The new planning and funding environment for learning providers

1. The new planning and funding environment for learning providers Paul Convery Director, Unemployment Unit & Youthaid, London Training & Employment Network (TEN)

2. New Deal programmes under-performing • 18-24 job entry rates: 46% (max) and 33% (sustained): better than previous programmes, but still poor e.g WBLA • ND for 25+ only achieving 10% job entry • ND for lone parents: 30% job entry • Delivery Unit variations - from 48% highest sustained entry rate to 22% lowest • "Jobs first": over-strong emphasis on job submission - 42% of job starts are for work that is not sustained for more than 13 weeks (incl 19% amongst employer option)

3. New Deal programmes under-performing • The "Disappeared": a fifth of leavers (cumulative 77,000 by December 1999) are still unaccounted • Options are not popular: 60% of all job entrants are from Gateway after interview; only 12% of job entrants come from Options • Sanctions numbers rising from 650 in Q3 1998 to 4,500 in Q3 1999 • Sanctions data shows some options are clearly unpopular (e.g. 46% of ETF participants in West Midlands)

4. Fixing New Deal under-performance? • Intensification: Gateway Trailblazers ("IGT"); • early diagnosis of acute disadvantage - identification of basic skills needs; • improved case management and counselling; • outreach and support - stressed neighbourhoods and chaotic lifestyle participants; • enriching the offers - option tasters, intensive activity and services - options mix and match; • interpersonal and communication skills; • special packages for the most disadvantaged;

5. Fixing New Deal under-performance? • identify skills required in growing industries and occupations; only refer those with realistic chance of meeting an employer's specification; • low paid, low quality, unsustainable jobs; • preparation of participants on what to expect; • maintain communication with employee and employer after the placement has been made; • post-placement services for participant/employer; • structured introduction to work; appraisals and help; training for career advancement;

6. Skill gaps emerging • 4 out of 10 of employers experience recruitment difficulties; • basic skill requirements: few jobs for those without reasonable literacy, numeracy and keyboard/interface competence; • change in work organisation: front-line employee responsibilities increasing; • higher touch skills: team-work, customer focus, social & interpersonal skills, verbal and written communication, problem solving, independent working - hard to quantify/qualify;

7. Skill gaps emerging • employer anxiety: "dizzying pace of change"; • employee anxiety: increasing complexity of work; • SMEs are usually specialists relying on niche markets or a small number/type of customers: • vulnerable to change; • highly specific work organisation and skill requirements;

8. Decline of traditional recruitment • outsourcing and employment of "contingent" workers (low skill and high skill) = employer reliance on external recruitment suppliers; • "flat structures" = short career paths and limited length-of-stay wage premiums; • weak employment tenure due to either cyclical market fluctuations or continuous re-structuring; • low levels of fixed cost labour = need for rapid firm-specific training for recruits;

9. Decline of traditional recruitment • paradox: more informal and structured complex recruitment (employers looking for the "right fit" i.e. personal attributes, experience and/or training) • growing businesses lead to re-location "jolts" • public employment service - traditional low end agency - less used in tight labour markets.

10. Identifying needs • Skills forecasting: by sector, region and by employer size: NTOs, LSCs, RDAs, SBS • better business and labour market intelligence • personally tailored information, guidance and advice to learners • intelligently using ITC - linking learners to employer demand • understanding employers’ real requirements

11. Improving participation and attainment • Basic skills and core competences • Strengthening the work based route • Integrating academic and vocational & progress into higher education • New entitlements e.g. all ages level 2 • Flexible forms of delivery - “where and when” • New learning cultures - both employers and individuals • targeted support for the disadvantaged

12. Improving quality - demand led • Modular - “bite sized” learning • Higher skilled teachers and teachers • New types of financing - personal learning portfolios, ILAs, income contingent loans • Workforce development and employer participation: financial rewards, tax incentives, industry-wide collective financing • New learning institutions: private sector and non-profit • Demand led, “full service” intermediaries

13. Labour Market Intermediaries • Evidence in US of improving retention rates • In UK emergence of organisations attempting to bridge the gap between employers and the unemployed • Appear to have improved placement and retention rates for most disadvantaged

14. Problems with existing approaches • A focus on skills independent of job opportunities • Inadequate information about jobs and skills needs of employers • Emphasis on short term results rather than long term aims such as job retention • Inflexible programme design and the benefits system

15. What employers want • Improved job application skills and motivation • key skills • evidence of work experience

16. What encourages employer participation? Good past experience of programmes: • that they receive appropriate and good quality participants • the extent to which programmes impose extra burdens • cost of training and supervision • burden of administration • cost of failure (turnover)

17. Trends require new services • Bridge the gap between demand for skilled employees and supply of labour • Improve the level and nature of information about employment opportunities and potential job seekers • Provide more intensive job matching • Deliver more intensive approach to job seekers facing barriers

18. Definition “An intermediary is an organisation which has the capacity to intervene in the labour market at the point of labour market failure to: • improve labour supply • to activate or stimulate demand for labour: and • to match supply and demand.”

