The impact of devolution

Employment andemployability

Paul Bivand, Laurie Bell,Lovedeep Vaid, DanielleWhitehurst and Ken Wan

www.jrf.org.uk

January 2010

An exploration of the initiatives on employment andemployability undertaken by devolved governments inScotland, Wales and Northern Ireland from devolution to 2008,and their impact.

Ten years since policy on employability and skills was devolved toelected governments in Scotland and Wales, this report examineshow they, and the Northern Ireland Government, have respondedto the needs of their nations. The report compares the overall resultswith the three northern regions of England, where devolution did nottake place.

• Before the recession, employment rates in all three devolvednations had risen faster than in England.

• However, there is no strong evidence that actions by thedevolved governments had accounted for that progress.

• Comparison of labour market and Jobseeker’s Allowance (JSA)claimant trends in Scotland and Wales and the North of Englandshows that the similarities outweigh the differences.

• In Northern Ireland, performance for the key group of JSAclaimants – at whom most initiatives have been targeted – hasbeen substantially weaker.

Contents

List of tables and figures 2

Executive summary 5

1 Introduction 7

2 Strategic context 10

3 Employment patterns since devolution –national and regional comparisons 18

4 Labour market trends for Scotland 21

5 Labour market trends for Wales 31

6 Labour market trends in Northern Ireland 41

7 Findings from the British Household PanelSurvey 46

8 Review of initiatives 52

9 Conclusion 58

Notes 61

References 62

Related reports 65

Appendix 1: BHPS summary tables 66

Appendix 2: Initiatives table 71

Appendix 3: Detailed review of initiatives 74

Acknowledgements 85

Contents

List of figuresand tables

Figures

Figure 1 Employment ratechanges, 1999–2008 18

Figure 2 Male employment ratechanges, 1999–2008 19

Figure 3 Female employment ratechanges, 1999–2008 20

Figure 4 Employment rate changes,1999–2008, North ofEngland and Scotland 21

Figure 5 Employment index (Nov2006 = 100), 1999–2008,North of England andScotland 22

Figure 6 Claimants on worklessbenefits as a proportionof population, 1999–2008,North of England andScotland 23

Figure 7 Jobcentre Pluscustomers, 1999 and2008, Scotland 23

Figure 8 ILO unemployment,Scotland 24

Figure 9 JSA claimant countindex (Dec 2006 = 100),North of England andScotland 25

List of tables and figures2

Figure 10 JSA claimants stayingthrough each three-monththreshold (seasonallyadjusted), Scotland 26

Figure 11 JSA claimants stayingbeyond the three-monththreshold (seasonallyadjusted), North ofEngland and Scotland 27

Figure 12 JSA claimants staying fromthree months beyond sixmonths (seasonallyadjusted), North ofEngland and Scotland 28

Figure 13 JSA claimants stayingfrom six months beyondnine months (seasonallyadjusted), North ofEngland and Scotland 28

Figure 14 JSA claimants stayingfrom nine months beyondtwelve months (seasonallyadjusted), North ofEngland and Scotland 29

Figure 15 JSA claimants stayingfrom 12 months beyond15 months (seasonallyadjusted), North ofEngland and Scotland 30

Figure 16 Employment rate changes,1999–2008, North ofEngland and Wales 31

List of figuresand tables

List of tables and figures 3

Figure 17 Employment index (Nov2006 = 100), 1999–2008,North of England andWales 32

Figure 18 Claimants on worklessbenefits as a proportion ofpopulation, 1999–2008,North of England andWales 32

Figure 19 Jobcentre Pluscustomers, 1999 and2008, Wales 33

Figure 20 ILO unemployment rate(percentage ofeconomically active),Wales 34

Figure 21 JSA claimant count index(December 2006 = 100),North of England andWales 34

Figure 22 JSA claimants stayingthrough each three-monththreshold (seasonallyadjusted), Wales 36

Figure 23 JSA claimants stayingbeyond the three-monththreshold (seasonallyadjusted), North ofEngland and Wales 37

Figure 24 JSA claimants stayingfrom three monthsbeyond the six-monththreshold (seasonallyadjusted), North ofEngland and Wales 37

Figure 25 JSA claimants stayingfrom six months beyondnine months (seasonallyadjusted), North ofEngland and Wales 38

Figure 26 JSA claimants stayingfrom nine months beyondtwelve months (seasonallyadjusted), North ofEngland and Wales 38

Figure 27 JSA claimants stayingfrom 12 months beyond15 months (seasonallyadjusted), North ofEngland and Wales 39

Figure 28 Employment rates inNorthern Ireland and theNorth of England since1999 41

Figure 29 Unemployment inNorthern Ireland(numbers, ILOdefinition) 42

Figure 30 JSA claimant count inNorthern Ireland and theNorth of England(Dec 2006 = 100) 43

List of tablesand figures

List of tables and figures4

Figure 31 Proportions remaining onJSA past three months,Northern Ireland andNorth of England 44

Figure 32 JSA claimants stayingfrom three monthsbeyond six months(seasonally adjusted),North of England andNorthern Ireland 44

Figure 33 Percentage of thoseemployed in 1999 whoare still employed 47

Figure 34 Percentage of thoseunemployed in 1999 whoare now employed (notself-employed) 47

Figure 35 Percentage of thosewho were inactive in1999 who are stillinactive 48

Figure 36 Percentage of those whowere inactive in 1999who are now employed(self-employed) 49

Figure 37 Median income ofindividuals last month (£) 49

Figure 38 Mean income ofindividuals last month (£) 50

Figure 39 Monthly incomes forthose in lowest 5thincome bracket (£) 50

Tables

Table 1 Initiatives identified byreview 52

Table A1 The change in economicstatus of thoseemployed in1999 66

Table A2 The change in economicstatus of thoseunemployed in 1999 67

Table A3 The change in economicstatus of those inactivein 1999 68

Table A4 Change in total income(last month) of thosesurveyed in 1999 69

Table A5 Percentage change inmonthly incomecompared to previousyear 70

Table B1 Initiatives 71

Executive summary

This report examines labour market trends inScotland, Wales and Northern Ireland from devolutionto 2008, and analyses whether there is evidence thatactions by the devolved governments have made anoticeable difference to the chances of worklessresidents moving into work.

Executive summary 5

The broad conclusion of this study is that whilethere has been substantial progress in raisingemployment rates in all three devolved nations,there is no strong evidence that actions by thegovernments have accounted for that progress.

We have come to that conclusion afterexamining how the trends differ between thedevolved nations and the three northern regionsin England,1 which have also seen substantialprogress in employment and in employment ratesover the last ten years. Data analysis uses theNorth of England as our ‘counterfactual’ on thebasis that, in 1999, the economic structures andlevels of key variables had a broad level ofsimilarity with the devolved nations, and also hada considerable shared economic history prior todevolution, conditioning responses to economicchanges. Together, the three North of Englandregions are larger than any of the devolvednations, but they vary in size, with the North Eastof England having the smallest economy.Therefore, changes that are common to thedevolved nations and to the North of Englandcannot be ascribed to the separate activitiesof the devolved governments.

For devolution to be shown to have madea difference, progress in the devolved nationswould need to have been greater, and changesin the difference between the North of Englandand each nation would have had to coincide withthe implementation of relevant initiatives from thedevolved governments.

Comparison of labour market and Jobseeker’sAllowance (JSA) claimant trends in Scotland andthe North of England shows that that thesimilarities outweigh the differences. The major

difference appears from late 2006 onwards,in favour of Scotland. This does not seemparticularly to match initiatives from the ScottishGovernment. There is some difference over thesame period for the JSA flows through durationanalysis where the Scottish improvement isgreater than that for the North of England. Thismay be due to more people leaving JSA to jobs,tighter JSA enforcement in Scotland, or somecombination of the two. There is no evidence ofdifferential trends in incapacity benefits (IB) claimsor lone-parent benefit claims over that period.

In Wales trends in employment rate andnumber and people claiming workless benefitshave broadly followed those in the North ofEngland. JSA flows through duration analysisshow generally better performance in Wales thanin Northern England over the post-devolutionperiod, particularly from 2005 onwards, but havebroadly followed the GB trend. Wales has had aconsistently and significantly higher rate of IBclaimants than the North of England.

