Past, present, future

75th Anniversary

1931 - 2006

50 Hanson Street, London W1W 6UP 020 7911 7500

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This is my first report since becoming Director of PSI two years ago. It is also the first since PSI movedfrom Park Village East to new offices in Hanson Street.

Having spent several years at PSI earlier in my career, nothing delights me more than to have returnedas Director. That earlier stint, working with researchers such as Bill Daniel, Michael White and JoanPayne deeply influenced my understanding of policy research and informed my values about what PSIstood for and why it is such an important institution.

PSI stood for, and stands for, important foundations of democracy: widely available information andfreedom of expression. Our aim is to provide rigorous evidence in support of public policy-making andpractice. We want our work to be trusted, not because we have produced it, but because it is has beencreated rigorously and transparently and is open to independent scrutiny. This sounds a old-fashionedin the fast moving world of policy development but it has never gone out of fashion at PSI. It is one ofthe reasons why we’ve survived (though only just at times) but usually thrived, for 75 years.

In this report, my colleague and PSI Deputy Director, Alan Marsh, highlights some of the achievementsof PSI over the years. Other colleagues then describe some of our recent and continuing contributionsto the evidence base. As ever, we are neither hidebound by discipline nor driven by method. We gowhere the problem is and fashion whatever combination of methods we think will fit the bill.

Policy-making only gets harder. We face enormous challenges not only in promoting democracy morewidely but also in sustaining it in the face of increasing threats to the environment and to socialcohesion. The world is quite different from the one that the founders of PEP faced in the 1930s. Thechallenges are different but the values underpinning our work and our purpose remain just as they everwere: independent, non-partisan, democratic, inclusive and transparent.

Introduction

Malcolm RiggDirector

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Contents

History4 From PEP to PSI “The Ginger Group of Gradualness”

Environment6 Environment at the Heart of Sustainable Development Research

8 Sustainable Development Research Network (SDRN)

The fair introduction of environmental taxes

Markal Energy Systems Model

9 Environmental Policy Instruments and Environmental Tax reform

10 Energy and Climate Change

11 Personal Carbon Allowances

Sustainability Impact Assessment

Work and Social Policy12 Work and Social Policy Research

14 A Quarter Century of Industrial Relations

16 A Quarter of a Century of Maternity Rights and Pay

17 Retention and advancement: the next step in welfare-to-work

18 Understanding Social Cohesion

19 Pathways to Work

20 PSI Staff

21 Contact

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The Library of the London School of Economics and Political ScienceWith kind permission from the New Statesman, © All rights reserved

Max Nicholson’s article, 14th February 1931, which inspired theformation of Political and Economic Planning (PEP) a few months later.

Landmark Reports

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The Policy Studies Institute began in 1931 as Political andEconomic Planning (PEP), merging with the Centre for Studiesin Social Policy to become PSI in 1976.

The spirit of ’31 Max Nicholson’s groundbreaking ‘National Plan for GreatBritain’ was the main catalyst for the formation of PEP in 1931.Fifty years later he wrote of that time, recalling ‘…a worldapparently falling apart’. A partial post-war recovery fell apartin the aftermath of the General Strike and the collapse of themarkets. Fledgling liberal regimes fell apart before the march offascist movements in Europe, whose apparent progress,together with the rival progress of Marxist planning in theSoviet Union, contrasted awkwardly with the faltering gains ofdemocracy. Policy response in Britain was a pitiable mix oflaissez-faire and defence of the gold standard. Max’sproposition was that planning, as an educated discipline usedto evaluate national need and lay down sound policy, waspossible and necessary. Rather than an excuse for bureaucracyand oppression, it would contribute to better government.

Nicholson’s initiative attracted heavyweight support, includingIsrael Sieff, who with his son Marcus remained an inspirationto PEP for three decades, and the Dartington philanthropistLeonard Elmhirst. The spirit of the 1931 meetings from whichPEP sprang was frenetic and radical. Belief in the need forplanning was said to take on ‘….almost a religious fervour.’ (It isslightly uncomfortable that Aldous Huxley attended some ofthese meetings and published Brave New World in 1932.) Yet‘planning’ in a democratic Anglo-Saxon form proved an elusiveand controversial goal. Objectors said it usurped human nature,enterprise, and natural economic selection and would lead totyranny, war and impoverishment – though many just thoughtit too difficult. Partly because of this uncertainty, PEP becamemore like what we’d now call a think tank but one with agreater enthusiasm for establishing helpful facts than fortelling people what to do. Nevertheless it is remarkable howmany aspects of the original plan for Britain worked thoughinto policy, not least the creation of the National Health

Service, a bureau of national statistics, New Towns, ‘greenbelts’, National Parks, integrated transport and other facets ofthe welfare state, and even what became the South Bank.

Throughout the 1930s PEP capitalised on its initial impetus,drawing often on purely voluntary contributions, publishinginfluential broadsheets on successive industries, the press,international trade, the social services and most influential ofall, The British Health Service, which provided the blueprint tenyears later for the National Health Service.

The warIf Max Nicholson failed to persuade Britain in the 1930s to planroot-and-branch, Adolf Hitler was more successful and PEPcontributed substantially to policy under the wartime commandeconomy, contributing many of its staff to the war effort. PEPSecretary Michael Young made an immediate impact bypointing out that the call for volunteers in 1914 had strippedindustry of too many skilled workers and pressed instead in1939 for conscription and the designation of reservedoccupations. But PEP’s lasting contribution was to concentrateright from the earliest months of the war on Britain’s andEurope’s post war recovery and long term future . PEP’sbroadsheet Planning for Social Security impacted crucially onthe Beveridge Report. A nation energised by this vision of afairer, socially secure future was one of Britain’s most potentweapons throughout the conflict. Another, Britain and Europe,prefigured much of the debate on creating a federalised futurefor a Europe that could never go to war with itself again.

After the warIn 1945 it was supposed that PEP would come into its own,especially since Michael Young had packed into Labour’s electionmanifesto ‘….as many ideas from PEP as I could decently getpast Herbert Morrison.’ Yet public ownership did not leadnecessarily to much public planning, while shortages meant thatenthusiasm was the only thing in plentiful supply. Like theGovernment, PEP was forced to confront the urgent problems ofproduction and export and its first major review ‘Britain and

From PEP to PSI“The Ginger Group of Gradualness”Professor Alan MarshDeputy Director

World Trade’ was well-received. Fuel and power, engineering andmanufacturing, dominated PEP’s post-war research but nascentstudies of industrial relations, citizen participation, and womenin the labour force all hinted at the decisive contributions PEPwas to make to social policy in later decades.

