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Employment Zones (Allocation to Contractors) Pilot Regulations 2006

My Lords, I thank both the noble Baroness, Lady Noakes, and the noble Lord, Lord Oakeshott, for their general support for the pilots, which is very much appreciated. The noble Baroness, Lady Noakes, asked me whether I could guarantee that I would not come to the House in a year’s time—or whoever is fortunate enough to be in this position—to propose new regulations to extend these pilots. I cannot guarantee that, because we are still in the evaluation process. At this stage, it is not possible to say what we intend to do in the future. The beauty of the procedure that we have is that it enables us clearly to develop pilots, learn from them and therefore consider whether we should carry on with slightly different pilots or extend them throughout the country. At this stage, I cannot say what is to be the likely outcome, although I accept that if the process has proven to be successful it is important that we learn the lessons generally. We will be publishing some evaluation in August 2006 followed by an end-year report. That will be made available and we will carefully consider the conclusions. It might help the House if I were to say that early indications are generally positive. The providers are working well with these difficult customer groups by using a flexible one-to-one tailored approach. We think that job entry rates are pretty good among the younger groups. Job entry rates are around 50 per cent for New Deal young people—returners after six months of the programme start. Although young people present a challenge in terms of getting them to sustain work, providers suggest that putting in place extra measures to promote sustainability seems to bring about positive outcomes. However, as I said, we will see when the full evaluation reports come out and that will then lead to a decision about whether we extend the scheme, go for more pilots or introduce these more generally throughout the country. The noble Baroness, Lady Noakes, asked me about Gershon and various questions around the efficiency of the Department for Work and Pensions. With regard to the Select Committee report on Jobcentre Plus, we shall of course consider the committee’s recommendations and respond as we are charged to do so. We believe that the report primarily focuses on a period when we recognise that Jobcentre Plus experienced difficulties, as it implemented a major change programme. Things have improved considerably since then and Jobcentre Plus now routinely answers more than 95 per cent of calls to make benefit claims. We think that those standards compare to those of leading private sector organisations. Of course, we cannot be complacent and we shall continue to monitor and improve the service. On the noble Baroness’s more general point, she is right to suggest that the department is going through a considerable change in its mode of operation and we have plans to reduce the number of staff employed directly by the department. I shall write to her on the specific technicality that she raised, as I am afraid that I do not know the answer to that. But on the general principle, she will notice that in the Budget settlement my department will undertake in the next spending round a 5 per cent real terms cut per year in our resources. So clearly the focus of the department is on a wholesale re-engineering to ensure that we improve our efficiencies to meet the new budgetary envelope that we shall operate in and to deliver a better service to the public. The implication of what the noble Baroness said was that some of the lessons learnt in the employment zones by using private contractors may well be valuable in the future re-engineering and restructuring of the department. She will also have noticed that in the Green Paper on welfare reform we referred to the intention to use private and voluntary sector organisations to help us to take forward our welfare reform programme. The noble Baroness also asked me about the way in which the private sector contractors were paid. I have lots of details here, which perhaps I can send her, but I make the general point that the private contractors are incentivised to be successful, so the more successful they are in getting people into work for a sustained period, the more money they get; the quicker they get people into work for a sustained period, the more profit they are likely to make. As I say, I shall happily write to her with further details. I was very surprised at her suggestion that the payments system works in a different way. If she has evidence of that I am happy to look into it, but my understanding is that the payments system is expressly designed to incentivise the private contractor to do well. Because of the random selection of people going into each of the companies, there is no opportunity for    cherry-picking. That, again, is very valuable information for the future. The noble Lord, Lord Oakeshott, referred to the question of postcodes and electoral ward boundaries. My answer to his question why we use postal codes instead of electoral ward boundaries is, ““Why not?”” The official answer that I have been given is that in essence, whichever system you use, changes occur, so there is no perfect way in which to set the designated areas. I know that postcode changes take place; if they take place within the designated employment zones, either we can bring new regulations in to regularise that—because it could have the effect of taking a customer out of an employment zone—or the customer could continue on a voluntary basis, even if    the postcode had been changed. Whichever mechanism we use, we have sufficient flexibility. I am tempted to refer the noble Lord to the regulations and to the Birmingham employment zone. He mentioned Washwood Heath; my own ward of Mosely and Kings Heath is here, but not my own postcode, so if a reshuffle takes me away I am afraid that it will not be open to me to take advantage. But I welcome further discussion with the noble Lord on these extremely important considerations in the life of Birmingham. On Motion, Question agreed to.