The question everyone’s asking: how can we get people back into work? 

When Jeremy Hunt suggested that life for over 50s “doesn’t just have to be going to the golf course” he was criticised for assuming that the so-called ‘early exiters’ were simply opting for the easy life while the economy struggles on. It is true that some people have been able to retire a few years early with financial security. But Demos research has shown that, for many over 50s, a complex mix of mental and physical health problems – along with inflexible employment practices – are actually to blame, causing people to leave work, or preventing them from returning.

The next government – whoever they are – will have to solve the problem of economic activity and how it’s slowing the economy down. According to a CBI survey, in 2022 three quarters of businesses reported being impacted by labour shortages, and nearly half of those had been unable to meet output demands, holding back economic growth.

The government is now in the thick of grappling with the issue in depth and finalised policies will be announced in the Budget on 15th March. Meanwhile, the opposition is thinking hard about it too. Labour has made a series of announcements on reforming employment services, including greater universalism and greater devolution in order to support people into work, whatever their age. 

We’re excited to carry on that conversation later this Wednesday, when we’ll welcome Alison McGovern, shadow minister for employment, to our offices for the next Public Services 2030 Network event (there are a few tickets left if you can make it – sign up here). Ahead of that event, in this article we want to take stock and ask: where have Labour got to on employment support and where next for fleshing out the vision? 

What have Labour said so far? 

 

The Shadow Work and Pensions Secretary Jonathan Ashworth has said that a Labour government would set a target of the highest employment rate in the G7 (the current leader is Japan at 78%, compared to the UK at 75%). To achieve this, Labour would open up services so that more people can access them if they want to – including people with health conditions, and over 50s who are economically inactive, for example. We welcome this announcement, which echoes work Demos carried out proposing a Universal Work Service.

Labour would also look to reform social security so that it supports people to move into employment, rather than disincentivising people from taking a job. As an example of this, to support people with health conditions or disabilities, a Labour government would guarantee people who move into employment would be able to return to benefits they were previously on if they weren’t able to sustain the job, or if the job was temporary.

Ashworth has also emphasised that Labour would increase devolution, “shifting resources and guaranteeing local innovation in the design and delivery of employment support services”, with the aim of enabling local areas to build integrated employment and skills systems through partnerships between public, private and third sector organisations. 

What questions remain? 

 

Question 1 – What will happen to Jobcentres and how will they interact with locally-run systems?

Labour are currently reviewing possible changes to Jobcentres and have said they are looking to ‘modernise’ them, but it isn’t yet clear what this will involve. At the moment Jobcentre support is restricted to people receiving an unemployment-related benefit such as Universal Credit. This means that many people are outside the DWP-led system: only one in ten over 50s, for example, receive an unemployment-related benefit. 

But even if they were able to use Jobcentres, would they want to? Research by both Demos and others has shown that people often have negative perceptions of Jobcentres in general, and Jobcentre buildings in particular – people mention the presence of security guards and the lack of private meeting spaces, for example, as negative factors. If Labour want to reform Jobcentres so that people see them as an accessible and supportive public service, it will take time and effort to change people’s perceptions.

There is also a question about how Jobcentres will interact with devolved services, commissioned and/or run by local authorities. Currently the main model for contracted employment support programmes such as Restart is that Jobcentres refer people who meet specific eligibility criteria. Individuals cannot, for example, make their own inquiry and get support from a Restart scheme. Will this continue under Labour’s plans, with Jobcentres acting as a ‘gatekeeper’ for locally-delivered schemes? If so, how does this fit with the intention to give flexibility and control to local areas? Or will there be a clear way of contacting a local authority-led programme, bypassing the Jobcentre?

Question 2 – How will these reforms interact with the wider benefits system? 

Another big and thorny question: how will a new system of employment support intersect with the benefits system (e.g. benefit payments, sanction etc)? Today, the two are linked; participation in employment support schemes can be mandated by the DWP, with failure to engage having an impact on benefit payments. However, not all employment support is linked to the benefits system – many charities offer employment support which is separate from the DWP-led system, for example.

One option – a fairly radical one – would be to divorce the benefits system from employment support entirely. Given this is likely to be perhaps too risky, in our paper we suggested an alternative information sharing approach between a devolved Universal Work Service and a national benefits system to maintain the link between employment support and benefits. One advantage of this approach is that there would be a clear separation between the organisation offering employment support (the Universal Work Service) and the organisation awarding conditional benefits and making decisions about possible sanctions.

Question 3 – How does reform of employment support relate to wider services, such as skills and careers advice? 

A third question to consider is the relationship between employment support, skills and careers advice. So far Labour’s proposals have focused primarily on employment support services which help people find or stay in work. But a holistic approach to labour market policy should include skills and careers as crucial in supporting individuals, businesses and the overall economy. 

Labour’s skills review, chaired by David Blunkett, recognises some aspects of this, for example mentioning the DWP’s role in enabling people to access skills courses and careers guidance. The skills review also states that “decision making and spending should be decentralised and devolved to regional and sub-regional level wherever possible.”

At the moment, the overall employment, skills and careers landscape is fragmented. Different organisations have different funding sources, priorities, working cultures and lines of accountability, which makes it difficult for both individuals and employers to navigate the system.

A more flexible approach from central government could enable local authorities to develop integrated employment, skills and careers systems – reducing fragmentation and improving overall labour market policy for their local area. But achieving this would require major rewiring of policy and funding – not just devolving a few existing funding streams, which will not be sufficient to improve the overall employment, skills and careers system.

Despite the questions we’ve outlined above , we remain enthusiastic about the prospects for big, bold reform of employment support – and for the cross party focus on this important area. The creation of a new, universal employment support service has the potential to be genuinely transformative. Done well, it could help our economy and strengthen our society.