19. Labour Market Intermediaries Generally characterised by the following: • direct and active interface between unemployed and employer • integrated approach which is needs rather than programme driven • customer focused service delivery, characterised by an account management system.

20. Functions • Pre-employment support • Recruitment • Retention

21. Pre-employment support • Outreach work • Induction and Assessment • Advice and support • Employability development • Literacy and numeracy • Careers Guidance and Counselling Vocational training • Work tasters

22. Recruitment • Identifying job opportunities • Job matching • Work experience/job tasters • Temporary employment

23. Retention • Workplace induction • Mentoring & Counselling • Mediation & Troubleshooting • Ongoing career development • Administrative support for placements and employers

24. New Focus • Getting a job is a process and not an event • Retention & advancement the ultimate goal • Client focused organisations need to change the internal culture • Selling a service to the “main” Customer • Focus on retention and advancement • Job quality is very important • Clearer relationship with ES is required

25. New Focus • Seamless service: stop clients from slipping through the net or giving up at the first hurdle • Performance measurement • Funding: flexible and public/private • Encouraging a mixed economy of providers • Broader workforce development • Jobs pooling for private and public sectors

26. Innovation Fund: £9½ million for three years Bidding process • Expressions of Interest submitted before the end of June 2000 • Shortlist drawn up by end of July 2000 • Bidders invited to submit full proposals within a six month period. • Subsequent bidding round scheduled for September 29th 2000 with a programme for future bidding announced autumn 2000

27. Innovation Fund Part I: £5 million ring-fenced for projects from the 11 inner city areas with Employer Coalitions. The objective is to support private and non-profit intermediaries using a demand-led approach to help unemployed people get and keep employment.

28. Innovation Fund Part II: £4.5m will support projects with the same objective as Part I; proposals for Part II funds will be accepted from all other parts of country and from intermediaries in the public, private and voluntary sectors

29. Innovation Fund Part III: will be used to support continuous improvement projects that will result in measurable increases in the quality and outcomes of the New Deal.

30. Innovation Fund Bids for Part I or Part II are expected to demonstrate match funding from an employer or group of employers equivalent to at least one quarter of the project funding

31. Innovation Fund The Part I or Part II payment schedule is output-related, with • 40% of payment will be made for job starts; • a further 10% for job starts where the starting wage is above £15,000; • 50% for retention after 6 months.

32. Innovation Fund Part I will be assessed on: • measurable increases in job placement and retention rates against existing local rates; • providing effective service to the most disadvantaged; • demand-led strategy with strong employer engagement and relevance to the local labour market; • levering additional public and private resource; • potential for replication by ESor contractors.

33. Innovation Fund Part II will also be assessed on: • ability to reach ethnic minority individuals and firms; and • focus on specific sectors that offer opportunities for career advancement

34. Innovation Fund Part III for general projects to enhance New Deal and advance continuous improvement • increase the labour market relevance and outcomes of New Deal Options; and/or • improve outreach and recruitment to ethnic minority and disadvantaged groups; and • result in measurable increases in the number of placed in jobs and retained for 6 months +.

35. LSC funding regime • a "core" funding formula which will determine the allocation of some 85-90% of total expenditure • FEFC model - better suited to classroom based activity (fixed length courses and qualification outputs) • applied nationally; formula operated

36. LSC funding regime • On programme payments & retention • No start payments • Rates not yet settled • Achievement • Area costs • Disadvantage • Additional needs

37. LSC funding regime Output related payments • For work based learning - a maximum of 20% triggered by qualification achievement • classroom based learning - only apply to A/AS levels and vocational A levels - with 10% maximum

38. LSC funding regime • 18+ will not have to pay if: • they are JSA claimants or are receiving other means tested benefits; • are unwaged dependents of benefit recipients; • enrolled on basic education or ESOL; • they are recipients of WFTC but only if they also qualify for help with NHS charges.

39. LSC funding regime • ES "re-engineered" New Deal 25+ • ES new contracting strategy: • preferred suppliers asked to establish general competence on the basis organisational and capacity criteria • Subsequently seeking bidders for identified provision

40. LSC funding regime ES contracting strategy: • demonstrated track record (TSC reports will be required evidence) • 7 principles in the TSC/Ofsted/FEFC common inspection framework document • existing quality standards systems • additional quality expectations - trained staff, equality of opportunity, health & safety, governance standards, VfM, financial probity

41. LSC funding regime • ESF ”co-financed" • Capital funds to non-college organisations - decision defered: local LSCs should make capital funding decisions based on guidance agreed by the Secretary of State • business and information systems: Individual Learner Record

42. Internet sources New Deal briefings, performance tables, advice & information for participants: www.uuy.org.uk/newdeal Learning and Skills Council www.uuy.org.uk/post16