A brave new world of welfare, employment & skills

Employment and skills are instrumental to addressing the two main challenges facing the UK economy: recovery and rebalancing. The old chestnut of how to tackle long-term unemployment now sits alongside emergent priorities, such as meeting the needs of the recently unemployed, overhauling the welfare system, enabling young people to enter the labour market, and ensuring that workforce skills are fit for purpose as regards the recovery and rebalancing needed.

“Worklessness is a particular problem for those with low skills. Developing skills which are relevant to work or to move on in education are clearly important however they are often one part of a complex mix of factors and generally a relatively small component of Welfare to Work (including the Work Programme) in the UK.” (The Role of Skills from Worklessness to Sustainable Employment with Progression, UKCES Evidence Report 38, Sept 2011)

‘Black-box commissioning’ means there is now little interest in what providers do as long as they deliver results. These results will be funded from projected future benefit savings, the scale of which is as yet unknown. It is a bold decision by the Government to press ahead with this untried method of funding. We await the reports on performance with interest. In the meantime, ‘minimum contract values’ have closed the door for organisations without an annual turn-over considerably larger than ours. Prime contractors need ‘to have the financial capacity to deliver large scale contracts which require a significant amount of cash-flow due to outcome funding and an annual turnover of at least £20 million per annum’. We have been told in no uncertain terms that we should instead seek sub-contracts from the ‘primes’ but they seem quite content to keep the business to themselves.

"Previous contracted employment programmes have experienced “creaming and parking”, whereby providers focus their attention on the participants who are most likely to gain sustainable employment, at the expense of those who face greater challenges to finding work….there is a risk that creaming and parking may still take place under this model, since it remains open to providers to continue to focus on the easier to help participants within each customer group." (Work Programme: providers and contracting arrangements. House of Commons Work & Pensions Committee. Fourth Report of Session 2010–12. 27 April 2011)

The government has clearly decided that privatisation is the answer and has now implemented a commissioning strategy for contracting mainstream employment & skills services through super-sized prime contractors across virtually all funding streams in a drive for efficiency. The rationale for having large prime contractors is that they would be able to bear the financial risk of operating on a largely results-based payment model. (Work Programme: providers and contracting arrangements. House of Commons Work and Pensions Committee. Fourth Report of Session 2010–12. 27 April 2011)

All risks duly considered, the brave ‘mega-providers’ have now monopolised welfare-to-work supply and it is doesn’t seem likely that smaller charities should expect anything much to trickle down through their supply chains as promised. Charitable involvement made for good bid candy in tenders but the reality is quite different and some prime contractors seem to expect that we can help them deliver for nothing. The Work Programme will pay between £4,000 for a jobseeker's allowance claimant aged 18 to 24 and £13,000 for an ex-incapacity benefit claimant.

“No fewer than three reports have been published this week, which show that while the Work Programme (WP) is very much about the private sector, it is in grave danger of having very little to do with either "big society" or the voluntary sector…..They all reach the same conclusions: that the corporate prime contractors are exploiting or excluding their voluntary sector and social enterprise subcontractors, putting many at risk of going bust. They find that the programme is failing to meet the needs of vulnerable job seekers, such as homeless people, ex-offenders, and single mothers…. The LVSC report states that of the 25 charity tier two subcontractors working with primes in the London area, 23 report that they have had no referrals whatever…..Many organisations have expressed concern that Prime Contractors are attempting to access third sector services free of charge." (Patrick Butler, Guardian, 12 October 2011)

Already, a ‘shake the tree’ exercise reveals far fewer charities still operating in the employment and skills arena. Let’s hope the new government strategy proves fruitful or there will be little supply-side left to fall back on. Of course, this puts the primes in a strong position to renegotiate if performance doesn’t meet the ambitious targets declared.

