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Local authorities should be given more responsibility for a revamped personalised service to reduce the costs of welfare, says a new study. Michael Burton reports. The recession may be nearing its end, but the impact on unemployment will be felt for at least another two years, with the young and unskilled, and particularly the young unskilled, being worst hit. Indeed, while 75% of councils named reducing ‘Neets' – not in employment, education or training – as a target in their local area agreements (LAAs), the number has since increased because of the recession, with the highest rates in the North, North West, and Yorkshire and Humber regions. Last year, the number of 16 to 24-year-old Neets reached a record level of 959,000, with 90% of this jobless grouping being aged over 18. A new report now urges a greater role for local authorities in tackling worklessness, with a sharper focus on personalising services around the unemployed to make them more effective. Because of the flexibility and local co-ordination required by a more personal service, the report argues that local government is best placed to take more responsibility. The report from the New Local Government Network (NLGN), We can work it out: Local employment and skills for economic recovery was officially launched at the Commons last week with a distinguished line-up. Speakers included employment minister, Jim Knight; shadow minister for works and pensions, Lord Freud, who is author of a report into worklessness; and Cllr Paul Carter, leader of Kent CC, who wrote an introduction to the report. In it, he said: ‘Welfare to work services often fail to adequately meet individual skills needs and are difficult to access, with various agencies overlapping responsibility for young people, adult skills, young offenders, apprenticeships and careers advice. The only bodies at the local level which have the ability to understand the complicated and diverse needs of local economies are local authorities which, acting as strategic commissioners, can co-ordinate provision.' The NLGN study, by Nick Hope and Anna Turley, proposes that the UK Commission for Employment and Skills, an employer-led body set up in 2008, be made up of the strategic functions of the main skills agencies, with the operational functions devolved to local authorities. They should also be given commissioning powers and block grant funding for 16-19 skills provision as the education leaving age is extended to 18. The Learning and Skills Council (LSC) is being broken up into the Skills Funding Agency, for those aged 19 and over, and the Young People's Learning Agency, for 14 to 19-year-olds, a new system which the authors slate as bureaucratic and unsustainable. They are also critical of the £1bn Future Jobs Fund set up to provide 150,000 jobs which, they say, has been launched without clear targets, is a return to the old ring-fenced model of funding, and is too short term. Recognising the sub-regional nature of local economies, the authors recommend an integrated welfare-to-work programme, with commissioning led by councils operating together sub-regionally. Councils should also have the right to ‘appeal against departmental decisions when local requests for devolution within the employment and skills system are ignored', supported by a parliamentary select committee acting as adjudicator. They also recommend that councils act as ‘municipal entrepreneurs' to create new companies and social enterprises through ‘better financial incentives to catalyse local economic growth'. Other suggestions include ‘skills accounts' for individuals, and lifelong learner loans for adult training, similar to student loans, which will be paid back through deductions from salary. Personal advisers should have a wider remit across other providers, such as childcare and mental health. They also argue that while there will be an upfront cost on investment in more personalised services, an ‘invest to save' accounting approach should be taken by the Treasury. In this scenario, future savings are brought forward to pump-prime investment. A reduction of 5% in welfare recipients would save £1.4bn in 2010/11. Lord Freud told the Commons launch: ‘It's difficult to get funds delivered in a coherent way. We already waste an enormous amount because of the incoherent way silos are pumping out cash. ‘We need to break down funding silos and see local authorities build their economic competence to offer leadership.' Mr Knight argued that unemployment was still below its level in the last recessions, thanks to intervention, but agreed the next step was ‘personalised delivery', with more local decision-making powers for Jobcentre Plus managers. He was more lukewarm about advocating a greater role for local government, saying: ‘We'll do more with councils if that's what's needed.'

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WHITEHALL

Cutting the costs of welfare

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