The strengthening and occasional weakeningof the peace process in Northern Ireland has hada major influence on economic progress. Thecurrent recession hit Northern Ireland earlier, andits effect has been more marked, than in NorthernEngland. Until the recent recession, NorthernIreland has had declining and comparatively lowunemployment, partly because of the relativelyhigh and persistent rate of inactivity. Variations inJobcentre Plus claimant count and flow rates incomparison to Northern England are likely to bedue to the different administration of JobcentrePlus services in Northern Ireland. Broadly, thesedo not show devolution to have had a positive

impact. Where Northern Ireland has performedbetter than Northern England, it is largely due tothe relative improvement for the short-termunemployed and for reductions in new claims,rather than activities helping the long-termunemployed where progress has beencomparatively slow.

Analysis of British Household Panel Surveyfindings finds no difference in economic activity orchange in income between Scotland and Walesand comparison English regions large enough tosuggest that devolution has had a significantimpact on changing the circumstances of peoplein workless and/or low-income households.

There is scope for caution in the broadjudgement that progress in these measures in thedevolved nations would have to be greater than inNorthern England and coincide with implementationof initiatives. The nature of the devolved powers,including adult skills, means that devolvedinitiatives may have longer-term returns than theshort-term returns visible from well-evaluatedemployment programmes that operate acrossGreat Britain.

However, for us to be sure whether the skillsinitiatives and activities of the devolvedgovernments were having positive effects, thesewould need to have been evaluated to standardsthat were international best practice. There issubstantial scepticism in the academic economicscommunity, following much research across theworld, whether adult skills activities designed toboost employability either can be shown to havepositive effects or, if they do show some smallpositive effect, are cost-effective. This is not thecase for the more work-first active labour marketprogrammes such as those run on a GB basisby Jobcentre Plus. These programmes, whenevaluated, show positive but small effects andsome have been shown to be cost-effective.

The devolved governments should try toensure that their initiatives on employmentand employability can be shown to be morecost-effective than English comparisons athelping their residents gain and keep rewardingwork. Our review of initiatives and evaluationsshows that even this limited objective cannot beshown to have been met.

Introducing more consistent and robustevaluation would enable devolved nations todemonstrate to their residents that not only arethey doing something to help the out-of-work getand keep rewarding jobs, but that they are doingsomething not only effective but more effectivethan if devolution had not taken place.

At present, our judgement on whetherdevolution has helped the poorest in employmenthas to be ‘not proven’.

This report does not cover the response of thedevolved governments to the recession from early2008 onwards. Even by late 2009 (when thisreport was finalised) the effectiveness of recessionresponses could not be disaggregated betweendevolved nations and English regions.

Executive summary6

Introduction 7

This report examines the changes in employmentand employability post-devolution in each of thedevolved nations, and examines these incomparison with the non-devolved North ofEngland. The aim of undertaking the comparison isto identify whether changes or initiatives made bythe devolved administrations had impacts over andabove those arising from either broader economictrends or from UK-level or GB-level policies.

Devolution was expected to make a significantimpact on employment through providing localaccountability in relation to employability and skills.While powers in relation to what is now JobcentrePlus were not devolved, the relevant agencieswere required to work together with the devolvedgovernments in developing and administeringprogrammes such as the New Deals. NorthernIreland is a little different.

The report is structured in the followingmanner. Following a brief summary of the extentof devolved powers in the employment andemployability area, there is a chapter thatexamines the strategies on employability andemployment agreed by the three nations (Chapter2). This is followed by a short chapter locating theimprovements in employment rates in the threenations within the UK regional pattern (Chapter 3).Chapters 4–6 compare the nations’ economictrends with those in the North of England1 basedon published employment and benefits data,inluding detailed analysis and comparison ofclaimant flows. Chapter 7 is based on analysis ofthe British Household Panel Survey and comparesthe subsequent histories of those who were inwork, unemployed or inactive at devolution, to seeif there are particular differences compared withthe northern English regions. Both the Scottishand Welsh governments fund enhanced samplesfor this data set to enable analysis of the progressmade. Chapter 8 is a review of the initiativesintroduced by each of the governments in theemployment and employability area. The finalchapter draws together conclusions.

Employment had, until the onset of therecession starting in 2008, increased dramaticallyin each of the devolved nations. This is based onthe total number of people employed, full-time orpart-time.2 The employment rate3 had alsoincreased, though employment numbers and theemployment rate diverged due to populationchanges (particularly in Scotland). At the sametime, numbers and rates of working-age peopleclaiming benefits fell in the devolved nations.

However, broadly similar trends also occurredin the North of England, where proposals forlimited devolution were rejected in a referendum inthe North East in 2004. Proposals to hold similarreferenda in the North West and Yorkshire and theHumber had earlier been shelved.

We are using the North of England as our‘counterfactual’ on the basis that, in 1999, theeconomic structures and levels of key variableshad a broad level of similarity with the devolvednations, and also had a considerable sharedeconomic history prior to devolution, which wesee as conditioning responses to economicchanges. In some of the analyses we will becomparing the North of England en bloc with eachdevolved nation and, in a few cases, individualregions within the North of England. Together, thethree North of England regions are larger than anyof the devolved nations, but they vary in size, withthe North East of England having the smallesteconomy. Changes that are common to thedevolved nations and to the North of Englandcannot, therefore, be ascribed to the separateactivities of the devolved governments.

Northern Ireland has had a more substantialimprovement than Scotland and Wales, or theNorth of England. In this case, the changescombine the effects of the activities of devolvedgovernment (in two phases), direct rule butthrough local administration, the peace processand the variations in its progress, and widereconomic forces. In particular, economic trendsin Northern Ireland bear comparison with those

1 Introduction

in the Republic of Ireland as well as with those inthe rest of the UK.

We examine, first, the overall employmenttrends and trends in benefits and related issues inScotland, Wales and Northern Ireland, comparedwith the North of England. This is followed by ananalysis of the impacts on workless individualssince devolution based on evidence from theBritish Household Panel Survey, and, third, areview of what the devolved governments havedone in relation to employment and employability.This element looks at strategies and initiatives,and in particular whether there is evidence ofeffectiveness of such strategies and initiatives.

Devolution, in the field of employment andemployability, is not complete. The degree ofcompleteness varies between devolved nations,with Northern Ireland having a greater level ofdevolution than Scotland or Wales. Scotland hashad, largely for historical reasons rather than thelegislative differences in this field, a greater levelof devolution than Wales.

The tax credit system operated by HMRevenue and Customs (HMRC) covers the UK.This impacts on the extent to which people arebetter off in work by improving net incomes ofworking households where gross earnings levelsare low. In 2006/7, approximately 16.4 per cent ofworking households in the UK were receivingWorking Tax Credit or the means-tested elementof Child Tax Credit above the family element. Thiswas substantially higher in Wales, Northern Irelandand the North of England at 20.2 per cent, 20.4per cent and 19.4 per cent respectively. Scotlandhad a proportion slightly under the UK average at16.3 per cent. The difference for Scotland is likelyto be driven by the very high female employmentrate in Scotland discussed below.

Employment services provided by JobcentrePlus are delivered across Great Britain, but not inNorthern Ireland. Benefit systems in Great Britainand Northern Ireland are legislatively different butthere is both a commitment to parity between thesystems and practical reasons for commonality,namely that the benefit processing systems aremanaged by the GB Department for Work andPensions (DWP) on behalf of the Northern IrelandDepartment for Social Development. Jobcentreservices in Northern Ireland are separately

administered by (now) the Department forEmployment and Learning (DEL) and previously bythe Training and Employment Agency. In NorthernIreland there remains a departmental split betweenbenefits provision and employment provision,though both are now provided through a commonJobcentre network. This departmental split mirrorsto some extent the GB pattern up to 2001, whenthe Benefits Agency was part of the Departmentfor Social Security, and Jobcentres were part ofthe Department for Education and Employment.