"Many organisations with crucial expertise and experience will be too small to tender as prime contractors, creating a risk that they will be effectively ‘frozen out’ of the Work Programme by larger organisations or collaborations. This loss of expertise would not be in the interests of service users and would greatly hinder the success of the Work Programme...It is important that the voluntary sector’s involvement in the Work Programme is meaningful and that organisations are not simply used to make prime contractors’ bids more attractive. We welcome the Minister’s assurance that any prime contractor which included a voluntary sector organisation in their bid at the tendering stage but was subsequently found not to be using that voluntary sector organisation in service delivery will have their contract cancelled. DWP must monitor this and act accordingly once the programme is underway." (Work Programme: providers and contracting arrangements. House of Commons Work and Pensions Committee. Fourth Report of Session 2010–12. 27 April 2011)

The over-riding narrative of the future for the UK economy is that increasing global competition means sustainable future growth will require higher levels of skills and continuous industrial and occupational change. However, an important problem remains in the UK regarding the ‘low-skill equilibrium and rigid labour market segmentation (i.e. a labour market where there may be little chance for low skilled workers to move into high skilled jobs). This inhibits the potential of the labour market to contribute to social mobility and results in income inequalities and, for some, in-work poverty… Low pay affects certain groups in society more than others including young workers (below 22 years), older workers (50 years+), some ethnic groups (Pakistani, Bangladeshi and Black African), women in part-time work and those living in disadvantaged areas.’ (The Role of Skills from Worklessness to Sustainable Employment with Progression, UKCES Evidence Report 38, Sept 2011)

There is an interesting chicken and egg problem in terms of employment and skills. A key feature of UK policy in recent years has been the “work-first‟ emphasis on activation, job search and into-work delivery over more substantive training and human capital development. While there is evidence available associated with the relative merits of each approach, the balance of the evidence suggest that job search and “work first‟ placements have a larger impact for less cost in the short-term while training and skills interventions have better impacts in the long-term, especially when a concern with transitions into employment are combined with concerns for progression in the labour market and avoiding the low pay no pay cycle. (The Role of Skills from Worklessness to Sustainable Employment with Progression, UKCES Evidence Report 38, Sept 2011)

Criteria for support?

Any charity engaged in a fundraising campaign is advised to undertake a critical review of its case for support periodically.

For Red Kite Learning, the need for review is upon us, by virtue of our nomination for entry to Deutsche Bank’s Charity of the Year 2012 competition. If our application is short-listed, we will have to step-up and fine-tune our campaign in order to compete against other very worthy causes for votes from more than 8,000 Deutsche Bank employees. The stakes are high and there will be only two winners out of some seventy charities nominated for consideration.

One of the first questions that springs to mind is how our ‘cause’ might compare against the others in terms of its natural appeal, as worthy and deserving of support. While some causes might be more popular than others as defined by their market share of donors, the criteria for choosing one cause over another are less than simple.

There is a widespread belief that charities exist primarily to help needy people and that the desire to meet needs is a key criterion in the selection of charitable beneficiaries. However, research suggests that people do not give to the most urgent needs, but rather they support causes that mean something to them.

Non needs based criteria will include factors such as tastes, preferences and passions acquired as a result of an individual’s social experiences; personal and professional backgrounds which influence choice; perceptions of charity competence including the efficiency with which they are believed to use their money; and desire to have a personal impact that is not ‘drowned out’ by other donors. On this basis, the criteria for support may be as much ‘taste-based’ as ‘needs-based’.

Seeing oneself from the perspective of your target supporter group is not easy. Particularly as any group, however narrowly defined, is rarely homogenous and predictable, be it investment bankers or another collection of individuals.

The range of opportunities on offer creates a difficult situation for those who wish to use their vote or wealth to support charitable work. Moreover, decision making is often subject to a range of limitations such the ability to gather and interpret information, cognitively process the merits of alternative recipients and dedicate time to this decision making process.

In face of such limitations, part of the challenge is to deconstruct unhelpful classifications and create positive ‘mental-maps’ that support rational choice. This might involve some empirical ‘rules of thumb’, to help filter potential charitable recipients. Evidence of impact and social return on investment can provide useful value metrics for comparison.

Pre assigning certain causes as intrinsically ‘worthy’ or ‘unworthy’ of support is not a rational approach. While hierarchies of helplessness clearly influence giving decisions, translating judgements into concrete decisions that favour certain causes and not others presents a moral minefield.

If people find it difficult to choose between the many organisations competing for their support, a good brand and campaign might support understanding of what an organisation does, what it stands for, and the extent to which it aligns with personal values.