During the 1950s PEP held almost a monopoly on theserious study of the Common Market and kept alive thedebate about joining.

The 1960s and 70s: a research institute During this period, PEP completed its transition from a think-tank to a primary research institute. It would not only ‘let thefacts speak for themselves ‘ (often though with a certainamount of clever interpretation) but would independentlydiscover the facts too. This transition was marked by a series ofbenchmark studies of great importance and influence:

• Racial discrimination: Bill Daniel’s famous demonstration of the discrimination faced by Afro-Caribbean migrants led directly to the extensions of the Race Relations Acts in 1968.

• Transport policy: Mayer Hillman’s studies of urban growth and transport, in collaboration with Peter Hall and Anne Whalley, challenged conventional wisdom favouring motor transport.

• Social policy: Isobel Allen’s studies of family planningand other issues in social medicine, and Richard Berthoud’s The Disadvantages of Inequality, returned PEP’s focus to social issues.

• Labour relations: inspired initially by Santosh Mukherjee, PEP produced a huge amount of work on labour relations and collective bargaining, including one study that determined the successful flat-rate policy to control runaway inflation in the mid-1970s.This work culminated in the first national study of Workplace Industrial Relations (WIRS).

In each of these streams of work can be seen the emergence ofwhat was later called ‘evidence based policy making’. This was‘intravenous’ research done directly in the public interest,applying the highest academic and professional techniques,delivered to Whitehall desks and other centres of decision, ininterpretative but even-handed reports.

PSI in the 1980s and 90s: the evidence baseUnusually for an institute relying solely on research contracts, thebenchmarks laid down earlier began a period of strikingcontinuity in PSI’s contributions to policy. As Alex Brysondescribes on page 14, the industrial relations studies wererepeated over the next 25 years to provide a unique resource forthe understanding of change in Union and Employer relations andthe effects of these changes on industry and the labour market.The studies of race relations were followed by a large number ofspecialised studies of racial disadvantage and began a series ofnational surveys of ethnic diversity in Britain that provided themain source of evidence in that field for 25 years. Studies ofeconomic disadvantage, debt, family poverty, benefits and work

incentives throughout the 1990s overturned conventionalthinking on the use of in-work benefits and opened the way fortax credits to become one of the main pillars of welfare-to-work.Subsequent evaluations of New Deal programmes provided alarge part of the evidence base now underpinning work-basedwelfare policy. From 1980, PSI also provided the main series ofevaluations of the effects of the extension of maternity andpaternity leave and pay, as Deborah Smeaton describes.

Towards centenary, 2031As it turned out, PEP did not plan Britain and nor will PSI. This‘failure’ is the Institute’s success. We participate instead in aprocess of modern governance and evidence-based policy makingthat is far more sophisticated and effective than the ponderouslaying down of decade-long blueprints. Nowadays, as well asproviding investigative descriptions that aid and encourageprogress in new social policy, PSI specialises in high quality, multi-method evaluation studies of existing policy and, more especially,pilot studies. PSI has pioneered the use of new analysistechniques and experimental methods, including the use of largescale random assignment demonstration projects that test socialpolicy in ways that medicines are tested, such as the EmploymentRetention and Advancement scheme, described below.

Our work, almost by definition, has always reflected the majorconcerns of the time. Over the past ten years PSI has built up alarge Environment Research Group under Paul Ekin’s leadershipthat is contributing to new policy in sustainable development,carbon emission control, hydrogen use, and climate change.

PSI began at a time when many feared liberal democracy inEurope would fail. It almost did. Perhaps for the first time since,fundamental questions are being raised about how democraticgovernments can cope with multiple challenges includinginequality, rapid demographic and social change, globalwarming and depletion of finite resources. As the remainder ofthis brochure shows, our work contributes to the most urgentand advanced social thinking on these issues. PSI will continueto make decisive contributions to public life, trusted equally byall sides to controversy.

16 Queen Annes’s Gate: PEP’s headquarters from 1933 - 63

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History

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The PSI Environment Group is dedicated to the analysis of thesocio-economic causes of environmental impacts and thepolicies that may ameliorate them.

Environmental policy research is concerned with linksbetween society and the natural world. Human activities canhave a profound influence on ecosystems, the climate andlandscapes, while the natural world has value for health,aesthetic or recreational reasons, and it provides theresources upon which economic activities depend. TheEnvironment Group seeks to undertake policy-relevantresearch of the highest quality, contributing to themaintenance and enhancement of the environment’scontribution to human welfare, now and in the future.

The Environment Group’s approach to the environmentrecognises the interaction between the environment, theeconomy and society generally at every level, and is thereforeintrinsically interdisciplinary. Much of our research, in one wayor another, is concerned with sustainable development.

Sustainable developmentThe challenge of sustainable development emphasises thatenvironmental policy must be firmly embedded in the widersocial and economic context. The research of the EnvironmentGroup is located within, and contributes to the development ofpolicy thinking about sustainable development.

The objectives of the Environment Group are to analyse,investigate and understand:

• how a transition to environmentally sustainable development might come about;

• the environmental policies, at all levels of government and in other institutions, which might help to bring it about;

• the role of science and technology in helping to bring about environmentally sustainable development;

• the linkages between environmental policy and economic and social concerns that need to be taken into account if the environmental policies are to be implemented and also be effective;

• the scope of sustainable development research, and to increase awareness of its significance.

The Environment Group has developed expertise across anumber of core themes, including:

• resource productivity and technical change,• energy policy and climate change,• environmental policy instruments,• the governance of science and technology,• scenarios of environmentally sustainable development,• the social dimension and acceptability of

environmental policies, and public engagement with them, and

• our conceptions and measures of quality of life.

The Group’s research in some of these areas is described inmore detail below. In addition to focusing on these corethemes, the Environment Group works to clarify, interpret andincrease the profile of the whole field of sustainabledevelopment research, through such activities as the Defra-funded Sustainable Development Research Network (see below),which we have coordinated since 2000.

