Work and Pensions Committee
Oral evidence: Plan for Jobs and employment support, HC 600
Wednesday 19 April 2023
Ordered by the House of Commons to be published on 19 April 2023.
Members present: Stephen Timms, (Chair); Debbie Abrahams, Shaun Bailey; Siobhan Baillie; Neil Coyle; David Linden; Steve McCabe; Nigel Mills; Selaine Saxby; Dr Ben Spencer; Sir Desmond Swayne.
Questions 338 - 385
Witnesses
I: David Hale, Head of Public Affairs, Federation of Small Businesses; Alex Till, Chairman, The National Enterprise Network; Matt Dooley, Chief Operating Officer, Momentic; and Jonny Briggs, Diversity, Inclusion and Resourcing Director, Aviva.
Written evidence from witnesses:
Federation of Small Businesses
The National Enterprise Network
Witnesses: David Hale, Alex Till, Matt Dooley and Jonny Briggs.
Q338 Chair: Welcome, everybody, to this meeting of the Work and Pensions Select Committee for our inquiry on the Government’s Plan for Jobs and employment support. We are grateful to the four witnesses who have joined us for our panel this morning, giving us the opportunity to consider these issues from a variety of employers’ perspectives. I wonder if you could each tell us who you are, starting with Jonny Briggs.
Jonny Briggs: I work for Aviva—the insurance company, not the engineering company. I look after diversity. I am the Diversity, Equity, Inclusion and Talent Acquisition Director at Aviva.
David Hale: I am Head of Public Affairs at the Federation of Small Businesses.
Alex Till: I am the Chairman of the National Enterprise Network and we support new, emerging and existing microbusinesses.
Matt Dooley: Good morning. I am Chief Operating Officer at Momentic. We are a specialist welfare-to-work organisation helping mainly the unemployed starting in business.
Q339 Chair: Thank you all very much. I will begin by asking each of you to set out, from the different perspectives that you bring to this question, what you see as the main labour market challenges confronting employers at the moment. Let us start with Jonny Briggs from a large employer’s perspective.
Jonny Briggs: We have a number of vacancies. To put it into context, we employ 16,000 people in the UK. We normally carry about 750 UK vacancies and we have been at over 1,000 for a year. That is a 25% increase and we plan to have around 750. The challenge for us has been the number of vacancies. That is coming down. The market is definitely softening, but we are still ahead of where we want to be. We are not quite down at that 750 level.
The challenge for us is that we split the types of roles we attract in two. One is what you would call volume. That would be more into contact centres. That would be early careers. That is tough. We hire big numbers and we have challenges and competition. Most people are looking for people in that area. Then, with specialists, it is harder. It always is, but we fill all our jobs. I would not turn around and say there is a shortage that we cannot get. It is just harder to fill the jobs and the volume is greater.
Q340 Chair: You make the point that you typically expect to have 750 vacancies. What was the peak number in your case?
Jonny Briggs: We were at 1,250 before summer last year when, you will remember, there was that huge post-Covid spike when everybody moved jobs. Financial services was particularly hit after the first quarter. We are now down to 860 or so and it has been coming down for the past six or seven weeks. The commentary I get from colleagues in other organisations in our networks is that we are starting to see a softening, but don’t forget that is still not going down below what we would expect it to be. It is just a softening from a height.
David Hale: I echo some of that from the small business perspective. Three years ago, at the start of the pandemic, we saw a huge drop in vacancies by about 500,000 across the economy and small businesses were not in a position to hire when lots of them were closed. It was similar in lockdown. Then we saw a spike up to a peak of about 500,000 as there was catch-up last year. We had catch-up on the employee and the employer side. Employers were trying to hire for roles when the economy opened up and they were all trying to hire at once. A lot of employees who had been working in businesses perhaps for longer than they might have otherwise done were seeking to move roles, so we had that huge churn at the same time.
