usuallyincluding the local authority andvoluntary sector bodies; these may taketime to develop and maintain

• a lead body prepared to help put afunding package together, take thefinancial risks involved during the

development phase and manage cashflow deficits

• clarity about the key target beneficiaries;this should determine the type of work tooffer and the support structure required

• an understanding by the managingagencies which recognises that they arenot running a training or temporaryemployment ‘scheme’; they areemploying temporary staff and this mayrequire the learning of newresponsibilities on both sides

• the payment of a wage to increaserecruitment, retention, motivation andoutcome rates, although without goodmanagement these advantages may belost

• the incorporation of appropriate jobsearchsupport early in the ILM process

• data collection and handling systemsmust be established at the start; theseshould be designed to provide themonitoring and evaluation data requiredby the funders

• finally, and most importantly, an overall

culture of delivery which emphasises quality

and progression.

The largest and more established ILMprogrammes are achieving progression into themainstream labour market at rates higher thanother measures such as Training for Work/WBLFA or New Deal for the same target group.Overall, the job outcome rate is over 50 per cent,with many over 60 per cent. There are a smallnumber of programmes achieving very low

8 Summary and conclusions

50


outcomes. There is evidence of higher retentionrates than comparable non-ILM programmes,and evaluations show a high job durability ratepost-ILM.

ILMs are more expensive than otherprogrammes in terms of total cost per place peryear (just under £14,000 on average), mainlybecause of the wage element (average 57 percent of all costs) and the inclusion of service-related costs. But, ILMs can be shown to be atleast as good or better value for money comparedto these other programmes for the same targetgroups if they:

• are compared on a like-for-like basis

• focus on recruiting people who wouldotherwise face major problems in gettingwork

• maintain their higher retention, joboutcomes and durability rates.

The value of the product or service providedby an ILM can also be measured in terms ofboth the increased incomes to the participantsand benefits to the community.

Investment of public or private resourcesinto a local service managed as an ILM candouble its value in terms of outputs achieved;this should be a factor that ILM programmedesigners take into account.

The ILM role in labour market policy

Intermediate Labour Market programmesembody some of the best practice of the ‘workfirst’ and ‘intermediary’ approaches beingconsidered by British Government. By ensuringadequate preparation and support in a realwork environment, albeit in a parallel job

market, they reduce the less successful featuresof these approaches as evidenced from the US –namely, poor job durability and limited long-term income growth.

The idea that ILMs keep people away fromthe active labour market to their detriment (seeLayard, 1997a) can be dismissed by the evidenceof the strong correlation between duration onthe programme and high entry rate anddurability of outcomes.

However, there still appears to be scepticismamongst some labour market economists andpolicy makers. This is based on three concerns.

The first concern is their cost and value formoney. In this study, data from a number ofindependent evaluations have been used toshow that with appropriate adjustment the costof an ILM programme is no more than for otherprogrammes. Evaluations of individual labourmarket programmes do not always take intoaccount multiple support and overlap inassistance, whereas the comprehensive package,often funded from a variety of sources, isexplicit in ILMs.

If the lower deadweight and substitutionimpacts, increased job outcomes and durabilityare taken into account, the value for money ofILMs is better than for most other programmesprovided they are properly targeted (up todouble the value for the same target group)with higher net savings to the Treasury.

The key adjustment to the cost is putting avalue on the service provided by deducting theservice-related grants and incomes from the costof the employment programme. This is rationalin accounting terms and sensible in‘neighbourhood renewal’ or regeneration terms.However, it may challenge the conventions ofemployment programme managers who see this

51

Summary and conclusions

service-related funding as simply anothercontribution to the overall cost of the labourmarket initiative. They are stuck with a 1980s’vision of ILMs as ‘make work’ programmesrather than accepting the expressed priority ofILM operators, which is progression into themainstream labour market.

ILM development has suffered because thereis no consistent evaluation framework formeasuring the success of labour marketprogrammes and their added value. TheGovernment should therefore establish a set ofmeasurable and comparable performancecriteria across all labour market programmes.Taking a lead from the Social Exclusion Unit’sPolicy Action Team on Jobs report (SocialExclusion Unit, 1999), which gives emphasis tothe subsequent progression of unemployedpeople, the evaluation framework should give ahigh weighting to job retention and incomeprogression. This would counterbalance theshort-termism of programmes like the newEmployment Zones where the operator’sincentives are geared to early access to jobs andleaving the register rather than providing thetraining and support that will facilitate long-term employability and income progression.