Research methodsEnvironmental research at PSI employs a wide range of researchmethods, including formal modelling and scenario building andmany styles of policy analysis and evaluation. A very wide rangeof data - economic, social and environmental - is relevant toenvironmentally sustainable development, and provides theempirical basis for the Group’s research. As shown below, thegroup has pioneered the use of a number of new approaches tomodelling issues in sustainable development policy.

Environment at the Heart ofSustainable Development ResearchProfessor Paul Ekins Head of the Environment Group

Environment The GroupThe Environment Group is led by Professor Paul Ekins, who isalso Professor of Sustainable Development at the University ofWestminster, a Co-Director of UK Energy Research Centre(UKERC) and a Member of the Royal Commission onEnvironmental Pollution. He has received the UNEP Global 500Award "for outstanding environmental achievement".

The Group currently consists of fourteen staff: Professor JimSkea, currently working as full-time Research Director of UKERC,Drs Simon Dresner, Nazmiye Ozkan, Roger Salmons and NeilStrachan, and Paolo Agnolucci, Nick Hughes, Kate McGeevor,Alexandra Miltner, Kannan Ramachandran, Ben Shaw, JuliaTomei, Robin Vanner and Andrew Venn. Dr Mayer Hillman is aSenior Fellow Emeritus, and Derek Smith a Visiting Fellow.

The Group maintains close contacts with both other researchersand research users, and engages in collaborative work with awide range of other research organisations in the UK andabroad, most obviously through the UK Energy Research Centre(UKERC) and its membership of the UK Sustainable HydrogenEnergy Consortium (see below), but also through Europeanprojects and joint projects. Close UK links are currentlymaintained with, among others, the Centre for SustainableDevelopment and the Centre for the Study of Democracy at theUniversity of Westminster, the Tyndall Centre and theCambridge Centre for Climate Change Mitigation Research atCambridge University, the Centre for Environmental Strategy atthe University of Surrey, SPRU at Sussex University, the ImperialCollege Centre for Environmental Policy and Technology,Cambridge Econometrics and AEA Technology.

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Sustainable Development Research Network (SDRN)Kate McGeevor

SDRN contributes to sustainable development in the UK by facilitating the better use of evidenceand research in policy-making. Coordinated by PSI since 2000, SDRN provides a unique channelof communication between researchers; local, regional and national government; and otherstakeholders, including businesses, consultancies and NGOs. Through the undertaking of ‘RapidResearch and Evidence Reviews’, SDRN provides concise, policy-relevant summaries of newly-emerging areas of sustainable development research, which have had an influential effect atmany levels of policy-making.

The fortnightly SDRN Mailing - received by over 1750 Network members - contains calls forresearch, updates on policy developments, details of new reports and books, job opportunities and other information relevantto those working in sustainable development policy and research. High profile events, including the SDRN Annual Conference,have also provided a platform for the presentation and discussion of new research.

For further information about the Sustainable Development Research Network, please visit the website www.sd-research.org.uk

The fair introduction of environmental taxesSimon Dresner

One problem with taxes aimed to limit or change people’s environmentally unfriendly behaviouris that they tend to fall equally on rich and poor, thereby having a greater proportional effect onthe poor.

In this research project, undertaken for the Joseph Rowntree Foundation, the consumption andexpenditure patterns of different types of households were analysed to identify which familieswould be most likely to suffer an unfair burden from taxes on their use of energy, water, vehiclefuel, and waste disposal.

The project then assessed what would be the social, economic and administrative impact of measures to remove theseregressive effects, including:

• redistribution of cash to low-income families through the benefit system, • charging different families different rates of tax, and • charging a very low rate of tax for basic use of the resource.

The research led to the production of the influential report “Green taxes and charges: reducing their impact on low-incomehouseholds”, which was published by the Foundation. It proposed a system of charging that would increase taxes on wasteand over-consumption but would be both fair to poor families and keep the overall tax burden the same.

Environmental Policy Instrumentsand Environmental Tax reformRoger Salmons, Paolo Agnolucci, Alexandra Miltner, Simon Dresner

The last fifteen years have witnessed major changes in theapproach to implementing environmental policy. There is nowincreasing interest in the use of market-based approaches, suchas environmental taxes and ‘emission permit’ trading. There isalso growing recognition of the advantages of combinedapproaches, using synergistic packages of policy instrumentsthat combine environmental effectiveness, economic efficiencyand social equity.

These changes have been reflected in the development of awide-ranging research agenda, covering both the prospectivedesign of market-based policy instruments and the evaluationof those policies that have been introduced. PSI is activelyinvolved in undertaking research into the impacts of policyinstruments implemented in the past and assessing possibleways of addressing the economic and social concerns to whichthey can give rise in the future.

The work undertaken by the Environment Group in this areahas focused on two key issues:

The relationship between environmental tax reform andeconomic performance. PSI is leading a group of Europeanresearchers undertaking a major research project on“Productivity and environmental tax reform in Europe”. The aimof this project, funded by the Anglo-German Foundation, is to

bring together the ideas of resource productivity withenvironmental tax reform. This will lead to new insights intothe conditions for sustainable economic growth and how itmight be promoted through public policy. The project will buildon the insights provided by an EU-funded research project onthe “Competitiveness effects of environmental tax reforms” inwhich PSI has participated. At the heart of this project is anevaluation of the competitiveness impacts for selectedindustrial sectors of the carbon-energy tax reforms that havetaken place in a number of EU Member States since 1990. Thekey result of the research to date is that no such impacts havebeen detected.

The implications of market-based approaches for individualsand households. In addition to the work by Dr Mayer Hillmanon personal carbon allowances, the Environment Group hasundertaken work on the potential distributional issues thatmight arise from the introduction of environmental taxes andcharges in the United Kingdom and how these could bealleviated. More recently, the “Green Living Initiative”,developed by PSI in collaboration with Green Alliance hasreceived widespread media coverage. Based on previous PSIresearch, this proposal assembled an integrated package of taxincentives, information and branding, designed to engagehouseholds in taking action on key environmental issues.