We are picking up struggles to fill vacancies with the right candidates. There is a big group that was out of work at the start of the pandemic and has not returned in the way it would be good to see, applying for jobs and being in work and getting roles in those small businesses. It is a story over the last three years from trough to peak and then coming slowly back down now.
Q341 Chair: Is that group you are referring to people who lost their jobs at the beginning of the pandemic, or who were already out of work at the beginning of the pandemic?
David Hale: In particular, there is a problem with people who were already out of work at the beginning of the pandemic and who now have not worked for, say, three years. That is part of what we see with the health figures and the number of people struggling with health problems, because the longer you are out of work, the more likely you are to develop health problems. You are also more likely to be out of work because of them.
Some other issues are working themselves out that are also connected to the pandemic. We had students not in student towns in the same numbers that they used to be. There were difficulties particularly in some rural areas with people not being able to drive to fill jobs. The stickiest one seems to be the people who have been out of work for a long time and are not managing to get in.
Chair: Thank you. Alex Till.
Alex Till: I am going to represent the microbusinesses with fewer than 10 employees and sole traders. We see a massive need for skills at the moment, particularly around programming, developments and things like that—IT-related skills. We find that a number of students who are coming out of education are not necessarily sure how to engage—that is something which I call business etiquette—and are asking where that transition is from education back into employment or self-employment.
Some of the larger microbusinesses find it difficult to recruit at the speed at which they need to recruit. A lot of them try to deliver a number of services, and they will look at subcontracting work out, rather than taking staff on. There is a real mismatch at the moment as regards, “Do we sub it out or bring people in? And, if we want to bring them in, how we use certain things—DWP, recruitment agencies and so on—to support us in the speed of placing those jobs?”
Q342 Chair: Tell us more about the business etiquette point.
Alex Till: The business etiquette piece is interesting. You have a number of people who are very educated. They are coming out of university. They have been through the pandemic. They do not necessarily understand the complexities of going into a business or even an interview at that point and how they position themselves and how they can portray their skills, knowledge and attributes to that employer, who may be looking at something that is slightly different from what they have been told while they have been going through education.
Chair: Thank you. Matt Dooley.
Matt Dooley: I will defer to my colleagues’ better knowledge on this one because the vast majority of customers we deal with are pre-starting their first business as small sole traders. Some do go on to employ, but it is not our area of expertise.
Q343 Chair: You work to support people going into those. Is this under contract to the DWP, or to whom?
Matt Dooley: Yes, we have a number of contracts up and down the country working with some homelessness charities. We work in Fair Start Scotland with the Scottish Government and partners up there. Our biggest contracts are with DWP, with the prime organisations that run the restart scheme. They brought us in as a specialist self-employment provider to help the hardest to reach customers start a business, consider self-employment and test that viability.
Q344 Chair: Have you just begun with restart, or were you doing this for a few years before?
Matt Dooley: With some providers, we have been in since the start of restart. We operate in half of the CPAs now. We work with six of the prime organisations. They have all come in at different stages as they have seen that there is a demand for self-employment from this customer group.
That has been growing steadily throughout. We have probably put around 1,200 people into gainful self-employment, which is the Universal Credit terminology of self-employment, and we have roughly 450 still trading at the six-month point. The sustainment is high but the barriers are also high with the customer groups. A lot of our work is pre-start. We work with the customer for five or six months and help them with all that market research, planning, testing viability and skills and helping them to launch that business.
Q345 Chair: Did your organisation start when restart began, or does it go back longer?
Matt Dooley: Momentic has been going since 2013, but mainly as a consultancy business, dipping in and out. We took the decision because of restart to go into the delivery, because we saw the opportunity with the restart scheme and subcontracting. With no NEA anymore, it was one of the only DWP programmes that we saw as an opportunity to offer self-employment support.
Q346 David Linden: Post-pandemic, we have seen an increase in job vacancies, with the number of vacancy postings reaching record highs last year. How have available job opportunities changed since the pandemic?
