New approach to cut youth unemployment by 20 per cent

LGA media release 2 February 2013

A new local approach to tackling long-term youth unemployment could see the number of young people out of work cut by 20 per cent in three years, according to new research by local government leaders.

The move would result in savings of £1.25 billion a year to the taxpayer and contribute an additional £15 billion into the economy over 10 years.

New research by the Local Government Association (LGA), based on evidence of what councils up and down the country are already achieving, shows the overall savings could be made through £1 billion of benefit payment savings and £250 million in additional tax and National Insurance contributions.

The report, 'Hidden Talents II', provides a wealth of evidence demonstrating how personalised local approaches are most effective in reducing the number young people out of work and training, but that such schemes are undermined by national funding, performance and procurement systems driven by Whitehall.

It exposes how under the current system attempts to get more than one million young people into work are being hampered by excessive bureaucracy, duplication and central government control, despite councils having the duty to help young people.

An analysis of the current efforts to tackle youth unemployment has identified an overly complicated system that is awash with 33 different national schemes that span 13 different age boundaries at a cost of £15 billion a year.

This risks failing young people and businesses, as separate Whitehall funding incentivises training for young people in jobs that don't exist. Earlier LGA research has shown that more than 94,000 people completed hair and beauty courses last year, despite there being just 18,000 new jobs in the sector. While in the construction sector around 123,000 people were trained for around 275,000 advertised jobs – more than two jobs for every qualified person.

Councillor David Simmonds, Chair of the LGA's Children and Young People Board, said:

"Youth unemployment is a worrying trend for us all, particularly long-term youth unemployment which has doubled since 2008 and continues to grow. For young people, being unemployed for long periods of time can have scarring effects that can last a lifetime, but the ramifications go even further, having a huge impact on our local economies and wider plans for growth.

"All the evidence in this report points to the success that local organisations, such as councils, businesses and education providers, can achieve when working together to ensure young people are given the very best chances to get into work or training, but this is being hampered by successive centrally-driven Government approaches. This has long been a major frustration for councils, who know their young people in their area and have a responsibility to look after their welfare.

"Councils are in a unique position and can play a pivotal role in identifying young people that are likely to slip into periods of long-term unemployment. But we need to be given the powers to prevent this happening and help equip future jobseekers with the skills, confidence and real-life experience they need to find work in their area.

"We also know that work experience in schools can play a valuable role helping young people onto the first step of the career ladder. Councils have generally had more power to join-up funding to help young people under 16, but it is vital that we are able to hold schools to account for ensuring pupils are receiving top quality work experience and careers advice.

"We are putting a new offer to government which, if implemented, would see local government help to reduce the number of young people out of work by 20 per cent, saving the taxpayer millions of pounds in the process and helping inject £15 billion into the economy over a decade through increased productivity."

The report reinforces recent analysis by Ernst and Young which projected a devolved community budgeting approach to helping people into work would generate between £1 billion and £1.7 billion in savings every year.

By introducing a local approach to addressing youth unemployment councils and their partners will be better able to spot and offer early help to young people struggling at school, train young people in skills to take local jobs in local labour markets, help improve the performance of the Work Programme for hardest-to-reach young people, and target job subsidies to local businesses offering the best opportunities for young people.

Councillor Peter Box, Chair of the LGA's Transport and Economy board, said:

"Getting young people into work and helping them to make a positive contribution to their communities is a priority for local government, one that unites the sector and transcends local party politics.

"It's clear that the current nationally-driven attempts to tackle youth unemployment aren't working to help the long-term unemployed. While there are many good initiatives, Government has incentivised a series of services like schools, colleges, third-sector providers to work in isolation of each other, with no clarity on who is responsible for leading the offer to young people on the ground.

"We would now urge Government to give local authorities and their partners the powers to ‘own the problem' and become the link between young people and local employers. In return, we will integrate all services around the most vulnerable young people, match the training young people get with the skills demanded by local employers. We will look to combine these services with current employment schemes such as Jobcentre Plus, and help the Work Programme to maximise opportunities for the hardest-to-reach young people."

