Wednesday, 30 April 2014

Benefits claimants and 18-24 earn or learn policy

by Mark Corney

The latest statistics show there are 1.1m young people aged 18-24 who policy makers should be acutely concerned about.

Around half are unemployed and have looked for work in the past four weeks but are not in full time education.

The other half are inactive and have not looked work in the past four weeks and are outside of full-time education. 

The Coalition is introducing three main strategies to reduce the number of unemployed and inactive 18-24 year olds not in full-time education.

The first strategy is to expand full-time education.

This is primarily being done through removing the cap on full-time undergraduate students in higher education by universities and colleges. Full-time students in higher education are able to take this route because the state pays them maintenance support in the form of loans and grants. By contrast, participation in full-time FE by 18-24 year olds is limited because there is no comprehensive system of FE maintenance support.

The second strategy is to increase the number of 18-24 year olds in employment but not in full-time education.

The Coalition is amassing an array of interventions including placing downward pressure on wages through limiting increases in the national minimum wage, abolishing employers' national insurance for 18-21 year olds in low paid jobs, jobs with publicly funded apprenticeships, and
wage subsidies under the Youth Contract to take on short-term unemployed 18-24 year olds, although only 10,000 have entered a subsidised job so far.

The third part of the strategy is to ensure 18-24s claiming Jobseekers' Allowance and Employment and Support Allowance are undertaking activities that eventually will lead to employment or full-time education (which in reality means entry into full-time higher education).

A key point to make is that where participants on government employment and training programmes receive a wage or a training allowance, they are counted as being employed. By comparison, where participants on government employment and training programmes are enrolled on part-time further/higher education programmes and receive JSA, they are counted as being unemployed.

Once again, the Coalition is rolling out a range of options for 18-24-year-old JSA and ESA claimants, including the DWP-sponsored Youth Contract, mandatory activity programmes, the Work Programme and BIS-sponsored traineeships.

It is useful, however, to distinguish between 'work activity' and 'skills training' interventions across these programmes.

After six months’ unemployment, 18-24 year olds might be offered a place under the Youth Contract programme or lose benefit. From April 2012, work experience and pre-employment sector-based work academy places are available for 250,000 young people. 182,000 have started the former and 95,000 the latter since January 2011.

After nine months’ unemployment, 18-24 year olds must join the Work Programme or lose benefits. Young people are allocated a provider who is paid a job outcome payment once a job is found and a sustainment payment for job duration. Since June 2011, over 390,000 18-24 year olds have been attached to a provider, but less than 25% have been placed in a job and even fewer in a sustained job of at least one calendar month.

18-24 year olds who have been out of work for more than 9 months can also be asked to participate in mandatory work activity which is of benefit to the local community. Some 28,000 young people aged 18-24 entered this activity between May 2011 and August 2013.

With regard to skills training, 18-24 year old claimants can be expected to undertake training or lose their benefits. Between August 2011 and 2013 more than 200,000 young adults started a skills conditionality course.

By contrast, participation by 18-23 year olds on traineeships is voluntary. To date, only 3,300 16-23 year olds have started a traineeship, which, although part of the 'apprenticeship family' clearly overlaps with elements of the Youth Contract.

Despite the abolition of the 16 hour rule for designated government training programmes, limits for JSA claimants on work experience placements to 12 weeks (and for 18 year olds 8 weeks) is holding the programme back.

In addition, Autumn Statement 2013 announced a pilot programme allowing 18-24 year olds without a Level 2 qualification to study full time whilst claiming JSA.

Without question, 18-24 JSA/ESA claimants are a key target group for the Coalition. Standing back, it is hard not to conclude that BIS and DWP are managing a complex system of programmes and benefits regulations for unemployed 18-24 year olds.The abolition of the 16 hour merely makes participation on mandatory skills training and designated voluntary skills programmes such as traineeships easier. Yet this is a far cry from abolishing the 16 hour rule to enable 18-24 year olds to study full time in FE whilst claiming benefits.

A radical solution would be to abolish JSA/ESA after six months, with 18-24 claimants moving onto a Learning Allowance. By receiving an allowance rather than JSA, these 18-24 year olds would no longer appear in the unemployment statistics. Even so, 18-24 year olds in receipt of the Learning Allowance should be allowed to study for a first Level 3 qualification as well as English and Mathsand other essential skills training.

Yet the achievement of a radical ‘earn or learn’ policy for the forgotten generation of 18-24 year olds will be a pipe dream unless there is a commitment to merge DWP with BIS and bring together labour market and education policy.

Mark Corney is policy consultant to CfL and writes in a personal capacity.

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