Matt Dooley: Again, availability of vacancies is probably not my area of expertise. We support our customers if they want to get to that stage to grow their business and start taking on a staff member. The vast majority of our customers stay sole traders or microbusinesses. We then work with an organisation like Alex’s when that business is ready to go to that next stage of starting to employ. We pass them over to help them with that next level.
Alex Till: It is interesting. As Matt said earlier, we hand over those clients. When we work with small businesses and they have an ambition to employ, they do not necessarily have the skills to understand how they take those opportunities further forward. We work with them in those spaces as well.
The availability and where those job opportunities are posted is interesting. We find from some of the microbusinesses that a lot of it will be through word of mouth. They will look at other organisations and maybe poach clients and people to work for them but, when we have had discussions, they do not necessarily look at DWP as their route to market.
Q347 David Linden: Why?
Alex Till: If I am honest, because they see it as a low-level engagement.
Q348 David Linden: Could the DWP do better at engaging?
Alex Till: Yes. That is the feedback we get from microbusinesses at the moment, because of the time it takes to recruit into that space.
David Hale: Picking up on that, small businesses on the whole do not report good experiences with the jobcentre or recruiting from the jobcentre. They tend to find it time-intensive, and the jobcentre tries to do things that are best done by the employer, like selecting candidates. They tend to find it quite difficult.
There has been a change in how jobs are advertised, which is probably to the disadvantage of some people who are outside the labour market. Word of mouth is still probably the largest way of recruiting but it has declined relative to things like online advertisements, which is probably a natural transition but disadvantages people who are most in need of work compared to word-of-mouth recruitment, which was always the way in the past that a lot of people entered the labour market from being outside of it.
To pick up on employing yourself as a way of getting a job, as Matt has talked about, there has been a big fall in the number of self-employed compared to what there used to be. That will, again, particularly disadvantage people who are far from the labour market. If you have a disability, you are most likely, if you are in work, to be self-employed. Then you are most likely to work for a small business, then a large business, then a medium-sized business. That is the order. The decline in self-employment is also relevant to this. Hopefully, we will see that start to turn a corner and more people will manage to enter self-employment and employ people.
Q349 David Linden: Is it a fair characterisation to say that the DWP and the jobcentre’s approach to this is almost like an analogue approach in a digital age?
David Hale: Potentially. I put it slightly differently. There are three ways to get a job: somebody employs you, you employ yourself, or you keep your job. The DWP is focused on working with candidates on their own job search, and on whether they apply for jobs; it is not so focused on working with employers at the point of recruitment to make sure that people get into work. That is the biggest problem from our perspective.
Q350 David Linden: Mr Briggs, do you recognise that characterisation?
Jonny Briggs: Partly. I will quickly answer the question as to how opportunities have changed. For us, it is across the board. It is the same type, but we have a greater growth in things like digital skills, which is what we expect. We see growth there and that is more the future of work.
To the point that was made there about Jobcentre Plus, we use Jobcentre Plus. We have mixed engagement depending on the location. We have some quite big hubs, particularly in Norwich, Bristol, Sheffield and Perth. In that respect, in some areas it is better than others.
Before coming here, I went through some of the experiences and did a search. If you were to do a job search in a Jobcentre Plus and then compare it to, for example, something like Indeed or doing it in LinkedIn, your analogue to digital comment would probably be fair because it is not a great experience.
Our ask of the Jobcentre Plus is not for it to educate about Aviva or any organisation. It is to help it with the selection process that it will go through because all big organisations will have some selection process, and some are just better than others. For us, it is not about selling Aviva. It is more about helping the individual to be in the best position possible to be successful with their application.
Q351 David Linden: In terms of how employers are prevented from filling these vacancies, it strikes me that certainly three of you suggest that perhaps the DWP could be more nimble and more flexible. That seems to be the thought there.
Interestingly, I was out visiting First Glasgow, a local bus company, last week. It does a huge amount of stuff, whether it is split shifts or a smaller number of hours. It seems it does everything it can to try to fill vacancies and it is still struggling. To what extent should the onus be on employers to make changes? Can you cite any good examples?