Dr Roger SalmonsSenior Research Fellow

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Markal Energy Systems ModelNazmiye Ozkan

A primary analytical tool of the PSI Environment Group is the UK MARKAL model. UK MARKAL(MARket ALlocation) is a data-driven, technology-rich energy systems economic optimisationmodel. The model encompasses the entire integrated UK energy system, including fuel resourcesand imports, energy processes (e.g., the refining sector), conversion to energy carriers (e.g.,electricity, hydrogen), through to end-use technologies, demands and conservation in theindustrial, buildings and transportation sectors. The model delivers a consistent and powerful‘what-if’ framework to explore alternate energy pathways, government policies, and internationaldrivers. A particular emphasis is on systematic characterization of future uncertainties. Themodel continues to be substantially extended, including inclusion of a macro module for

demand-side responses and macro-economic impacts, and linkage to a geographical information system for spatial aspectsin the evolution of energy infrastructures. The model is used both for a range of UK analytical projects, and contributes tointernational energy modelling efforts including the assessment of long-term low carbon societies.

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Energy is a fundamental driver of modern societies and a keyelement in economic and social development. As the world’senergy consumption increases and we continue to burn mostlyfossil fuels, containing its impacts on climate change, and thenreducing them, has become a major policy priority.

Research has a crucial role to play in helping to inform andpursue long-term energy policy goals. Very large investmentswill be required to reduce the carbon intensity of our energysupply, while safeguarding its security and reliability. At thesame time we must maintain a competitive economy andaffordable access to energy for all households.

The PSI Environment Group has become one of the UK’s leadingsources of expertise in “E4” (energy-environment-economy-engineering) analysis of energy systems, taking a whole-systems, integrated approach. This includes focused research onenergy policy instruments, energy prices, technological change,scenarios and modelling, and impacts on competitiveness andvulnerable households.

Two of the Group’s major research efforts in this area are throughits involvement in the UK Energy Research Centre (UKERC) andthe UK Sustainable Hydrogen Energy Consortium (UKSHEC).

Energy systemsWithin UKERC, PSI is leading the crosscutting theme of EnergySystems and Modelling, through which new scenarios andmodelling approaches and tools are being developed.Specifically, PSI’s work is focused on the development of state-of-the-art UK modelling, including the MARKAL energy systemsmodel; integration of top-down economic models withbottom-up technology models; and energy modellingnetworking in the UK and internationally. This research hascontributed to the analysis and evidence underlying the UKGovernment’s Energy Review and White Paper processes, andwill make an increasingly important contribution tounderstanding and quantifying the evolution of the UK energysystem. It will analyse the impacts of the external drivers andpublic policies that seek to shape UK energy supply and use.

Hydrogen useUKSHEC is a long term research programme funded by theEngineering and Physical Sciences Research Council (EPSRC)under its SUPERGEN (Sustainable Power Generation andSupply) research programme. The consortium combines highlevel scientific research into innovative methods of hydrogenstorage and generation with a broader socio-economicapproach that aims to examine the role of hydrogentechnologies within future energy systems, as well as social andpolitical structures. Research at PSI has been carried outthrough four separate but linked activities:

The development of a hydrogen module within the newly builtMARKAL model of the UK energy system, in order to examinequantitatively the effects upon energy demand and supply ofincreasing levels of hydrogen production and use.

An economic analysis, within the context of technologicaltransition theory, of end-use applications of hydrogen,assessing the prospects for hydrogen technologies at currentand future performance levels, and in particular the role of‘technological niches’ in encouraging new technologies.The development of a coherent and comprehensive set ofhydrogen futures scenarios, using expert stakeholderconsultation, and involving an innovative expert-led multi-criteria sustainability appraisal of a range of prospectivehydrogen futures.

Analysis with colleagues at the University of Salford of thepublic awareness and social acceptability of various hydrogendevelopment options.

The research has identified that there are many challenges –scientific, technological, economic and social – that will need tobe successfully addressed if hydrogen is to become amainstream energy source in the future. It will also beproducing recommendations to policy makers about theapproaches to these challenges that seem likely to have thegreatest chance of success.

PSI’s Environment Group has made innovative contributions tothe development of methods of sustainability impactassessment: the systematic analysis of the environmental,social and economic impacts of different kinds of policies,before and after their introduction,

European Structural FundsTwo European projects have assessed the contribution tosustainable development of the European Structural Funds, themain EU policy instrument to promote economic convergencebetween richer and poorer regions. Starting from the idea that,for development to be sustainable, it must at least maintain theasset base (the manufactured, environmental, human and socialcapital stock) of society, the research found worrying evidence ofthe sacrifice of environmental capital in the process of economicdevelopment. The results of this work will be published in aspecial issue of the journal European Environment.

Trade agreementsAnother European project, SIAMETHOD, is developing existingmethods of Sustainability Impact Assessments (SIAs) of tradeagreements, by including in the SIA consideration of thereasons why countries may resist trade liberalisation.SIAMETHOD distinguishes the protection of the environment orcritical social values from more narrowly based economicprotectionism. PSI is focusing on how the trade in commoditiesmay be made more environmentally sustainable, whilstmaintaining developing countries’ access to export markets andpromoting their sustainable economic development.

The cost of legislationImpact assessment usually involves the assessment of the costsand benefits of policies prospectively or followingimplementation. Recent analysis by PSI for the EuropeanCommission showed that the cost of legislation is often over-estimated when it is proposed. In the case of businessestimates, this may be due in part to resistance to thelegislation. But the evidence suggests that it also arises fromthe inherent difficulty of estimating the extent and impact oftechnological innovation, and conservative assumptions aboutthis having been made in the past.

Material flow analysisMaterial flow analysis (MFA) is a relatively new tool in theassessment of sustainability and the pursuit of resourceefficiency. PSI has used MFA, coupled with value chain analysis,to carry out work in collaboration with the UK offshore oil andgas industry to assess different options for the management ofproduced water and the decommissioning of defunct offshoreinstallations. PSI has also carried out for the UK Department forthe Environment, Food and Rural Affairs (Defra) an assessmentof the £10m Biffaward programme of studies, which used MFAto identify and implement the scope for material efficiencieswithin the UK economy. PSI provided guidance as to how theoutcomes and policy utility of the programme should informfuture data gathering of this kind. PSI will be taking forward afurther programme of work in this area in collaboration withthe Defra-funded National Industrial Symbiosis Programme(NISP), of which Paul Ekins has recently become Chairman.