The service delivered by Jobcentre Plus acrossGreat Britain is based on standard proceduresand Standard Operating Models. However, insome respects devolved skills provision providesa differing possible menu of opportunities in eachcountry. Both Scotland and Wales have retainedelements of work-based training that enablereferral by Jobcentre Plus, whereas in Englandthere have been greater changes, first to allreferrals by Jobcentre Plus (to Work-BasedLearning for Adults or WBLA) and subsequentlysuch provision being transferred to the Learningand Skills Council, with fewer referrals.

Both youth and adult skills services have beendevolved to each of the nations. However, inScotland and Northern Ireland the provisiondiffered substantially prior to devolution. Arguably,the design and provision of skills services werealready devolved, but not controlled bydemocratically elected national bodies.

This difference in the degree of devolutionbetween different elements of the employmentand employability agenda means that there aremuch greater differences regarding provision inthe skills and employability area than there are inthe employment field, with the exception ofNorthern Ireland.

There are also substantial differences in theculture of evaluation between the employment andemployability fields.

In the employment field, evaluation, led on aGB-level by DWP and on a Northern Ireland levelby DEL, has concentrated on the effectiveness ofgetting people into jobs (a ‘hard’ outcome).Analysis has been compared to much internationalresearch on the effectiveness of ‘active labourmarket programmes’ using control groups andin some cases control areas, propensity score

Introduction8

matching to identify close match controls, orrandom assignment. These methods have alsobeen applied to ‘human capital’ (i.e. skills)interventions in a welfare-to-work context. Thiswork has produced a corpus of evidence on theimpact (or otherwise) of a range of programmeswith evaluations that can be compared withinternational best practice (not always adversely).This applied to the work led by DEL in NorthernIreland as well as DWP in Great Britain.

In the employability field, there has been agreater variety of views as to what employabilitymeans, and a lesser culture of identifying hardoutcomes or using control groups to identifyeffectiveness. This is a problem because, wherethere is a crossover between the two fields, DWPevaluations of ‘human capital’ interventions suchas Work-Based Learning for Adults in Englandand Wales have found relatively low levels ofeffectiveness for skills interventions compared withjob search training interventions, and particularlyso when cost-effectiveness is considered.

These DWP evaluations have been conductedusing jobs as the measured outcome. Some ofthe evaluations of learning interventions haveincluded as positive outcomes undertaking furtherlearning and more qualitative assessments ofwhether people feel the education or training wasuseful.

The view taken here is that, while there maybe many factors underlying employability, in theultimate sense employability is about jobs andpay. The learning outcomes are an intermediateoutcome that needed to be measured as towhether they were related to job entry, durationand pay.

Unfortunately, experience shows thatprogrammes that are evaluated without a controlgroup and without assessing the impact of selectioneffects can overstate the impact of employabilityinterventions.

These issues apply to a large proportion ofthe evaluations of programmes and projects inthe devolved nations, and also to evaluationsof European-funded employability interventions.

Introduction 9

Strategic context10

Devolution was expected to impact onemployment and employability by enabling localaccountability and control, particularly in areaswhich had become run by a ‘quango state’.A range of bodies ran significant aspects of theemployment and training services, controlled bypeople appointed by the Secretaries of State forScotland, Wales and Northern Ireland within theWestminster Government. While in the case ofScotland, the Secretaries of State representedScottish constituencies in the WestminsterParliament in the decades before devolution, thiswas not the case for Wales or Northern Ireland.From 1987 onwards, the Secretary of State forWales in the Conservative WestminsterGovernment represented an English constituency.For Northern Ireland, the direct rule period led tono Northern Ireland MP being Secretary of State,a situation that continues to this day whilesignificant powers are devolved to the NorthernIreland Executive.

The devolution debate

The Secretaries of State in the WestminsterGovernment before devolution appointed peopleto run bodies such as Training and EnterpriseCouncils (TECs), which operated in Wales andEngland, and Local Enterprise Companies (LECs)in Scotland. These organisations fundedemployment training for adults and young peoplewho could not find work. The intention was thatthese would be business-led, and responsivenessto local needs would be provided by appointinglocal business people and sometimes localcouncil representatives to their boards. Noaccountability to local people was providedthrough this system. Other parts of theemployment and enterprise infrastructure wereled by the Welsh Development Agency, ScottishEnterprise and Highlands and Islands Enterprise,with appointed business and other people inleadership roles.

The lack of local accountability, with significantparts of the local infrastructure run by peopleappointed by Secretaries of State, contributedsignificantly to the groundswell of support fordevolution that led up to the enactment of thedevolution laws.

In this discussion we will concentrate onanalysis of Scottish documents, noting wherethe resulting powers differed for Wales. Thedifferences in powers over employment,employability and skills are rather less than insome other areas of the devolution settlement.While the powers devolved to Wales are in generalrather less than those devolved to Scotland, in theemployment and employability area the differencesare less material.

The final report of the Scottish ConstitutionalConvention, Scotland’s Parliament, Scotland’sRight, published in 1995, provided a blueprintagreed by several major political parties and widesections of civil society for devolution. TheScottish National Party and the Conservative Party(for different reasons) did not participate. TheConvention report heavily influenced thedevolution proposals as implemented in Scotlandand also those implemented in Wales, althoughWales did not get a tax-raising power or certainlegislative rights that were devolved in Scotland.

Scotland’s Parliament, Scotland’s Right statedthat:

It will be the Scottish parliament’s responsibilityto channel the energies and the knowledge ofthe people of Scotland into creating aneconomy of efficient, competitive companiesproviding worthwhile jobs … It will be able tojudge and reflect Scotland’s priorities withregard to improving health or housing orcommunity care or education … Within the UKframework of benefits and allowances,Scotland’s parliament will co-operate with theScottish offices of the Department of SocialSecurity and with other agencies in the field to

2 Strategic context

ensure that benefits are administered in a waysensitive to Scotland’s needs. This role,coupled with direct responsibility for communitycare, health and social work, will give theparliament a powerful capability to planstrategically all welfare service provision inScotland … The parliament will also haveresponsibility for investing in research, and intraining and retraining programmes, and forsetting up accountable systems to direct thisinvestment. The Convention regards educationas a process to which all the people ofScotland have the right of access throughouttheir lives. It is therefore essential thatScotland’s parliament has responsibility for thefull scope of educational provision and thus thepower to restore the unique Scottish educationsystem to its position as a world leader.

The report clearly considered that Scots shouldcontinue to be entitled to social security benefitsdefined UK-wide, with the UK continuing to beresponsible, rather than, say, the Northern Irelandsystem where benefits are nominally locallydetermined but in practice are determined by theWestminster legislature. The role of theEmployment Service (the predecessor ofJobcentre Plus) is by implication included underthe ‘other agencies in the field’ as administeringUnemployment Benefit (re-labelled Jobseeker’sAllowance at about the same time as the ScottishConstitutional Convention was sitting).

At the time the plans for devolution were beinglaid, employment and employability support wasdivided. Training programmes were delivered byLECs in Scotland and TECs in Wales and wereincluded in the subjects to be devolved.Employment programmes such as Project Workwere contracted by the Employment Service, on aGB basis. Project Work had been planned to berolled out nationally over the course of 1997, andinvolved mandatory work experience for thelong-term unemployed, presented by ministers asa means of weeding out those unwilling to look forwork. It was clearly understood by the promotersof devolution that any government that wouldenact devolution would also terminate ProjectWork. Whether an employment programme wouldreplace this on a GB basis was less clear.

In the event, New Deal was planned on a UKbasis and implemented on a GB and NorthernIreland basis. The incoming Labour administrationwished to enable all long-term unemployed youngpeople in the UK to benefit from New Deal, andthe manifesto pledge was UK-wide.

The administration of New Deal was in thehands of the Employment Service in Great Britainand the Training and Employment Agency inNorthern Ireland. New Deal for Young People(at first, the more intensive of the New Dealprogrammes for Jobseeker’s Allowance claimants)included at the start a requirement for training inall its four options, one day per week for theemployment option (subsidised employment) andsimilarly for the two work experience options. Thefull-time education and training option wasfull-time for up to a year.