Performance targets and evaluationmeasures for labour market programmes needto shift from this ‘number off the register’approach – the issue is one of quality not ofquantity.

A second concern is the complexity of thefunding package and monitoring arrangements,and that in many areas there is not the localcapacity to manage this complexity. There arethree responses to this.

• The relatively large number ofprogrammes in operation would indicate

that this is less of a problem thananticipated. Many ILM programmes arebeing run with the involvement of localauthorities or TECs/LECs that do havethe capacity to manage multi-fundedprogrammes.

• Often, this concern is coming fromgovernment officials who have a role indesigning programmes; they couldsimplify the problem by putting togethera suitable funding package for ILMs asthey have in Northern Ireland. It mightreasonably be argued that the PersonalJob Account available in the newEmployment Zones gives more flexibilityand could support ILM programmes. Theconcern from ILM experience is that thestructure of the new Zones means that theincome and profit of the EZ contractors(mainly private sector) rely on the fastestpossible movement into jobs while ILMevidence shows that a longer period ofsupported employment leads to betterlonger-term results. It is thereforerecommended that the Personal JobAccount is made available to ILMprogramme operators (public andvoluntary sector) in addition to thecurrent EZ contractors in order to fullypilot this innovative funding measure.

• Much of the complexity of operatingILMs is a result of the audit and paper-trail requirements of fundingprogrammes. Monitoring of governmentprogrammes is still largely based onevidence of process and correct procedurerather than performance. Where localILM programmes have been allowed time

52


to develop good practice, have receivedconsistent support from lead bodies andhave been trusted to take risks, goodsustained outcomes have resulted.Programme managers should operate ona contract basis where the emphasis is onperformance in terms of results, and trustthe process (and resulting innovation) tolocal deliverers.

The third concern about ILMs is whether theoutcomes will be sustained if the programmesare expanded to more people within an area orescalated to many more areas. There are tworesponses to this.

• ILMs offer added value when workingwith the longer-term unemployed orpeople who are otherwise ‘excluded’, andare best used as part of a range ofmeasures. It is not recommended thatthey are elevated to large-scale or nationalprogrammes. However, there is noevidence that the largest programmespresently operating suffer from lowerperformance and local programmes of1,000 or more places seem practicablewithout loss of quality. The issue is one ofestablishing and nurturing the culture ofprogression in the ILM approach ratherthan scale of operation.

• This study has identified some goodpractice and ‘benchmarks’ which shouldhelp to establish working practices in theemerging ILM sector. The problems oflocal capacity are reduced where ILMs aresponsored by strong local partnershipsproviding funding and other support,and are managed by established specialist

agencies that have the experience todeliver the service. It is thereforerecommended that investment in localcapacity building should be an integralpart of any funding programme.

However, it is also important for policymakers to consider the reality that many long-term unemployed and ‘excluded’ people live inrural areas and in pockets of deprivation inareas which have generally low unemployment(e.g. Hertfordshire). In both of these situations,the costs of operating labour market initiativesare significantly higher that those in areas wherethe target groups are concentrated, but thefunding available may be much less (e.g. theymay not be covered by regenerationprogrammes and may not be a priority forEuropean funding).

Conclusions

It is recommended that the ILM approach beused as one tool in labour market policy andlocal regeneration. In these contexts, they canplay a significant role in:

• enabling people who are not able to findor maintain employment to obtain themotivation, skills and work experiencethey need in order to work their waypermanently out of welfare and into work

• delivering new services or adding valueto existing services provided by thepublic or private sectors (but justifiedbecause they provide ILM opportunitiesat no greater cost, or because they target‘disadvantaged’ clients).

53

Summary and conclusions

A strong link should therefore be madeacross public sector policies and programmes.This should emphasise the added value of theILM approach in community regeneration,social enterprise development, housing stocktransfers, crime prevention, childcare, healthpromotion, and other social policy and fundingstrategies.

As indicated in this report, there have beensome reservations about the ILM approachexpressed by labour market economists. Thesewere based on a number of assumptions thathave not been supported by the researchevidence in this report.

However, the report also has some importantmessages from the experience of ILMs for thedesigners and managers of welfare to workprogrammes:

• they need to be well targeted to achievegreatest added value

• there should be a focus on durability ofemployment and income progression,and not just on a quick move on to a job

• the capacity to deliver well can take timeto develop and resources to build thiscapacity in local organisations should beincorporated into the funding ofprogrammes

• there should be a common frameworkbuilt in from the beginning for thetracking and evaluation of the long-termimpacts for the participants.