Sustainability ImpactAssessmentRobin Vanner, Andrew Venn

Dr Neil StrachanSenior Research Fellow

Energy and Climate ChangeNeil Strachan, Kannan Ramachandran, Nazmiye Ozkan, Nick Hughes

Left:Robin VannerResearch Fellow

Right:Andrew VennResearch Officer

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Personal Carbon AllowancesMayer Hillman

Over the last 16 years, Dr Mayer Hillman’s research has focused on the gravity of climatechange, the alarming inadequacy of the response to this threat at all levels of society, and howpublic policy can best promote sufficiently low energy lifestyles.

This research has concluded that, to safeguard the future for succeeding generations, a globalagreement based on the allocation of per capita carbon rations must be adopted urgently. Thiswork has produced many publications, including How we can save the planet (Penguin Books) andThe Suicidal Planet: our last chance to prevent climate catastrophe (St. Martins Press, in press).

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The past 30 years have been marked by dramatic social andeconomic changes in Britain. The 1980s in particular saw afundamental restructuring of the economy as traditional heavyindustry declined and knowledge-based, service sectoremployment grew. The wages of unskilled workers hardly rosein real terms while the incomes of well-educated workersdoubled by the end of the century.

Inequality was increased further by demographic changes.Despite an increase in women’s employment, a million loneparents found themselves excluded from the labour market,alongside many older workers, sick and disabled people andunskilled migrants. There arose ‘a new sociology of work’whereby social location, housing tenure and consumptionpatterns determined people’s economic opportunities. Britainbecame a country of ‘work-rich’ households, many of themdual-earners, and ‘work poor’ households where no adult had ajob. With a fifth of children in work-poor homes, Britain had by1990 one of the highest proportions of children in poverty inthe developed world.

Disadvantaged workers became particularly vulnerable toeconomic exploitation and health and safety risks. They facedsignificant barriers to job entry or progression due todiscrimination, poor education and skills, health problems, orfor circumstantial reasons such as a lack of affordablechildcare, especially among lone parents. Increasingly, the jobsfound by such individuals were often poorly-paid and short-term leading to a ‘low pay, no pay’ cycle.

Recent policy responses have focused on ‘welfare-to-work’whereby people receiving out-of-work benefits are helped totry and find work, if at all possible. There has also been anemphasis on ‘making work pay’ by increasing tax credits tosupplement the earnings of the low-paid, while the nationalminimum wage provides a floor beneath which wages shouldnot fall. Other policy initiatives include the National ChildcareStrategy and new or strengthened anti-discriminationlegislation. The focus of Government attention has expanded tocover vulnerable groups not traditionally addressed by

employment policy such as lone parents, people with adisability or health problems, and the partners of those onbenefits.

PSI’s research has contributed strongly to the welfare-to-workprogramme; research in the 1990s restored faith in the use ofwage supplements and our evaluation studies strengthenedseveral of the New Deal initiatives. This research agendabroadened to embrace studies of individual and communitywell-being, including teenage pregnancy and sexual health, theexperiences and needs of new migrants, social cohesion, andlocal governance, transitions to retirement, citizen engagementand quality of life

• Re-engaging disabled people: PSI is leading a consortium of research organisations evaluating ‘Pathways to Work’. This is providing essential information for the redesign of these benefits announced in this year’s welfare reform Green Paper (see feature).

• Sustainability and progression: PSI is part of the consortium evaluating the Employment Retention and Advancement (ERA) demonstration. This assesses the effect of providing support and financialassistance to help low-paid workers progress in the labour market (see feature).

• Social cohesion: PSI has recently carried out research on social cohesion in ethnically and socially diverse neighbourhoods, which will inform the growingdebate about community cohesion (see feature)

• Maternity pay and rights: PSI’s most recent survey of maternity and paternity rights and pay showed how legislation had strengthened women’s position in the labour market, allowing more women to returnto work and, crucially, maintain their seniority(see feature).

• Opportunities for older people: PSI is involved in a variety of projects relevant to debates about extending working life, pension reform, living standards, social participation and quality of life for

Richard DorsettHead of Quantitative Research

Work and Social Policy ResearchHelen Barnes and Richard Dorsett, respectively Heads of theQualitative and Quantitative teams

older people. These include studies of retirement andpension planning among ethnic minority communities, research into why people work after state pension age, an assessment of the potential impact of pension reform on ethnic minority groups, an evaluation of full New Deal participation for the over-50s, a study of local authority initiatives to engage with older citizens, and an evaluation of an initiative seeking to persuade workers to increase their pension contributions.

• Employment relations: PSI has been a co-sponsor of the Workplace Employment Relations Survey since its inception in 1980. The survey is the biggest of its kind in the world and has been informing and influencing public policy formation over the last quarter of a century (see feature).

• Child poverty: PSI founded the Families and Children Survey, now in its eighth year, which monitors the well-being of 8,000 British families. It showed how effective the increased government

investment in families has been, sharply reducing hardship among the lower income families.

• Discrimination: studies of ethnic parity continue, focussing mostly recently on parity in Jobcentre Plus programmes and in private sector employment.

• Lone parenthood: PSI has a long history of research on lone parents and employment. Recent and ongoing evaluations examine the extent to which mandatory work-focused interviews, and financial incentives, have influenced the labour market behaviour of lone parents.

PSI is well-placed to continue informing the development ofpolicy across a wide range of topics. We have expanded overrecent years, and have developed and diversified ourmethodological range, using a variety of quantitative andqualitative approaches, alone and in combination. The value ofan integrated approach is best seen in our large-scale, mixedmethods evaluations, such as those of Pathways and ERA. Wecontinue to learn how to realise the full power of this approach.

Work and Social Policy

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A quarter of a century ago industrial relations (IR) was a bigissue. It had been at the ‘forefront of public and politicaldebate in Britain for the previous two decades and reform ofthe industrial relations system had been part of every politicalparty’s manifesto’ (Daniel and Millward, 1983). This wasbecause IR was viewed as a serious problem, its turbulencecontributing to macro-economic problems and difficulties forfirms, workers and their families. Yet, with the exception of thesurveys conducted under the auspice of the DonovanCommission, what was known about industrial relations wasbased largely on case studies and small scale surveys. Thisbegan to change when PEP’s Bill Daniel conducted the firstworkplace survey of pay determination in Britain in 1975 and itchanged for good with the establishment of the WorkplaceIndustrial Relations Surveys (WIRS) in 1980.