A crucial decision was for the EmploymentService to carry out the contracting for the trainingelements, rather than the pre-existing TEC andLEC infrastructure. Some TECs and LECssucceeded in becoming lead contractors foroptions within their areas, but they were incompetition with FE colleges and with a numberof private and voluntary sector contractors whoalso bid for lead contractor status.

If the contracting for training elements of theNew Deal had been handled by the TECs andLECs, then it would have been devolved when theTEC and (control of the) LEC infrastructure wasdevolved. If this had happened, the New Dealprogrammes would have had a much strongeraccountability to the devolved governments thaneventually happened.

The decision as to why the New Dealcontracting was handled by the EmploymentService seems to have been unrelated todevolution. It related more to similar attitudes asheld in Scotland and Wales to the ‘quango state’in relation to the performance of TECs in highunemployment areas in England, i.e. theadministration of substantial parts of the welfarestate by bodies that were not accountable toelected local or national representatives. TheEmployment Service as subject to the direction ofministers did not have this drawback.

In the historical context, therefore, when theplans for devolution were being drawn up, it

Strategic context 11

seems as though a greater level of devolution thaneventually emerged was envisaged. The reasonswhy this did not emerge in practice seem to havebeen a combination of factors that do not seem tohave been consciously planned in relation to theissue of devolution.

For Wales, prior to devolution, responsibility foradministration of the TECs had been delegated tothe Welsh Office and therefore passed to theWelsh Assembly Government.

For Northern Ireland, all relevant powers werelocally administered by the Northern Ireland Office.Employment programmes in operation in NorthernIreland were different from those in Great Britainand resembled those in operation over a decadepreviously in Great Britain, with one of the mainprogrammes being Action for CommunityEmployment, a parallel programme to the earlierCommunity Programme in Great Britain. Therewere also parallels to programmes in operation inthe Republic of Ireland. The implementation ofNew Deal in Northern Ireland was the innovationof applying a UK programme. The detail ofimplementation was, however, local, and differedin several respects from the GB version.

A major difference between Northern Irelandand Great Britain has been that the underlyingbenefits and sanctions administration was unifiedin Great Britain under the Employment Serviceand later Jobcentre Plus. The Northern Irelandadministration remains separated into twodepartments, the Department for SocialDevelopment (DSD) handling benefits and theDepartment for Employment and Learninghandling employment, though with a departmentalfocus on learning and skills. Local offices arestaffed jointly by DEL and DSD staff in much thesame way as early Jobcentres in Great Britain hadEmployment Service and Benefits Agency staffworking side by side.

Current understanding of thediffering contributions ofemployment and skills provisionto job entry and sustainability

There has been a considerable amount ofresearch over the period since devolution wasbeing considered in the 1995/6 time frame on therelative contributions to job entry of employmentprogrammes and skills development. The thenDfES and DWP published a joint report in 2007summarising the state of knowledge up to then.

This report, DfES and DWP: A SharedEvidence Base: The Role of Skills in the LabourMarket (DfES and DWP, 2007), was a contributionto the Leitch Review (HM Treasury, 2006) of Skills.The Executive Summary commented:

Employment focused programmes havegenerally had more impact on initialemployment chances for the low skilled,and are typically more cost-effective thaneducation focused programmes. However,the jobs low-skilled people enter (eitherthrough employment or education focusedprogrammes) are typically low-paid andprovide few prospects for progressionand training.

More recent research than that summarised bythe DfES/DWP report has generally producedresults that are similar (see, for example, the workof Michael Lechner on European examples;Lechner 1999, 2004, 2009).

While the early work in this pattern was beingpublished in the USA when devolution was underconsideration, earlier views emphasised theimportance of human capital development inimproving employability. This was consistent withthe theory of ‘post neo-classical endogenousgrowth theory’ that was famously endorsed byGordon Brown, and followed from earlier analysisof education-led employment progress in Ireland.

The intellectual climate has thus changed,following research evidence, away from anemphasis on the elements of the employabilityagenda that were devolved towards those thatwere not devolved.

Strategic context12

The current strategic context

As stated in the Introduction, employment andemployability policy is only partially devolved (tovarying degrees across the three nations) whileeducation and learning is more fully devolved.Consequently, many of the strategies andinitiatives with intended or potential impact onemployability introduced by the devolvedadministrations have a skills focus. This isapparent in the following review of relevantdevolved administration strategies and in thesubsequent review of initiatives. While skills is acore focus in all three devolved nations, there isalso a significant degree of devolvedadministration action around employment andemployability in Scotland and Northern Ireland, butless so in Wales. Of the three devolved nations,Scotland has had the most explicit and roundedstrategic approach to tackling poverty: primarilyset out in the Closing the Opportunity Gapstrategy, the related employability framework andNEET (not in education, employment or training)strategy, and now the new framework for tacklingpoverty, inequality and deprivation.

The current strategic context regarding skills inScotland is informed by the new approach to skilldevelopment set out in the 2007 skills strategyand government budget in which priority wasgiven to developing learning support andopportunities for low-paid/low-skilled workersworking towards a more effective mix ofvocational skills and working with employers tomeet their skill needs. The new skills strategy forScotland is not as structured around the LeitchReview as the strategy in England, but adoptssimilar aspirations while emphasising theimportance of utilising skills effectively.

The strategy in Wales also adopts similarprinciples and aims to Leitch. As with the strategyin Scotland it places great emphasis onstrengthening employer involvement, influence andinvestment and on a more integrated approach toskills and employment policy through: improvinginformation advice and guidance to employers andindividuals; focusing funding on the skills mostneeded by employers; ensuring vocationalqualifications better meet the needs of learners

and employers; and revising the quality assuranceframework and expanding the WorkforceDevelopment Programme and apprenticeships.

Northern Ireland had already set out on asimilar path to the one advocated by Leitch andprior to the Leitch report had moved towards amore demand-led system.

While there may be differences in emphasisacross the skills strategies of England, NorthernIreland, Scotland and Wales, particularly in thedetail of the policies they adopt and the deliveryorganisations and mechanisms, there are keysimilarities, for instance in terms of the stepchange in investment and the greater emphasison employers as the locus for demand within a setof shared responsibilities between individuals,employers and the state.

Northern Ireland

The Department for Employment and Learninghas developed a strategy to support the visionand priorities for education and skills in theNorthern Ireland Executive’s Programme forGovernment:

• providing high quality education for all, withequal access for all;

• ensuring that all our young people have theskills and qualifications to gain employment ina modern economy;

• enabling people to update their knowledge,skills and qualifications;

• assisting and supporting all those in theeducation system, including the sociallyexcluded, to enable them to enter or return tothe workforce, or to improve their quality of life.(DEL, 2002)

The Essential Skills for Living Strategy, publishedin 2002, sets out key strands containing DELactions:

• strong leadership at all levels to deliver thestrategy;

Strategic context 13

• a structured and coherent framework which isbased on common standards, a commoncurriculum and robust assessment andaccreditation procedures;

• quality in all aspects of provision which is keyto the success of the strategy and which inpractice will be monitored and evaluated;

• a diverse range of provision which is key tobuilding capacity and which must be flexibleand creative to suit the needs of the learner;

• a comprehensive promotional campaign whichis essential to increasing awareness anddriving up demand among adults for EssentialSkills (DEL, 2002).

A skills strategy, Success Through Skills (DEL,2006), was published in draft form for consultationin 2004 and launched in 2006. It defined threedifferent types of skills:

• the essential skills of literacy and numeracyand, increasingly, information andcommunications technology (ICT);

• employability skills, including the key skills ofteamworking, problem-solving and flexibility;

• work-based skills, specific to a particularoccupation or sector.

It highlighted the need to focus on:

• raising the skills of the current workforce;

• enhancing the ‘knowledge base’ of thoseentering the workforce;

• addressing the employability skills of those notin employment.

Key programmes to improve the skills levelsinclude the Essential Skills Programme;development of an independent all-age CareersEducation, Information, Advice and Guidance(EIAG) strategy; and an increase in the number ofapprenticeships and introduction of all-age

apprenticeships. Key actions set out to improvethe quality and relevance of education and traininginclude implementation of the Further EducationMeans Business strategy and reform of vocationalqualifications (DEL, 2006).