Jonny Briggs: That is exactly what we do. We try to create a huge amount of flexibility for individuals to be attractive. We are in a lot of places looking for the passive jobseeker, somebody who might be out of the market, who has some skills and who would be of interest for us to bring in. The active jobseeker will come and ask, and will be online. They might well be less interested in flexibility, but for us it is everything. Part-time is important, and full-time, but we have had recent examples of term-time contracts where we have brought people in. That has helped people to come in and do that.
One gets flexibility now for certain jobs for hybrid working. We find that that is one of the first questions that applicants will ask, but we are clear that we want them to have clarity. We want to see people have a balance between being at home and being in the office, so our view is very clear that you have to do that. The people, for example, in the bus company probably have to be there all the time so we need to be respectful about that. We have people who have to be in the office all the time, so we need to be respectful about that and not just have a two-tiered system.
We will have a conversation with anybody around what their requirements and their requests are. That is why we have recently gone back to having some term-time contracts. We have said that this will work for us and we will find a way of working it. The employer has a huge responsibility to create an environment because, if they want to get the best people in a competitive environment, they need to make sure that they can show flexibility.
Q352 David Linden: Before I move on to Mr Hale—and I know that other colleagues will ask questions about demographics—on that point about hybrid working and working in the office, how much of that is in play when it comes to getting younger workers into the labour force? Anecdotally, we have heard that younger workers have much more of a demand as to what they expect now in the labour force.
Jonny Briggs: Yes. I would back part of that. We are clear about the fact that actually, for those younger workers, we want people to be in the office because of the learning that you get from being next to people and so on. We are quite clear. We have said, “No, you will be in the office half your time and a minimum of 40%”. We think that clarity helps and we are definitely not losing people because of it. It is quite important to make sure that we have this balance.
Q353 David Linden: Okay. Mr Hale, going back to the original question about the flexibility that in this case small businesses have, do you have any examples that you can cite that would be helpful to the Committee?
David Hale: Yes. Small businesses do everything they can to fill the vacancies they need for the business to function, as you would expect. There is a real diversity in how small businesses operate. We have had a large number of small businesses in the UK for years working entirely remotely and working entirely from home. We have businesses that are entirely staffed by part-time workers. Then we have businesses that have a mix. At the moment, part of the churn and part of the reason for the vacancies is some people move to places where they want to work with colleagues who are always in the office and some people move to places where they want to work fully remotely. That accounts for some of the churn.
In terms of the earlier conversation about attracting people, the issue with some people who have been out for a long time is they are now in a place where they have low confidence and low self-esteem and are unlikely to necessarily apply for as many jobs as they might otherwise, or might have done when they were first out of work. They are likely to struggle to get support for things like health conditions. Getting that group in contact with the businesses that might employ them is why we have talked for a long time about having a health kick-start for people who have been out for a long time. That is about taking people who are low on confidence and who may be low on work skills, or may not have built them up recently, and putting them with employers who are keen to take them on and give them some of those work skills that were referred to earlier, when that is helpful for them to get into work.
Alex Till: I find the whole flexibility approach quite interesting as microbusinesses have to be flexible constantly, whether it is about income, outgoings and so on. We see that a number of our members have coworking spaces. We see that larger organisations are downsizing in some respects to reduce overheads and move into those coworking spaces where they have individual sole traders or other individuals who are freelancers. They will then utilise them for their skills. We see a lot of opportunity coming and quite a flexible approach, one driven by finance and overheads, the other driven by wanting to engage with younger people. One tech company shut its site and works out of coworking spaces because it gains more knowledge from those individuals who are freelancing in those spaces than it could do sitting isolated within its own business centre. We see quite a shift in that space.