Together with the Department of Employment and the SocialScience Research Council, PSI became a co-sponsor of theseries.1 Each co-sponsor had slightly different interests. TheDepartment wanted ‘to ensure that there was established asolid base for analysis of industrial relations practice andprocedures as a background for policy making’ (Daniel andMillward, 1983: 2). The then Social Science Research Council’saim was ‘to ensure that a rich, new data base about industrialrelations was made available to the whole community ofresearchers and scholars in a form that was most useful tothem’ (op. cit.). PSI was concerned ‘that the information beused for medium term policy analysis and evaluation’ (op. cit.).But they all had one overriding interest in common. As PeterBrannen, one of the originators of the WIRS series, put it: “theidea of establishing a series of Workplace Industrial RelationsSurveys was …to remedy the lack of systematic data and tomake possible the analysis of change and continuity over time”(Millward and Stevens, 1986: x). And so differences wereaccommodated in a spirit of collaboration and cooperationwhich “at least in the judgment of those most closelyinvolved…represents a new and valuable arrangement forcarrying out research relevant to public policy and scholarlyenquiry” (op.cit.). It is this co-sponsorship that makes WIRS sounique today.

Now that the WIRS survey has been carried out five times(1980, 1984, 1990, 1998 and 2004) it is easy to understate theambition and potential risks associated with the first survey in1980. As Cully (1998) reminds us, OPCS senior statisticians hadadvised against WIRS80 saying that ‘a survey which takesestablishments as its unit of analysis will not succeed in itsresearch aims….[due] to the unreliability of informationobtained from individuals acting as proxy informants’2 Thesurvey also charted new territory, covering the whole economy(manufacturing, private services and the public sector) for thefirst time and surveying much smaller workplaces.

If we fast forward some 25 years, there is a general acceptanceof the value of large-scale survey data collection in furtheringour understanding of IR. As Millward, Marginson and Callus(1998: 137) point out, they provide a ‘snapshot of thestructures, practices and outcomes of industrial relations’. Theyidentify diversity and heterogeneity within employerpopulations; offer opportunities for hypothesis testing andtheory building; provide data for policy evaluation; and, ifrepeated over time, can map change and identify reasons for it.Their methodological strength is in offering generaliseabilityand transparency.

The abiding challenge for WIRS has been in keeping up withthe seismic shift in the discipline that has taken place over thequarter century. This change, reflected in the change in thesurvey’s name from WIRS to WERS (Workplace EmploymentRelations Survey), has two elements.

• The first is the movement away from joint regulationto the restoration of managerial prerogative and the re-emergence of the ‘managerialist’ HRM agenda.

• The second shift has been towards much greater interest in employees’ experience of work in its own right. WIRS has reflected these trends with a very substantial shift in the nature of the survey instruments and survey design (Cully and Marginson,1995; Cully, 1998; Marginson, 1998; Marginson and Wood, 2000; Kersley et al., 2006).

Alex BrysonPrincipal Research Fellow

A Quarter Century ofIndustrial RelationsAlex Bryson, Principal Research Fellow

The ever-changing nature of WIRS reflects an abiding concernwith continuity and change. Identifying the degree ofcontinuity in IR means retaining a core set of questions whichpermit the construction of time-series data. Identifying thenature and reasons for change entails innovation in surveyquestioning and design. This was apparent to the inventors ofWIRS at the outset. Introducing the WIRS84 book, PeterBrannen says that it ‘...provides a comprehensive overview anddescriptive analysis of the survey data and sets out in a lucidand objective manner a wealth of material on employment andindustrial relations in British workplaces…...More importantly,however, the authors have been able to identify, in a rigorousmanner, changes and developments over the previous years.This is the first time that such systematic monitoring has beenpossible’ (Millward and Stevens, 1986: xi). Brannen explainedthat, in order to achieve this, ‘...a substantial core of commonquestions was retained but a new topic area, concerned withtechnical change, was introduced…...In addition anexperimental panel element was built into the design.’ And sothe state of permanent revolution which is the WIRS series gotunderway. Recently this ‘revolution’ has included a newemployee survey linked to workplaces introduced in 1998 andextended in 2004, the refinement and extension of the panelsurvey, the linkage of the survey data to financial informationin the Annual Business Inquiry (Kersley et al., 2006), theinterviewing of non-union worker representatives in 2004, anda reduction in the employment size threshold for inclusion inthe survey from 25 employees to 10 in 1998 and 5 in 2004(Forth et al., 2006).

The primary contribution WIRS has made to our understandingof industrial relations in Britain is in tracing the demise of

collective industrial relations in Britain. As Millward, Brysonand Forth put it in 2000:

“The Conservative government that came to power in 1979confronted a system of collective employment relations thatwas dominant, though not universal…That system of collectiverelations, based on the shared values of the legitimacy ofrepresentation by independent trade unions and of jointregulation, crumbled in the intervening eighteen years to suchan extent that it no longer represents a dominant model”.

Despite New Labour and a slow down in the rate of decline,there is little sign of its revival in the 2004 WERS.

Five surveys, nine sourcebooks3 and many, many journal articlesdown the line4, we are used to seeing British IR through thelens of the workplace. This is a remarkable achievement inmany ways, not least because an authoritative picture of IR andIR change is not available in most other countries around theworld – including the USA. The United States may haveproduced the most heavily cited IR book ever (Freeman andMedoff, 1984) but it did so without representative workplace-level data. Indeed, in reviewing Kersley et al. (2006) Freemandescribed WIRS as ‘the gold standard survey of personnel andlabour relations’ going on to say:

“If only the US was smart enough to imitate this masterfulsurvey and study!”

Let’s hope that WIRS can continue to lead the way for anotherquarter century.

1The Advisory, Conciliation and Arbitration Service became the fourth co-sponsor in 1984.2Letter from Head of Social Survey Division, OPCS, July 1979, Department of Trade and Industry files.

3Daniel and Millward (1983); Millward and Stevens (1986); Daniel (1987); Millward et al. (1992); Millward (1994); Cully et al. (1999); Millward et al. (2000); Kersley etal. (2006); Forth et al. (2006)4In a personal communication John Forth estimated there are around 400-450 WIRS publications. Roughly 165 of these are articles in refereed journals and 15 are books.