54

Bivand, Paul (1999) ‘Estimating the cost ofunemployment’, Working Brief, October

Bivand, Paul (2000) ‘Concern over job entry ratefrom New Deal options’, Working Brief, March

Cambridge Policy Consultants (1996a) ‘Ananalysis of unemployment flows in EU,September 1996’

Cambridge Policy Consultants (1996b) Glasgow

Works Evaluation, October 1996. Glasgow:Scottish Enterprise Glasgow

Cambridge Policy Consultants (1997a)‘Evaluation of Training and Employment GrantScheme, May 1997’

Cambridge Policy Consultants (1997b) Wider

Benefits of Intermediate Labour Market Programmes,

October 1997. Glasgow: Scottish EnterpriseGlasgow

Cambridge Policy Consultants (1998a)‘Evaluation of action for communityemployment, January 1998’

Cambridge Policy Consultants (1998b)Durability of Glasgow Works Outcomes, May 1998.Glasgow: Scottish Enterprise Glasgow

Cambridge Policy Consultants (2000a) The

Sustainability of Glasgow Works’ Outcomes, June

2000. Glasgow: Scottish Enterprise Glasgow

Cambridge Policy Consultants (2000b,forthcoming) Value for Money Comparison Study.Glasgow: Scottish Enterprise Glasgow

Cambridge Policy Consultants and Training andEmployment Research Unit, University ofGlasgow (1998) ‘Evaluation of Training forWork’

Campbell, Mike with Sanderson, Ian andWalton, Fiona (1998) Local Responses to Long-term

Unemployment. York: Joseph RowntreeFoundation

Department for Education and Employment(DfEE) (1999) New Deal: From Policy to Practice.London: Stationery Office

Gregg, Paul and Wadsworth, Jonathan (1997)‘The changing nature of entry level jobs inBritain’, in P. Gregg (ed.) Jobs, Wages and Poverty:

Patterns of Persistence and Mobility in the New

Flexible Labour Market. London: Centre forEconomic Performance

HM Treasury (2000) ‘Tackling poverty andmaking work pay – tax credits for the 21stcentury, March 2000’

House of Commons (1999) ‘Education andEmployment Select Committee, Second Report,The New Deal, November 1999’

House of Commons (2000) ‘Education andEmployment Select Committee, Fourth Report,employability and jobs: is there a jobs gap?April 2000’

Jobs for the Future (1999) ‘Business participationin welfare to work, January 1999’

Layard Richard (1997a) ‘Preventing long termunemployment’, in John Philpott Working for

Full Employment. London: Routledge

Layard, Richard (1997b) ‘Employment PolicyInstitute, economic report. March 1997’

McGregor, Alan and Richmond, Kenneth (1999)‘New jobs for Glasgow: an evaluation’, Trainingand Employment Research Unit, University ofGlasgow, September

References

55

References

McGregor, Alan; Ferguson, Zoe; Fitzpatrick,Iain; McConnachie, Margaret and Richmond,Kenneth (1997) Bridging the Jobs Gap: An

Evaluation of the Wise Group and the Intermediate

Labour Market. York: Joseph RowntreeFoundation

New Deal Task Force (1999a) Lasting Value:

Recommendations for Increasing Retention within

New Deal. London: HMSO

New Deal Task Force (1999b) Improving the

Employment Prospects of Low Income Job Seekers;

The Role of Labour Market Intermediaries. London:HMSO

Policy Studies Institute (1999) ‘Work basedtraining and job prospects for the unemployed:an evaluation of Training for Work’, RR96.Payne, Joan et al., DfEE, February

Robinson, Peter (1997) In submission to House of

Commons Education and Employment Select

Committee, The New Deal, November 1997.London: HMSO

Social Exclusion Unit (1999) ‘National Strategyfor Neighbourhood Renewal, report of thePolicy Action, Jobs for All, December 1999’

Stationery Office (1999) Welfare Reform and

Pensions and Welfare Act, 1999

Training and Employment Agency (1999)Workstart. Belfast: Training and EmploymentAgency

University of Glasgow (1998) ‘Evaluation ofGlasgow Works access projects, Training andEmployment Research Unit, August 1998’

US Congress (1999) ‘Welfare reform; assessingthe effectiveness of various welfare- to-workapproaches’, report to CongressionalCommittee, September

Webster, David : ‘Welfare to Work; why thetheories behind the policies don’t work’,Working Brief, June

Titles available in the Work and Opportunity series:

Making work pay: Lone mothers, employment and well-being

Alex Bryson, Reuben Ford and Michael White

This study tracks a sample of lone mothers over five years to find out what works in moving themoff benefit, and what really makes a difference in easing hardship.£11.95