These are set to be developed and expandedthrough new proposals contained in the 2009 DELand the Department for Education joint strategyfor careers education, information, advice andguidance (DEL and DE, 2009).

Scotland

Until it was recently replaced (see below), thestrategic driver behind tackling poverty andpromoting social inclusion in post-devolutionScotland was the Closing the Opportunity Gap(CtOG) strategy, adopted by the ScottishExecutive in 2004. CtOG had the three basic aimsof preventing poverty, providing routes out ofpoverty, and sustaining poverty-free lives. The sixCtOG objectives were:

• to increase the chances of sustainedemployment for vulnerable and disadvantagedgroups – in order to lift them permanently outof poverty;

• to improve the confidence and skills of the mostdisadvantaged children and young people – inorder to provide them with the greatest chanceof avoiding poverty when they leave school;

• to reduce the vulnerability of low-incomefamilies to financial exclusion and multipledebts – in order to prevent them becomingover-indebted and/or to lift them out ofpoverty;

• to regenerate the most disadvantagedneighbourhoods – in order that people livingthere can take advantage of job opportunitiesand improve their quality of life;

• to increase the rate of improvement of thehealth status of people living in the mostdeprived communities – in order to improvetheir quality of life, including their employabilityprospects;

Strategic context14

• to improve access to high quality services forthe most disadvantaged groups andindividuals in rural communities – in order toimprove their quality of life and enhance theiraccess to opportunity.

In 2006, two key further strategies were launchedunder the Closing the Opportunity Gap approach:an employability framework (Scottish Executive,2006a) and a strategy to reduce the proportion ofyoung people not in education, employment ortraining (NEET) (Scottish Executive, 2006b). Thesewere underpinned by the same aim andunderlying principles: ‘entering the labour marketas a realistic option for those who are currentlyfurthest away from it through appropriatelydesigned support and opportunities’ (ScottishExecutive, 2006b, p.1).

Workforce Plus, the employability framework,stated a target of helping 66,000 individuals, inseven local government areas, to move frombenefits to work. The framework set out sixthemes for transforming performance:

• early interventions;

• client-focused interventions;

• employer engagement;

• sustaining and progressing employment;

• joined-up planning and delivery of services;

• better outcomes.

The framework asserted a key role for localemployment partnerships. It announced theestablishment of focused local Workforce Pluspartnerships and formation of a NationalWorkforce Plus Partnership to provide leadership,strategic direction and support for the localpartnerships.

The NEET reduction strategy (ScottishExecutive, 2006b), published alongside WorkforcePlus, established an objective to eradicate theproblem of NEET throughout Scotland. Thestrategy seeks to ensure that all policies andprogrammes aimed at people or people at risk of

becoming NEET (e.g., health, housing, social care)have an employability focus.

Key areas of activity included:

• pre-16 (opportunities for young people of schoolage) – including developing employability;

• post-16 (post-compulsory education andtraining) – clear commitment on employmentand learning options; expanding choice andimproving quality of education and learningfocusing on sustainable outcomes andprogression;

• financial incentives (education, employmentand training as viable options) – testing newfinancial incentives in order to remove financialbarriers in progressing towards the labourmarket.

The first post-devolution skills strategy in Scotlandwas the Lifelong Learning strategy (ScottishExecutive, 2003). It set out goals aroundincreasing participation in learning; ensuringeffective utilisation of skills; improving information,guidance and support to support effective learningdecisions and transitions; and equality ofopportunity in learning.

Key actions included:

• introducing Education MaintenanceAllowances (EMAs) across Scotland;

• supporting Community Learning andDevelopment Partnerships, linking learning tocommunity regeneration in Scotland’s SocialInclusion Partnerships (SIPs) and elsewhere;

• launching a new scheme of Individual LearningAccounts during the year 2003/4 to widenparticipation in adult learning and encouragelearner ownership;

• re-engineering work-based training foryoung people (Skillseekers), introducingpre-apprenticeships to link with vocationallearning in schools;

Strategic context 15

• redesigning the Training for Work initiative toimprove its effectiveness and flexibility inenabling jobless adults to enter sustainedemployment and to articulate better with otherinterventions available, including UK welfare-to-work programmes;

• expanding the Scottish Union Learning Fundscheme to further build trade union capacity topromote lifelong learning in the workplace;

• resourcing the development andimplementation of the Scottish Credit andQualifications Framework.

This was supplemented by Determined toSucceed – a strategy for enterprise in education,which sought to increase the enterprise andvocational focus of learning for young people. Itsfour themes were: enterprising teaching andlearning; entrepreneurial activities; work-basedvocational learning; and appropriately focusedcareer education (Scottish Executive, 2006d).

Since the advent of a new SNP-led ScottishGovernment administration in 2007, some ofthese strategies have been replaced. The CtOGapproach was replaced in late 2008 by the newScottish Government’s framework on tacklingpoverty, inequality and deprivation (ScottishGovernment, 2008a). The new framework seeksto build on action taken under CtOG, setting outfurther priorities for action and investment todeliver improvement across four main areas:

• reducing income inequalities;

• introducing longer-term measures to tacklepoverty and the drivers of low income;

• supporting those experiencing poverty or atrisk of falling into poverty;

• making the tax credits and benefits systemwork better for Scotland.

The new Scottish Government produced a newskills strategy for Scotland in autumn 2007(Scottish Government, 2007a). The strategyfocuses on:

• individual development – aligning employmentand skills; balancing needs of employers andindividuals; equal access and participation inskills and learning;

• economic pull – stimulating increased demandfor skills from employers; improving theutilisation of skills in the workplace; challengingemployers, learning providers, awardingbodies and others to use the Scottish Creditand Qualifications Framework (SCQF) as a toolto support learning;

• cohesive structures – simplifying structures tomake access easier; ensuring that Curriculumfor Excellence provides necessary vocationallearning and the employability skills.

Wales

The Welsh National Assembly document TheLearning Country (National Assembly for Wales,2001) provided the first post-devolutioncomprehensive strategic statement on educationand lifelong learning in Wales. It includescommitments to:

• transform provision for 14 to 19 year olds –including breaking barriers between vocationaland academic pathways and between schoolsand employers;

• ensure that better services for young peopledevelop coherently under the ExtendingEntitlement banner (see below);

• ensure high quality careers information, adviceand guidance is accessible to all;

• promote greater access to lifelong learningpost-16, notably through further educationincluding a credit-based qualification andtransfer framework and new measures offinancial support to students, apprentices andtrainees;

• tackle skills deficits through engagingbusinesses in learning provision for theirworkforce.

Strategic context16

The Extending Entitlement strategy (NationalAssembly for Wales, 2000) set out measures toextend entitlement to young people in Wales to arange of services, activities and support including:

• education, training and work experience,tailored to need;

• independent, specialist careers advice andguidance and student support and counsellingservices.

The strategy did not propose new structures butrather recommended ways to improve the supportprovided by existing services and co-ordination atNational Assembly and at local level.

Wales: A Better Country (Welsh AssemblyGovernment, 2003), the strategic agenda of theWelsh Assembly Government, stated a numberof key commitments designed to addressfundamental and connected issues around health,communities, skills and jobs, including:

• establishing an Individual Learning Account forWales (launched in 2003);

• reforming the 14–19 age range curriculum,extending education at school into lifelonglearning as an adult;

• eliminating the basic skills gap.

Skills and Employment Action Plan for Wales2005 (Welsh Assembly Government, 2005)sought to build on Wales: A Better Country andthe previous action plan in 2002, supporting fourmain strands:

• improving the mechanisms of workforcedevelopment;

• supplying new entrants to the labour marketwith the skills needed for employment;

• working with employers and employees toimprove skills;

• helping more people into sustainedemployment.

The latest Skills and Employment Action Plan waspublished in 2008 (Welsh Assembly Government,2008a). The strategy provides a response to theLeitch Review of Skills in the UK. It sets outobjectives and measures around:

• new approaches to funding;

• a more demand-responsive skills and businesssupport service;

• integrated skills and employment servicesdelivered through partnership between theAssembly Government and Department ofWork and Pensions;

• the transformation of the learning network.