Recent discussions with corporate social responsibility staff suggest that the virtue of providing for the poor or disadvantaged is diminished if action isn’t being taken to tackle the root causes of poverty or disadvantage. Sustainable social impact is increasingly characterised in terms of hand-up rather than a hand-out.

Let us know what you think matters and by what criteria you choose one charity over another.

The Ethics of Reform

Rushworth Kidder's book ' The Ethics Recession: Reflections on the Moral Underpinnings of the Current Economic Crisis' suggests that what started as an economic recession has become an ethics recession - a collapse of integrity. The abandonment of responsibility and failures of moral courage underlying the financial numbers require us to think beyond personal ethics to a collective culture of integrity. Whereas the recession has typically been reported, discussed and analysed as a mechanistic failure in wealth creation, framed in the language of economics ('what's the bottom line') and politics ('where's the power'), Kidder argues we are increasingly needing to use another type of lingua franca - the language of ethics - to ask 'what's right'.

However, current UK media coverage of bank reform, following the long awaited report from the Independent Commission on Banking (Sir John Vickers et al), seems to have reverted to type, stopping short on the language of ethics, focussing on 'what's safe' instead of 'what's right'. Safety is needed for sure but reform presents an opportunity to stimulate consideration of banking for the 'common good'. Big Society is conspicuously absent. The separation of casino banking from the high street seems sensible but what about the 'financial well-being' of banking customers?

Bradley Fried of Grovepoint Capital recently published an article in the FT called 'Mandela's lessons in truth for City high-fliers' where he laments the lack of people with courage enough to ask 'what ought I do?' He feels that a rift has been opened between the City and the rest of society that we should all try to heal. "We need to do more than apportion blame and address structural solutions......What is now urgently needed is some moral authority from the government and also the financial sector."

Social Investment

Discussion of social investment developments are taking hold in the blogosphere. Weird and wonderful fiscal experiments are being proposed and reviewed, from Social Impact Bonds and Community Investment ISAs to the Big Society Bank and new tax-breaks for social investors. What does it all mean?

Research into the social investment market has been commissioned by City of London Corporation, City Bridge Trust and the Big Lottery Fund to examine what investment products would most likely bring greater levels of capital to the social enterprise sector. The research will be undertaken by ClearlySo who will interview leading investment professionals about the product preferences of their clients.

Apparently previous studies point to a large reserve of untapped capital. Potential investors increasingly express themselves open to the idea, but relatively few have actually committed any capital.

"There is, it seems, a chasm between potential and reality. If the sector is to make the leap, a huge part of the solution will be finding the right vehicles. We are, after all, in one of the financial epicentres of the world. Coupled with Britain’s leadership position in social enterprise, nowhere is better placed to marry the two." (Tom Cropper, ClearlySo, 09.03.11)

£300m is due to be made available through a new Big Society Bank that will offer loan finance to social enterprises. The Big Society Bank will be wholesale; it will not make direct investments but will rather lend to intermediaries, who will apparently offer a range of financial products.

Part of the rhetoric from the government is that this will help social enterprises and charities to compete for and manage public sector payment-by-results contracts. The Public Service Reform Bill is supposed to look at ways to create a level playing field when it comes to charities competing for public sector contracts.

However, for many charities like Red Kite Learning that have been delivering payment-by-results contracts successfuly for years, the rhetoric does not stack up because the government has put the relevant contracts out of reach, in a drive for 'efficiency'. The flagship skills and employment opportunities - the Work Programme and Apprenticeships - are now only available to large 'prime contractors' who are expected to manage 'supply chains' more effectively than the civil servants have previously. It remains to be seen whether viable sub-contracting opportunities will emerge from this approach to commissioning.

It also remains to be seen what value will be offered through social investment vehicles and loan finance. There is still an important question mark as to whether investors will be willing to forego some financial return in order to invest in a product that delivers social benefit.

James Allen of the National Council for Voluntary Organisation (NCVO) recently wrote a blog article 'Is social investment the future?' where he warns members of potential dangers, including an erosion of donations if social investment is seen as an alternative to charitable giving rather than being additional.

Like most charities, Red Kite Learning will be watching developments in the social investment market with keen interest and intrepidation.

2020 vision to double individual philanthropy to £20bn

Increasing individual giving to £20 billion by 2020 is one of the key objectives put forward by a new report which explores how to ensure charities financial sustainability over the next 10 years.