Bridges from benefit to work: A review

Karen Gardiner

An innovative study of 42 welfare-to-work initiatives, assessing which give best value for money,how many people they help, and what the level of take-up is.£11.95

Combining work and welfare

Jane Millar, Steven Webb and Martin Kemp

An exploration of key questions surrounding in-work benefits, and the likely impact of the nationalminimum wage.£11.95

Lone mothers moving in and out of benefits

Michael Noble, George Smith and Sin Yi Cheung

This study analyses how and why lone mothers move between income support and in-work benefits,and considers current and future policy directions.£11.95

Pathways through unemployment: The effects of a flexible labour market

Michael White and John Forth

A study of the effects and long-term consequences of flexible forms of work – particularly the part-time, self-employed and temporary jobs often taken up by unemployed people.£11.95

Local responses to long-term unemployment

Mike Campbell with Ian Sanderson and Fiona Walton

A review of research to date on how to reconnect the long-term unemployed to the labour market.£12.95

Company recruitment policies: Implications for production workers

Stanley Siebert

This study explores whether increased regulation of the labour market has an impact on hiringstandards, screening out less qualified workers and so reducing their job opportunities.£12.95

Young men, the job market and gendered work

Trefor Lloyd

A study of whether young men are being adequately prepared for the contemporary workplace, andwhether their, or others’, gender assumptions are affecting their opportunities.£10.95

Back to work: Local action on unemployment

Ian Sanderson with Fiona Walton and Mike Campbell

This report complements Local responses to long-term unemployment (above), presenting detailed case-study research into what local action is effective in getting people into work.£13.95

Ending exclusion: Employment and training schemes for homeless young people

Geoffrey Randall and Susan Brown

An evaluation of the particular difficulties in finding work faced by this group, and an assessment ofthe impact of a range of projects designed to assist them.£13.95

Job insecurity and work intensification: Flexibility and the changing boundaries of work

Brendan J. Burchell, Diana Day, Maria Hudson, David Ladipo, Roy Mankelow, Jane P. Nolan, Hannah Reed,

Ines C. Wichert and Frank Wilkinson

An exploration into the effect of job insecurity on the social, physical and psychological well-being ofemployees.£13.95

Whose flexibility? The costs and benefits of ‘non-standard’ working arrangements and

contractual relations

Kate Purcell, Terence Hogarth and Claire Simm

Drawing on the experience of a range of industries and organisations, the report analyses theeconomic, operational and social effects of flexible employment practices.£13.95

Finding work in rural areas: Barriers and bridges

Sarah Monk, Jessica Dunn, Maureen Fitzgerald and Ian Hodge

A timely analysis of disadvantage in rural areas, and the role employment plays in this. The reportfocuses on the particular problems people in rural areas face and what strategies work in attemptingto find work.£12.95

Work and young men

Bruce Stafford, Claire Heaver, Karl Ashworth, Charlotte Bates, Robert Walker, Steve McKay and

Heather Trickey

A study which analyses whether certain young men are underachieving, and what the long-termconsequences of this are. The authors also review the social, personal and economic factors that affecthow young men are integrated into the labour market.£13.95

Making the grade: Education, the labour market and young people

Peter Dolton, Gerry Makepeace, Sandra Hutton and Rick Andas

The decisions young people make when they first become eligible to leave school are crucial to theirlong-term prospects. This wide-ranging study investigates what influences a child’s performanceand choices during this important time.£14.95

Young Caribbean men and the labour market: A comparison with other ethnic groups

Richard Berthoud

An exploration of the challenges faced by a group of young people with an exceptionally high risk ofunemployment. The study relates young Caribbean men’s experiences in the labour market to otherethnic groups, whose employment prospects vary substantially.£14.95

Young people in rural Scotland: Pathways to social inclusion and exclusion

Stephen Pavis, Stephen Platt and Gill Hubbard

This report provides substantial first-hand evidence of what life is like for rural young people today.It explores the impact of education on their work opportunities, and how rural wages, availableaccommodation and isolation affect their lifestyle and their transitions to adulthood.£12.95

Youth unemployment in rural areas

Fred Cartmel and Andy Furlong

A review of the distinctive features of rural youth unemployment, including seasonal work,transport issues and the importance of local networks in obtaining work.£12.95

Further reports from this series will be published throughout 2000.

The Intermediate Labour Market...2 The Intermediate Labour Market Network (established in 1998) has...

Documents

Transcript of The Intermediate Labour Market...2 The Intermediate Labour Market Network (established in 1998) has...