The LGA is calling on local authorities and their partners to be able to:

  • become the default commissioners of all programmes seeking to get the most disengaged young people up to 24 years old back into work training and education
  • lead in setting local and sub-regional priorities for 16 to 24 skills provision, driven by employer demand in local labour markets, and linked to pre-16 provision
  • co-design, with Jobcentre Plus and Work Programme providers, joint packages and employment programmes for hardest to reach young people, effectively bringing together local and national programmes
  • commission wage subsidies announced as part of the Youth Contract, engaging small and medium enterprises and targeting young people with most to gain from public subsidies.

Case studies

The Tri-borough Whole Place Community Budgeting pilot, between Hammersmith and Fulham, Kensington and Chelsea and Westminster councils, has proposed an Employability programme that runs from the first year of secondary education through to sixth form or further education college and into work for those at high risk. Tri-borough calculate a £320,000 two-year programme would generate net savings to public services between £1.5-2.5 million each year from six pilot schools, at a cost of £50 per pupil.

Hertfordshire County Council has pulled together partners around a single offer that has delivered consistently low levels of disengagement. Within one year to June 2012, the council reduced the number of care leavers becoming disengaged from 26 per cent to 17 per cent, young offenders from 26 per cent to 22 per cent, young people with learning disabilities from 11 per cent to 9 per cent, and young people from deprived areas from 9 per cent to 7.5 per cent.

In 2011 Lewisham Council implemented a strategy to prevent young people disengaging and contribute to reduce high unemployment among 19 to 24-year-olds. The strategy has reduced 16 to 18-year-old disengagement by 25 per cent in one year.

The Greater Manchester Forecasting Model predicts that the trend towards increased demand for higher level skills looks set to continue over the next decade. Forecasts indicate that of the 921,000 jobs due to be created over the next decade, half will require skills equivalent to at least NVQ Level 3, and a quarter to NVQ Level 4.

The structural change in the economy experienced over the past decade is forecast to continue and will dictate the demand for skills.

Work Redbridge Partnership, initiated by Redbridge Council, provides a coordinated approach to tackling unemployment bringing together Jobcentre Plus, 20 local employment support and training providers, and organisations supporting volunteering, self-employment and business start-up. Since May 2011, it has delivered 65 outreach sessions for 600 harder-to-reach residents, over 83 per cent enrolled into training or voluntary work, 14 per cent found work and 10 per cent became self-employed.

Established by Jobcentre Plus and Cornwall Council, Cornwall Works is a strategic approach that brings together organisations, projects, programmes and services to provide a gateway for organisations providing services and for individuals seeking work. The model has helped Cornwall and the Isles of Scilly to deliver performance that is consistently above national levels. In November 2012, youth unemployment was 6.5 per cent compared with 7.1 per cent nationally. Off-flow for all JSA claimants at 39 weeks was 87.2 per cent (83.4 per cent nationally), indicating that young people were returning to work in Cornwall and Scilly at a higher rate than all unemployed jobseekers.

The report, 'Hidden Talents II', is available on the LGA's website:

Hidden Talents II

ends

Author: LGA Media Office
Contact: Cherie Willers, Telephone: 020 7664 3333

Notes to editors

The LGA is co-hosting a Town Hall Summit on Tuesday 5 February where representatives from councils, colleges, youth work, business, Jobcentre Plus and the Youth Parliament will discuss how to tackle locally youth unemployment and disengagement. It takes place at Reading Borough Council Town Hall, from 4.00 pm to 6.00 pm.

It's estimated that each unemployed 18 to 24-year-old costs about £14,980 a year, £4,873 in benefits, £1,199 in lost tax and National Insurance contributions, and £8,998 to the economy in lost productivity.

For disengaged 16 and 17-year-olds the costs are, on average, £781 in benefits and £4,576 in lost spending and productivity, a total of £5,357 per individual each year.

On average, every individual that experiences sustained periods of disengagement as a young person will cost the exchequer an additional £2,269 a year in lost tax and NI contributions up to 34-years-old.

The number of young people not in employment, full-time education or training is 1,346,000, representing 18.5 per cent of the youth population. About 260,000 of these are people who have been out of work for over a year, 100,000 have been out of work for over two years.


4 February 2013

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