The Welsh Assembly Government has followedthe devolved administration in Scotland indeveloping a strategy to reduce the number ofyoung people not in education, employment ortraining. The strategy and action plan for reducingthe proportion of young people NEET waspublished in 2009. Addressing this issue has nowbeen recognised as potentially making a keycontribution to raising economic activity rates andskills levels and to cross-cutting efforts to achievesocial justice in Wales, as defined in the prioritiesset out in the various strategy documents.

Strategic context 17

Employment patterns since devolution – national and regional comparisons18

Overall employment rates

The employment rates in the three devolvednations have risen substantially faster since 1999than in the rest of the UK. These are the working-age employment rates: that is, the proportions ofthe working-age population who are inemployment (of any sort above one hour a week).Figure 1 shows the employment rates in eachregion or nation in the second quarter of 1999 andthe same period in 2008. Each nation or region isshown, with a line linking their position in 1999

with the 2008 position. The numbers next to thenation or region name are the employment rate.The devolved nations are shown with a heavy lineand bold text, and the North of England regionsare shown with a broken heavy line andunderlined text.

The fastest rises in the employment rate are inthe three devolved nations and in the North Eastof England. The other two regions in the North ofEngland also showed rises in the employmentrate, but at a slower pace. Outside these regions,the only region showing an overall rise in the

3 Employment patterns sincedevolution – national andregional comparisons

Figure 1: Employment rate changes, 1999–2008

1999 2008

79.4 South EastSouth East 79.6

South West 78.478.8 South West

East of England 78.077.7 East of England

East Midlands 76.075.7 East Midlands

74.8 EnglandEngland 74.6

Great Britain 74.0

74.9 Great Britain

United Kingdom 73.8

74.7 United Kingdom

West Midlands 73.7

72.5 West MidlandsYorkshire and

the Humber 72.8

73.4 Yorkshire andthe Humber

London 71.971.5 LondonScotland 71.5

76.5 Scotland

North West 71.3

72.2 North West

Wales 68.4

72.6 Wales

Northern Ireland 67.0

70.1 Northern Ireland

North East 65.7

70.2 North East

employment rate was the South West. Thecombined areas of Great Britain and the UnitedKingdom show a substantial rise, which is muchlarger than that for England. A conclusion thatmuch of the growth in the overall UK employmentrate was due to growth in the devolved nations,and to a lesser extent in the North of England,seems unescapable.

The further point that is apparent is that theemployment rates for Wales and Northern Ireland(and the three North of England regions) wereamong the lowest in 1999 and remain there in2008. The gaps have closed to some extent, buthave not been eliminated. Scotland was closer tothe UK average in 1999, and the largestimprovement in the employment rate of all regionshas moved Scotland to a position behind only theregions in the South and East of England.

Employment rates – men

Male working-age employment rates had, on a UKbasis, been in long-term decline since peaking inthe 1970s at well over 90 per cent (for men aged16–64). The reasons for the fall in male employmentrates include the reductions in heavy manufacturing,trends towards earlier retirement that wereexacerbated in the recessions of the 1980s and1990s, and growth in educational participationamong the young that followed the collapse of theyouth (male) labour market in the late 1970s.

Figure 2 shows, on a similar basis to Figure 1,changes in male employment rates by regionbetween 1999 and 2008. Overall, the Great Britainmale employment rate was the same in both yearswhile the UK male employment rate was slightlyup. The only English region outside the North toshow a rise in the male employment rate wasLondon, while the South East and East showed

Employment patterns since devolution – national and regional comparisons 19

Figure 2: Male employment rate changes, 1999–2008

1999 Males 2008

83.5 South East

South East 86.0

South West 83.082.7 South West

East of England 83.8

82.0 East of England

East Midlands 80.279.3 East Midlands79.0 England

England 79.8

Great Britain 78.9 78.9 Great BritainUnited Kingdom 78.7 78.7 United Kingdom

West Midlands 78.4

76.3 West Midlands

Yorkshire andthe Humber 77.1

77.5 Yorkshire andthe Humber

London 77.978.2 London

Scotland 74.5

79.4 Scotland

North West 71.375.0 North West

Wales 71.9

75.7 Wales

Northern Ireland 66.2

74.7 Northern Ireland

North East 68.8

72.4 North East

sharp declines. The three devolved nations allincreased the male employment rate, as did theNorth East and Yorkshire and the Humber (in thelatter case, slightly). The North West showed a fallin the male employment rate.

Despite this pattern of regional convergencesince 1999, the devolved nations (with theexception of Scotland) and the North of Englandremain with the lowest employment rates in theUK for males. Scotland had the largest increase inthe employment rate for men of all the nations andregions, and (as of the second quarter of 2008)had an employment rate for men only behind theregions in the South and East of England.

Employment rates – women

Figure 3 shows similar information for women.The long-term trends for women have been forincreasing employment rates since the 1970s, which

are reflected in the 1999–2008 figures. However,within the broad trend towards higher employmentrates for women, the devolved nations and the Northof England have shown the sharpest increases. Onlytwo regions have shown falls in female employmentrates, the West Midlands, where there was a verysharp decline for men also, and London.

Apart from London and the West Midlandsand Scotland, the devolved nations and the Northcontinue to have the lowest employment rates forwomen. There has, therefore, been convergenceand some change to rankings, but overall thedevolved nations and the North remain belowaverage for female employment rates. Theexception is Scotland, where a similar increasein the female employment rate to the North Eastof England, 5.2 percentage points, has led to afemale employment rate that was, in the secondquarter of 2008, not far behind that for the SouthEast and South West of England.

Employment patterns since devolution – national and regional comparisons20

Figure 3: Female employment rate changes, 1999–2008

1999 Females 2008

74.9 South East

South East 72.7

South West 73.5

74.4 South West

East of England 71.8

73.0 East of England

East Midlands 71.3

71.7 East Midlands

70.2 EnglandEngland 69.2Great Britain 68.9

70.5 Great Britain

United Kingdom 68.7

70.3 United Kingdom

West Midlands 68.5

68.2 West MidlandsYorkshire andthe Humber 68.3

68.8 Yorkshire andthe Humber

London 65.6

64.3 London

Scotland 68.3

73.5 Scotland

North West 66.6

69.2 North West

Wales 64.8

69.1 Wales

Northern Ireland 61.1

65.2 Northern Ireland

North East 62.4

67.7 North East

Labour market trends for Scotland 21

Employment rates in Scotland andthe North of England

Over the period since devolution, the employmentrate in Scotland has risen substantially faster thanin the North of England – see Figure 4. The recentfalls have left the employment rate in Scotland 4.1percentage points above that in the North ofEngland, from a starting point of being 0.9percentage points higher at the start of 1999(see Figure 4).

However, the numbers employed havefollowed a much more similar pattern to the Northof England with a smaller evidence of improvementrelative to the North of England than for theemployment rate. The reason for the difference isthat the trends in the working-age population haveshown faster rises in the North of England than inScotland. In order to show the trends, we haveused an index, with September– November 2006set as 100. The choice of start date is arbitrary.

According to mid-year estimates, thepopulation aged 15–64 rose 3.1 per cent inScotland between 1999 and 2007, whereas in theNorth of England the population rose 5.1 per centover the same period. The population growth inWales, the South East of England and the Northof England is closely similar over this period, whilein Scotland it is lower and in the South West ofEngland it is higher.

Employment changes in Scotlandand the North of England

Employment numbers followed very similar pathsfor the North of England and Scotland up to late2006, with some evidence of Scotland droppingbehind the North of England. In 2007, Scottishemployment rose above the pattern for the North ofEngland, followed by a period of stability up to morerecent falls (see Figure 5 which is up to September–November 2008, so does not include later events).