We do not call it homeworking. It is closer to homeworking, which then means you can pick your children up at 3.30. There is a flexible approach to it. A lot of our coworking spaces are open 24/7 so that people can work in the parameters they need to fulfil not only their life requirements but also their working requirements. Yes, a massive amount of flexibility and change is happening constantly, but that is the nature of microbusinesses.
Matt Dooley: I have two quick points. We work on the restart scheme with a number of the prime organisations. While we do the self-employment, we see their delivery.
Bearing in mind that it is a challenging customer group, we see some great examples of getting people into work. The best one we see regularly is that joined-up partnership with the employer. The employer codesigns what a pre-employment programme would look like with the right training, the right qualifications and the right skills. Ultimately, it is a pre-vet and quite a lot drop out, but that has quite good success, from what I see, working with the prime organisation.
A second good example working with those organisations is a rise in part-time self-employment at the moment with the side-hustle thing. Full-time self-employment is down 750,000 from before the pandemic, but part-time self-employment is almost back to what it was before the pandemic. It was 230,000 down and it is now 13,000 down.
We work with our prime organisations with their vacancies for part-time work. If a customer has a small business, it will not be enough to sustain them long term just from that lifestyle business. They make only a few hundred pounds or £1,000 a month, but a part-time job can subsidise that and, between the two, it is enough for them to come off benefits. We work quite well with our primes when they have part-time vacancies as well. Employers are part of that process.
Q354 David Linden: Before I go on to my last question, I want to come back to Mr Hale, because he mentioned the support and guidance that is available to some of these people coming back into the employment market. You already mentioned confidence and self-esteem. Is it the FSB’s view that employers have sufficient access or support to help ensure that job offers are attractive and that you deal with some of these work-readiness issues that perhaps hinder people getting into the labour market?
David Hale: Employers do as much as they can to make jobs attractive. When you talk about work-readiness issues, the view from employers is that the best way that you can build work readiness and work skills is to get as close as possible to a real-life work experience for a block of time. Not all the vacancies are necessarily entry-level positions. Head chef is not an entry-level position. They have to work for a long time to get to that level. The same is true for some of the IT vacancies that we see.
The strong feeling from employers is that the people who struggle the most would benefit from a block of work experience where they can get used to a workplace and also get the advice of colleagues who are working. It can be simple things; if you are a young person in a job for the first time, you can sit next to somebody who might help you with your CV when you try to go for another job. Those things are important.
That is why I touched on the kickstart scheme. Those things would be much better delivered as something that sits with employers and places somebody in as close as possible to a work-life environment, rather than some of the CV writing classes—that is the analogue approach that you talked about earlier. That will not help someone so much as that real-life work experience.
Q355 David Linden: To finish off, we are looking at challenges in the labour market and economic inactivity. If we can keep it to one word from each of you, has Brexit and the Government’s migration policy hindered this whole process?
Jonny Briggs: For us, no.
David Hale: It is not a thing that people refer to. If you are a small business, what concerns you at the moment is that you put vacancies out and you do not get applications. That is the complaint.
Alex Till: Significantly, because of the reduction in the amount of European funds that come through to support these areas. It is having a massive impact.
Matt Dooley: Yes, the same. The cost of living, support for the unemployed, the whole thing. Yes, significantly, I agree with that.
Q356 Sir Desmond Swayne: To what extent is Jobcentre Plus perceived as being any good to employers for filling local job vacancies? One criticism that we have heard is that work coaches are focused on getting a claimant into a job, any job, rather than the right job. Is that a fair criticism, in your view? If so, what are the consequences for employers?
Alex Till: Yes, that is a true reflection. We work in a number of rural, coastal and urban communities. We have direct dialogue with the jobcentres and their managers. They are keen to make placements. Those placements are not always appropriate for the organisations that they go into, which then creates a negative impact on the organisation and going back to them to have an experience, which is where they were looking for a positive experience. It may have taken more time, more effort, more energy. That individual may not have been as responsive within the business as they had anticipated. A whole number of things around that will cause a grey cloud on occasions.