‘Funding the Future’ produced by the Funding Commission for the National Council for Voluntary Organisation (NCVO) offers a 10-year framework for how the voluntary and community sector can stay financially resilient when faced with depleted resources coupled with increasing demand for services.

It sets out clear recommendations for civil society organisations (CSOs), funders and commissioners, infrastructure bodies and the government to bolster all income streams for the sector, including individual giving, trading income, grants, public sector contracts and private investment.

It suggests that individual giving can be increased from £11.3 billion to £20 billion by 2020 through increased donor engagement, better fundraising approaches and via a 'Better Asking' Campaign, developed by NCVO in partnership with the Institute of Fundraising and other sector bodies.

The report says: “It is clear that getting more people to give more than £100 per month and getting more of the very rich to give millions are going to be an essential part of meeting the challenge of increasing giving to £20 billion per year by 2020.”

Yet, as Dr Beth Breeze, Kent University researcher, highlights in a paper for the Commission, as a nation, we are at best ambivalent, at worst hostile, in our attitudes to the rich. She argues for the need to reposition philanthropy as part of the solution to, rather than as part of the ‘problem’ of, being rich; suggesting it should be viewed as an essential part of the successful life in the 21st century.

The Big Society

The Coalition Government wants to build a ‘Big Society’. The Prime Minister says ‘we are all in this together’ and building it is the responsibility of every citizen as well as every Government department.

David Cameron has outlined three strands to his vision. First, he argued for social action, with the government sponsoring a new spirit of "voluntarism, philanthropy, social action". Second, he called for public services reform, criticising the "centralised bureaucracies" of government and enthusing instead about their replacement by "charities, social enterprises and private companies". Finally, he espoused the need for community empowerment, to create communities "in charge of their own destinies".

Francis Maude Minister for the Cabinet Office, said:

“Big Society is about creating a country in which people are in control. People giving time, money, assets, skills and knowledge all drive social action and help make life better for all….Talking about what we do for good causes is often seen as vulgar. But sharing experiences can inspire others.”

Deserving vs undeserving

Is anyone undeserving of support? Some people clearly think so.

For example, Melanie Phillips of the Daily Mail thinks that all of us, rich or poor, are equally capable of making choices. “The choice to be honest rather than fiddling the benefits system. To work, however demeaning the job, in preference to taking state charity. To bring children into the world only where there is a committed father to help bring them up.”
Mail Online 30th Dec 2010

Negative stereotyping is commonplace in the media, labelling people in poverty as ‘scroungers’, ‘feckless’ or ‘lazy’. Research from Joseph Rowntree Foundation suggests that media coverage tends to focus on extreme cases, highlighting the inherent ‘failings’ of undeserving people. On the whole coverage of poverty is peripheral in mainstream UK media.
Joseph Rowntree Foundation Research - Media Coverage of Poverty

There is a lot of mythology surrounding the notion of the ‘deserving and undeserving poor’. For example, at Red Kite Learning we have learned from experience that people who are not working are not necessarily lazy, and people who are working have not necessarily escaped poverty. It’s not as simple as that. It is easy to be dismissive about some of the problems faced by people but much harder to deliver practical solutions. Red Kite Learning delivers practical solutions every day.

Ms Phillips goes on to admit in the same article (link above) that “it is crucial to offer all poor people assistance which will give them a leg up and out of poverty rather than kick away the ladder of opportunity from beneath their feet.”

Precisely what our campaign is for.

Corporate Social Responsibility

“The crisis has particularly hurt the more vulnerable people in our society, who may be unemployed and have lost their homes as well. I think that the public now expects more consideration of their needs.” (Professor Robert Shiller, 2009 winner of Deutsche Bank Prize in Financial Economics)

The City has an important role to play in rebuilding London's balance sheet and supporting initiatives that benefit the capital. There has been a lot of chatter about excessive bonuses in the banking sector. We are far more interested in dealing with the other end of the spectrum; relieving excessive poverty and unemployment.

We can see that the financial services sector is taking ‘corporate social responsibility’ seriously and we are keen to engage London stakeholders in a dialogue about how we can collaborate to achieve shared aims and objectives.