4 Labour market trendsfor Scotland

Figure 4: Employment rate changes, 1999-2008, North of England and Scotland

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Trends in claims for worklessbenefits in Scotland and the Northof England

These trends in employment and in theemployment rate have been reflected in trends inpeople claiming DWP workless benefits. Up toAugust 2008 (the latest date we have figures forall benefits) there had been a fall of 3.6percentage points in the proportion of the Scottishpopulation claiming workless benefits sinceAugust 2000 – see Figure 6. The fall was spreadacross the major benefit groups, with Jobseeker’sAllowance claimants down 1.2 percentage pointsof the population, incapacity benefits (includingIncome Support on grounds of incapacity) down1.5 percentage points, and lone-parent benefitsdown 0.8 percentage points.

These trends have been very similar to thosefor the North of England, which started with verymuch the same proportions of the working-agepopulation claiming benefits.

The largest single group of workless benefitclaimants in Scotland continue to be incapacity

benefits (IB) claimants. The rise in this groupflattened off and numbers started to fall earlierthan in the UK as a whole. In Scotland, thenumber of incapacity benefits claimants peaked inFebruary 2001, while in Great Britain the peak wasNovember 2003. The different population trendsmean that the falls in benefit claim rates started ata similar time in winter 2002/3.

In August 2008, the proportion of thepopulation claiming incapacity benefits was 0.4percentage points above that in the North ofEngland, as it had been in November 1999 – seeFigure 7. Over the period since 1999, the IB ratehas been consistently marginally higher inScotland than in the North of England, but thedifference averaged 0.47 percentage points, witha standard deviation of 0.07.

Unemployment in Scotland and theNorth of England

Unemployment has fallen on the internationalstandard measure consistently over the periodfrom 1997 to spring 2008. Since then there has

Labour market trends for Scotland22

Figure 5: Employment index (Nov 2006 = 100), 1999-2008, North of England and Scotland

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been a sharp rise in ILO (International LabourOrganisation) unemployment – see Figure 8. Wehave projected forward the ILO unemploymentmeasure using the claimant count measure,

which is available for more recent dates.This shows continuing sharp rises, but as yetunemployment has not risen above the numbersrecorded in 2004.

Labour market trends for Scotland 23

Figure 7: Jobcentre Plus customers, 1999 and 2008, Scotland

0

Per

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ofw

orki

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epo

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8

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job seeker incapacity benefits lone parent others on incomerelated benefit

Aug 2008Nov 1999

Figure 6: Claimants on workless benefits as a proportion of population, 1999-2008, North of Englandand Scotland

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Claimants of Jobseeker’sAllowance in Scotland and theNorth of England

The JSA claimant count shows a sharper rise overthe course of 2008, but over the preceding periodhas shown declines, although in a series ofphases separated by periods of lower falls. Therewas a fall in 2007, followed by a period of slowerdecline in 1998 and 1999. Following 1999, therewas a further period of rapid falls through to May2001. After this, there was another period ofstability through to May 2004, when there was afurther fall, followed by a small rise in 2006 andthen further falls through to February 2008. Afterthis point, the current sharp rise in JSA claimantsbegan.

We have shown these patterns for comparisonwith the North of England pattern, takingDecember 2006 as 100 as an index – see Figure 9.Scotland had a faster fall through to December2006 than the North of England, and had a verymuch smaller rise in JSA claimant unemploymentin 2005/6. The fall from this point to early spring2008 was again greater in Scotland than in theNorth of England, resulting in the recent risestarting from a lower base.

The phasing of the falls and periods of stabilityin the JSA claimant count shows that the claimantcount fell faster in the UK than in Scotland in theperiod to June 1999, then trends were similar overthe period to early 2002, followed by a markedclosing of the gap in the claimant count over thesubsequent period.

JSA claimants: rates of becominglong-term unemployed

The following discussion is based on an analysisof unemployed JSA recipients remaining throughquarterly duration thresholds. The method isderived from work by Ray Thomas of the OpenUniversity and is based on calculating the numberof claimants in a quarterly duration group as aproportion of those in the preceding quarterlyduration group three months previously. Thepeople in the numerator must therefore have beenin the denominator three months previously, alongwith others who have left JSA.

The overall pattern for Scotland is shownbelow, followed by a series of figures comparingScotland with the North of England for eachduration group (Figures 10 to 15). The importantfinding, using this method, is that overall economic

Labour market trends for Scotland24

Figure 8: ILO unemployment, Scotland

100,000

140,000

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220,000

Estimate ActualM

ar-M

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changes tend to produce coincident movementsacross duration groups, while programme effects,such as those from programmes aimed at peoplewho have been on JSA for a particular period,have differential effects.1 The larger than averagefall in the proportions remaining on JSA from the6–9 month period to 9–12 months between May1998 and May 2000 can be attributed to theeffects of New Deal for Young People, whereparticipants who did not find work in the Gatewaywere required to leave JSA to participate in one offour ‘options’. This took place after ten months ofa claim, subject to administrative variations. This isan example of a differential effect, visible in Figure10, that can be attributed to a programme. Theeffect in this case combines administrative effects(people leaving the count to options) with changesto moves into work. These different effects havebeen the subject of a series of reports on the NewDeal programmes.

A simple seasonal adjustment method hasbeen used to remove much of the seasonalvariation, but this is not of the level of sophisticationof ONS (Office for National Statistics) seasonaladjustment.

For the shortest three duration groups it isapparent that the rates of remaining on JSA in2007/8, before the recent rise, were the lowest

over the whole period shown. When the sameanalysis is done since the earliest possible date(November 1985) the same conclusions apply.

The patterns for these flow rates show somedifferences by duration – mostly that the changeshave had much greater effects on those who havenot yet become long-term unemployed – but alsosome general similarities, with particular evidentprogramme effects such as that of New Deal forYoung People in 1998/9.

The rise in flows through to longer durations in2005/6 is less easy to explain. What is easier toexplain is the following decline in staying on JSA,for all duration groups. The rise in the JSAclaimant count towards one million in the 2005/6period produced a searching investigation byDWP, and resulted in a ‘relaunch’ of the JSAregime. It was found that the administration of theJSA regime, requiring evidence of jobsearch‘steps’ each fortnight and regular review ofcompliance with Jobseeker’s Agreements, hadbecome less stringent over the years. From April2006, the requirements were checked morethoroughly and regularly. The fall in numbersclaiming was also associated with increases in thenumbers of JSA claimants disallowed benefit forfailing to look for work and sanctions for breachesof the JSA regime. This more rigorous

Labour market trends for Scotland 25

Figure 9: JSA claimant count index (December 2006 = 100), North of England and Scotland

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implementation of the regime resulted in fallingtotal JSA numbers and in the numbers andproportions becoming longer-term claimants.As to what had caused the earlier rise indurations, it is unlikely that there had been asingle-year collapse in the enforcement of the JSAregime, rather a slower decay as culture changeinitiatives designed to allow Jobcentre staff to help‘customers’ rather than enforce rules became thenorm. There was, however, at this period aprogramme of headcount reductions acrossJobcentre Plus, and some industrial action. Thismay have impacted on the services provided andthe degree of jobsearch monitoring carried out.

There has been some earlier evidence ofdifferential stringency in New Deal 18–24sanctions between Scotland and other UKregions, with Scottish participants being morelikely to be sanctioned. For example, in WorkingBrief 121, February 2001, we reported that thenumber of New Deal sanctions relating to optionswas 16 per cent in Scotland compared to 13 percent nationally. One would expect that differentialsin the enforcement of the JSA regime couldproduce differences in JSA off-flows both becauseof the administrative effect of disallowances andbecause increased job search can produce

greater off-flows to jobs. There can also be theeffect of greater off-flows to other benefits wherejob search is not required or monitored.

Looking at the first duration group, theproportion of those up to three months claimingbecoming 3–6 months claimants, Scotland has abroadly similar pattern of claimants remaining onJSA to the North of England. Scotland improvedfaster than the North of England in the period tosummer 2001, following which there was a slowdeterioration over the period through to early2005. Over the 2003–5 period, Scotland and theNorth of England had both similar rates andtrends. The sharp rise in remaining on benefit in2005 affected the North of England first, before asharper rise in staying-on rates in Scotland. Themore recent rises in the rates of staying on haveraised the Scotland staying-on rates faster, thusclosing the gap.