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Looking back over the past 75 years, one of the most notablesocial developments of the 20th century has been thefeminisation of the labour force. When PEP (PSI’s precursor)was formed in 1931 the marriage bar was still in place andwomen were expected to give up work upon marriage in orderto devote themselves to home and hearth. The bar waseventually lifted in 1946 and over the post-war period rates ofemployment among women eventually rose dramatically, asshown in the figure below, with growth most marked amongmothers returning to work sooner after childbirth.

The expansion in labour market participation among womenhas been encouraged by a number of developments, including aburgeoning service sector, more part-time opportunities, and asecond wave of feminism which changed attitudes and raisedexpectations. Equal opportunities policies and, in particular,maternity rights legislation have also played an important rolein promoting the employment prospects of women.

Statutory maternity leave was introduced in 1976, establishinga right to reinstatement at work up to 29 weeks afterchildbirth, provided two years of service had been completed.Since then, incremental improvements to maternity rights andbenefits have been implemented, widening eligibility, increasingthe duration of maternity pay and the extension of new rightsto fathers. Partly as a consequence of these developments, theproportion of mothers returning to work within a year or so ofchildbirth continued to grow, reaching 80 per cent by 2002.

PSI has a history of research in this field spanning more thantwenty-five years - unusual for an Institute that relies oncontract research funding. The Government’s series of studiesof maternity rights provision and take-up was begun at PSI byBill Daniel in the late 1970s (Daniel 1980) continued by SusanMcRae ten years later (McRae 1991) and subsequently at fiveyear intervals - first by Claire Callender and colleagues(Callender, Millward, Lissenburgh and Forth 1997) and then byMaria Hudson and Stephen Lissenburgh in 2002 (Hudson,Lissenburgh and Sahin-Dikmen 2004), and most recently by our2005 interim Maternity and Paternity Rights Survey (Smeatonand Marsh, 2006).

This most recent research came up with a small but vitallyimportant finding. Alongside these more rapid returns to workafter childbirth, mothers were more likely to return to their oldemployers: eight out of ten now do so. This is allowing womento continue using their skills and experience and maintain theirseniority and pension rights. The point at which women returnto work is pivotal to their future economic chances – taking aprolonged break for full-time motherhood has typically led,upon return, to jobs of lower pay and reduced status fromwhich it can be difficult to escape. The evolution of maternityrights and benefits has therefore been instrumental in theimprovement of the longer term financial and career prospectsof women.

As research often shows, there remains considerable scope forimprovement. Women are still under-represented in manyoccupations, in the upper echelons of business hierarchies andin positions of political power. Looking to the future, PSI plansto continue our contribution to the analysis of women in theworkplace and the role maternity and paternity rights can playin the march toward final equality of opportunity and outcome.

Deborah SmeatonSenior Research Fellow

A Quarter of a Century of MaternityRights and PayDeborah Smeaton, Senior Research Fellow

20

30

40

50

60

70

1950 1960 1970 1980 1990 2000 2006

Pe rce ntage of wome n age d 16-59 in e mployme nt

New Deal programmes to help out-of-work people find jobshave been broadly successful. For some, however, success wasshort-lived and too many of those sent into low-paid insecurework, or who found work, travel and childcare just too hard,returned to benefit. Repeated spells out of work predicted morefor the future and many of Britain’s less skilled workers foundthemselves caught in a ‘low-pay-no-pay cycle’.

The DWP and Jobcentre Plus have launched an imaginativeexperiment to intervene decisively in this malign cycle of labourmarket disadvantage and if they can, reverse it. TheEmployment Retention and Advancement scheme (ERA) isdesigned to help low-paid workers keep their jobs and progressin work by providing them with a personal adviser for threeyears. They also receive new cash incentives for working fulltime (30 hours or more) and undertaking training.

Three groups are eligible for these ERA services: • Out-of-work lone parents entering the New Deal for

Lone Parents (NDLP), a voluntary programme providing work-entry support to lone parents receiving Income Support;

• People aged 25 and over on Jobseeker’s Allowance who have been unemployed for about 18 months and are entering New Deal 25 Plus (ND25+); and

• Lone parents working 16 to 29 hours a week and receiving a wage supplement through Working Tax Credit (WTC).

In six pilot areas chosen for this experiment, about 16,000people were eligible for ERA during 2003/4. Of these, half wererandomly allocated on entry to an Experimental Group thatwould receive the ERA services and half to a Control Groupthat remained entitled to the usual pre-employment help andother Jobcentre services. These two groups will be studied fortwo years, possibly for much longer. They will be studied by avariety of methods, by:

• tracking administrative records• site observation of customers and staff by a team of

Technical Advisers• repeated telephone surveys of customers• repeated in-depth interviews of customers and staff• self-completion surveys of staff

This evaluation study is led by MDRC in New York, whose staffhave years of experience of random assignment studies in theUS. PSI is joined in a four member consortium by the Office forNational Statistics and the Institute for Fiscal Studies.

ERA is the first large-scale random assignment test of a labourmarket experiment in Britain. The Control group reliablyrepresents what happens to these three groups without ERA.Therefore, differences seen among the Experimental group canbe confidently attributed to the new services they received. It isan attempt to test a social policy, as far as possible, in the sameway medicines are tested.

Random assignment is sometimes accused of being a ‘blackbox’ because you end up knowing you had an effect but youdon’t know why. But ERA is comprehensively a multi-methodproject deploying the whole range of quantitative andqualitative research. We will know what impact ERA has had interms of longer spells in work, better wages and conditions,and so on. More than that, we will have watched the ERAcustomers and spoken to them, and to the Controls, every stepof their way into work and beyond. Study of the deliveryprocess will tell us what worked best for what kinds ofcustomer. We will also be able to compare the value of theiroutcomes with the cost of the programme. We will be able tosay if ERA worked, why it worked, and whether it was worth it,both by counting the financial gains and by assessing the widersocial value of long term improvements for some of Britain’smost disadvantaged workers.