The second duration group, those movingfrom 3–6-month unemployment to 6–9 months,also shows a stronger Scottish lead, with lowerproportions remaining on benefit over the entireperiod, with the exception of the odd month. Themajor differences with the previous analysis is thatboth for Great Britain and for Scotland there is adetectable improvement in the 2003/4 period,

Labour market trends for Scotland26

Figure 10: JSA claimants staying through each three-month threshold (seasonally adjusted), Scotland

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80%Proportion remainingbeyond 3 months

Proportion 3-6 monthsremaining 6-9 months

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Proportion 12-15 monthsremaining 15-18 months

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prior to the deterioration in 2005/6 which was ofthe same scale in Scotland and the North ofEngland, although it took place over a muchshorter period in Scotland. The recent deteriorationhas affected Scotland more than the North ofEngland as a whole, so earlier gaps have closed.

We have attempted to scale the figures so thatthe range in percentage points covered by eachfigure is the same, so it is visually apparent thatthe Scottish lead in leaving JSA before the secondthreshold is greater than that for the shorter-duration group, at an average 1.4 percentagepoints for 2001–8 compared with 1.2 percentagepoints. These gaps in favour of Scotland are muchlarger than for the longer-duration groups.

The third group, those 6–9 months becoming9–12 months, is affected in 1997/8 by an effectlinked to the introduction of New Deal for YoungPeople in April 1998. The Gateway for this startsat six months, involving intensive adviser support.It is likely that the extensive publicity campaign,together with a distinct economic ‘wobble’ at thesame time, resulted in a rise in people staying onbenefit to receive the new support, followingwhich there was a dramatic fall as New Deal tookeffect. This is the duration group affected by the‘register effect’ of New Deal 18–24, with people

leaving the claimant count to go to options at tenmonths. The effect persists, with a very muchsmaller effect for the subsequent duration group.The gap between Scotland and the North ofEngland was very small over most of the period,with the major exception of a substantialimprovement in the North of England in the2004/5 period that was not reflected in Scotland.The deterioration in rates in 2005/6 wasconcentrated in a very much shorter period inScotland than in the North of England figures. Thesubsequent improvement in Scotland was fasterand stronger than in the North of England, but hasnow been succeeded by substantial rises in therate of staying on JSA, so the Scottish positivedifference has now been eliminated.

The two subsequent duration groups, forpeople who were 9–12 months becoming 12–15months unemployed, and those 12–15 monthsbecoming 15–18 months unemployed, cover, inthe post-1998 period, those aged 25 and overonly. At this stage in a claim, they are not eligiblefor New Deal 25+, but continue to be eligible (inScotland) for Training for Work (voluntary eligibilitystarts at six months) and were formerly eligible inEngland for Work-Based Learning for Adults(WBLA). This programme ceased to be provided

Labour market trends for Scotland 27

Figure 11: JSA claimants staying beyond three-month threshold (seasonally adjusted),North of England and Scotland

42%

40%

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ay19

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Labour market trends for Scotland28

Figure 12: JSA claimants staying from three months beyond the six-month (seasonally adjusted),North of England and Scotland

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Figure 13: JSA claimants staying from six months beyond nine months (seasonally adjusted),North of England and Scotland

53%

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North of England Scotland

by Jobcentre Plus from April 2006, though it hadbeen winding down over the preceding year.

For the shorter term of these two durationgroups, the Scottish pattern tracks the North ofEngland trend closely to 2003, with the periodpost-2000 being associated with a broadly risingpattern in Scotland, up to the relaunch of the JSAregime in April 2006, followed by a sharp fall in therates of staying on benefit. This was then followedby the move to the current recession. The majorexception to this was the improvement in theNorth of England in the 2003–5 period that wasnot reflected in Scotland. There was a fall instaying-on rates between 1998 and 2000, butmore than half the fall was reversed in thefollowing year.

The longest duration group we can analyseusing these three-month flow groupings is that forJSA claimants flowing through the 15-monthstage and up to 18 months, before they becameeligible for New Deal 25+. Over the period since1998, this group has had a rising trend in thestaying-on rate, and the trend in Scotland hasbeen marked by very much smaller fluctuationsaround the trend than has the North of Englandline. The improvement after the JSA relaunch inApril 2006 was sharper in Scotland than in theNorth of England, accounting for most of themonths when Scotland had lower rates of stayingon JSA than the North of England.

Labour market trends for Scotland 29

Figure 14: JSA claimants staying from nine months beyond twelve months (seasonally adjusted),North of England and Scotland

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Conclusion

The conclusion we draw from this (extended)comparison of labour market and JSA claimanttrends in Scotland and the North of England isthat the similarities outweigh the differences. Themajor difference appears from late 2006 onwards,in favour of Scotland. This does not seemparticularly to match initiatives from the ScottishGovernment. There is some difference over thesame period for the JSA flows through durationsanalysis where the Scottish improvement isgreater than that for the North of England. Thismay be due to more people leaving JSA to jobs,tighter JSA enforcement in Scotland, or somecombination of the two. There is no evidence ofdifferential trends in incapacity benefits claims orlone-parent benefit claims over that period.

Labour market trends for Scotland30

Figure 15: JSA claimants staying from 12 months beyond 15 months (seasonally adjusted),North of England and Scotland

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ay19

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North of England Scotland

Labour market trends for Wales 31

Employment rates in Wales and theNorth of England

Over the period since devolution, the employmentrate in Wales rose sharply in 2002/3. After that,the trends were broadly flat before the mostrecent falls with the onset of the recession(see Figure 16).

Numbers in employment in Walesand the North of England

Employment numbers followed very similar pathsto those for employment rates, showing thatpopulation trends were similar in Wales and in theNorth of England, and unlike Scotland.

The number in employment showed a sharprise in 2003, followed by a slow rise (unlike theemployment rate, where the trend was flat or aslow fall) until the onset of the recession. As withthe Scottish data, employment numbers are

Header 3

presented as an index to permit easy comparisonof the trends between the North of England andWales (Figure 17).

Workless benefit claims in Walesand the North of England

These trends in employment and in theemployment rate have been reflected in trends inpeople claiming DWP workless benefits (seeFigure 18). Up to August 2008 (the latest date wehave figures for all benefits) there had been a fallof 3.8 percentage points in the proportion of theWelsh population claiming workless benefits sinceAugust 2000. The fall was spread across themajor benefit groups, with Jobseeker’s Allowanceclaimants down 0.8 percentage points of thepopulation, incapacity benefits (including IncomeSupport on grounds of incapacity) down 2.2percentage points, and lone-parent benefits down0.8 percentage points.

5 Labour market trendsfor Wales

Figure 16: Employment rate changes, 1999-2008, North of England and Wales

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Labour market trends for Wales32

Figure 17: Employment index (November 2006 = 100), 1999-2008, North of England and Wales

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Figure 18: Claimants on workless benefits as a proportion of population, 1999-2008, North of Englandand Wales

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These trends have been very similar to thosefor the North of England, which started with verymuch lower proportions of the working-agepopulation claiming benefits. The overall fall in theproportion of the population claiming benefits inthe North of England was 2.9 percentage points,almost 1 percentage point less than in Wales, withthe bulk of that difference being in IB claims. Thefall in IB claims in Wales was 2.2 percentagepoints, and in the North of England 1.4percentage points.

The largest single group of workless benefitclaimants in Wales continue to be incapacitybenefits claimants (see Figure 19).

In August 2008, the proportion of thepopulation claiming incapacity benefits was 1.9percentage points above that in the North ofEngland, down from 2.7 percentage points inNovember 1999. Over the period since 1999, theIB rate has been consistently significantly higher inWales than in the North of England.

Labour market trends for Wales 33

Figure 19: Jobcentre Plus customers, 1999 and 2008, Wales

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job seeker incapacity benefits lone parent others on incomerelated benefit

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Labour market trends for Wales34

Figure 20: ILO unemployment rate (percentage of economically active), Wales

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Figure 21: JSA claimant count index (December 2006 = 100), North of England and Wales

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