Dr Lesley HoggartSenior Research Fellow

Retention and advancement: thenext step in welfare-to-workLesley Hoggart, Senior Research Fellow

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Understanding Social CohesionMaria Hudson, Joan Phillips, Kathryn Ray, Helen Barnes

Promoting community cohesion is central to the remit of the new Department for Communities and Local Government.Social (or community) cohesion is thought to be about relations between people of different ethnic and culturalbackgrounds. Indeed community cohesion rose to prominence following the disturbances between (primarily) white andAsian young men in some British cities in 2001. However, social cohesion is not only about relationships between ethnicgroups, but also about the importance of eroding economic disparities and social exclusion. This study was commissioned bythe Joseph Rowntree Foundation. It is part of a programme of research on Immigration and Inclusion which seeks tocontribute to the development of appropriate public policy and practice responses to new migration. The research sought toprovide a detailed exploration of social relationships between the White British, Black Caribbean and Somali communities inNorth Tottenham, in the London Borough of Haringey, and Moss Side, in Manchester, by undertaking qualitative researchfrom March 2005 to February 2006. This consisted of a range of research methods:

• Face-to-face interviews with ordinary residents;• Discussion groups with young people;• Discussion groups and interviews with community activists and local service providers;• Interactive feedback workshops for local residents.

Pathways to Work is the name given to a package of initiativesaimed at helping those claiming incapacity benefits (IB) toleave benefit and enter employment. Pilots commenced inOctober 2003 for new claimants and this was later extended toinclude existing (stock) claimants. There has since beenextension to additional geographic areas for new claimants.

Pathways involves three main elements:

• a series of mandatory work-focused interviews with a specialist adviser

• a ‘Choices’ package of new and existing labour market programmes, most notably the New Deal for Disabled People (NDDP) and the Condition Management Programme (CMP)

• financial incentives – a Return to Work Credit for those leaving IB to low-paid employment and, for stock claimants only, a Job Preparation Premium payable to those engaged in some activity linked to finding work.

The DWP-commissioned evaluation of Pathways is being carriedout by a consortium of research organisations led by PSI.5 Theevaluation itself is wide-ranging and includes both quantitativeand qualitative analysis. The quantitative component of theevaluation is made up of a number of elements:

• an evaluation of the overall impact of Pathways on, for example, employment, benefit and health

• an evaluation of the impact of Choices, specifically NDDP and CMP

• a series of surveys: face-to-face, telephone and web-based, to understand the nature of the Pathways population

• an assessment of the generalisability of the results tothe national case

• a cost-benefit analysis of Pathways

The qualitative component of the evaluation has been designedas a series of interlinked studies, covering different aspects ofthe Pathways pilots. This has allowed us to be flexible in

responding to emerging areas of interest, and to provide rapidfeedback to policy makers. Each study is led by one partner inthe consortium, with the others involved in carrying outfieldwork and analysis. Notable features of the design include:

• a longitudinal client panel which has followed peopleover the course of three interviews

• rapid production of early implementation findings based on focus groups

• studies on new aspects of provision, such as the Condition Management Programme

• studies on changing roles, such as those of the Personal Adviser.

The evaluation is ongoing and has so far generated a numberof reports.

Qualitative research has shown that some people who do notinitially feel capable of work become more positive in theirattitudes towards working as a result of their involvement withPathways, although those already focussed on the possibility ofwork appear to have benefited most from pilot provision. Others,however, experience severe ill-health or complex personalproblems (such as debt, family problems or substance abuse)which may limit their ability to benefit. The early findings fromthe impact analysis suggest a positive effect of Pathways onemployment and income and a reduction in levels of IB claims.Full results are given in the report:

• ‘Early quantitative evidence on the impact ofPathways to Work pilots’, http://www.dwp.gov.uk/asd/asd5/rrs2006.asp.

Dr Helen BarnesHead of Qualitative Research

Pathways to WorkHelen Barnes and Richard Dorsett

5The other consortium members are the Institute for Fiscal Studies, Mathematica Policy Research, the National Centre for Social Research, the Social Policy ResearchUnit at York University and David Greenberg of the University of Maryland.

Left to right:

Dr Maria HudsonSenior Research Fellow

Dr Joan PhillipsResearch Fellow

Dr Kathryn RayResearch Fellow

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Malcolm Rigg Director

Professor Alan Marsh Deputy Director

Environment

Professor Paul Ekins Head of Environment Group

Paolo Agnolucci Senior Research Fellow

Dr Simon Dresner Research Fellow

Nick Hughes Research Officer

Kate McGeevor Research Fellow

Alexandra Miltner Research Fellow

Dr Nazmiye Ozkan Research Fellow

Kannan Ramachandran Research Fellow

Dr Roger Salmons Senior Research Fellow

Ben Shaw Senior Research Fellow

Dr Neil Strachan Senior Research Fellow

Julia Tomei Research Officer

Robin Vanner Research Fellow

Andy Venn Research Officer

Dr Mayer Hillman Emeritus Fellow

Work and Social Policy

Dr Helen Barnes Head of Qualitative Research

Dr Richard Dorsett Head of Quantitative Research

Helen Bewley Senior Research Fellow

Sheere Brooks Research Officer

Alex Bryson Principal Research Fellow

Verity Campbell-Barr Research Officer

Dr Getinet Haile Research Fellow

Dr Lesley Hoggart Senior Research Fellow

Dr Maria Hudson Senior Research Fellow

Dr Diana Kasparova Senior Research Fellow

Dr Genevieve Knight Principal Research Fellow

Karen Mackinnon Research Fellow

Dr Joan Phillips Research Fellow

Dr Kath Ray Research Fellow

Melahat Sahin-Dikmen Research Fellow

Isabel Shutes Research Officer

Debbie Smeaton Senior Research Fellow

Dr Rebecca Taylor Research Fellow

Sandra Vegeris Senior Research Fellow

Isobel Allen Emeritus Fellow

Michael White Emeritus Fellow

Central Services

Tim Edwards PSI Administrator

Hilary Salter Research Administrator

Jenny Yip Research Administrator

Mehrdad Hashemi-Sadrai Reception Administrator

Vivienne Stiemens Librarian

Georges Allen Senior Research Administrator (Finance)

Neil McEnery-West Research Administrator (Finance)

Rob Lyons Website Manager

PSI Staff Contact

Qualitative Research Team2120

Policy Studies Institute

50 Hanson Street,London W1W 6UP

Tel: 020 7911 7500Fax: 020 7911 7501

Email: psi-admin@psi.org.ukwww.psi.org.uk

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