David Hale: I have just one point. The perception is less that it is trying to get somebody into any job. It is just that it is trying to get claimants to apply for as many jobs as possible. That is quite a different thing. There is an argument for trying to get somebody into work. A complaint we get from a lot of small employers is about the amount of applications they have from people who might be in a jobcentre 40 miles away and who they do not think have any genuine interest in the job or it might not be relevant at all to their skills. It might be a totally different job.
That comes from having to do a certain number of applications and being less focused on getting somebody into sustainable work and getting somebody into a job. Some people do well and there are positive experiences with Jobcentre Plus but, on the whole, the experience of small businesses is probably different from large businesses with Jobcentre Plus. They do not feel that when they come to the jobcentre with a role there is that much interest and focus on helping somebody to get into that role from the jobcentre.
Q357 Sir Desmond Swayne: What challenges do small and medium-sized enterprises face when it comes to hiring those claimants who will be further from being work-ready, and who will place greater demands on the workplace environment due to their disabilities or whatever? Could the Department for Work and Pensions do more, or could it do anything, to help small and medium enterprises overcome those challenges?
David Hale: If you talk about people who are furthest from the labour market, you can often be talking about a lifetime of disadvantage. If someone was disabled at school, they are less likely to have good qualifications. They are less likely to have gone on and got higher-level qualifications. They are more likely to have had a poor work history, have not worked for a long time or have had challenges in previous jobs. That is a huge amount of disadvantage going through the door on day one.
Again, that is why we talk about redressing that disadvantage at the point of recruitment through the short kickstart-style approach. As the Committee might know, because of the way the previous kickstart worked, it specifically excluded people on the Work and Health programme from participating. That was a real loss. People who have been out for a long period of time would benefit from redressing that at the point of recruitment.
It is not necessarily the business that offers that that would benefit. It is primarily the individual who would benefit, but it is where they can go on and work. It is not a lack of potential in people who are outside the labour market and people who are further from the labour market. It is the need to have that time to build those workplace connections and that confidence, especially if someone has been out of work for a long time. That is what the focus is.
Lots of businesses tell us that they employ people and then they have to spend a large amount of time convincing them that they can do the job because they are not confident, and because they do not have the skills. The real challenge for a lot of people is helping to build that confidence and build those skills.
Q358 Sir Desmond Swayne: Is there an ask there for the DWP to step up, or for the provision of occupational health and that sort of thing?
David Hale: During the pandemic, there was a lot of innovation. There were a lot of new good policies. Kickstart was a key one. The ask is not to bring back kickstart. The ask is to focus on that group that struggles the most, people who are disabled or who have health conditions, who have been out of work for more than a year. Employment of disabled people is lower in every age category than youth employment ever was during the pandemic.
The ask is to bring back that kickstart focus on that group, to get them that block of work experience, which employers will be keen to give, just for a limited period of time, and then for those people to go on and use the skills that they have. If there is an ask on the employment side, it is for a health kickstart scheme. If there is an ask on the self-employment side, it is simply to have a target for an extra 100,000 people into entrepreneurship who are disabled or have health conditions. Lots of things sit under that. It is about working with the banks to make sure that the policies they have in place to help personal banking customers are also available to business banking customers when they try to start a new business.
Yes, if I were to pick one thing on the employment side, it would be a health kickstart. If I were to pick one thing on the self-employment side, it would be to restore that 100,000 target. Matt might want to speak about new enterprise allowance and whether a version of that scheme could be brought back. That would also be useful, but those are the ones that I would focus on.
Matt Dooley: We may talk about this later, but from a jobcentre and provision point of view, the numbers of self-employed now have dropped significantly by 700,000, the lowest in 10 or 15 years. Before that, self-employment was growing rapidly. It is the first time in 14 years that there has not been a national publicly funded self-employment provision in the UK since new enterprise allowance finished in December 2021. That was a successful programme. Some 160,000 got into work. Yes, it had some barriers and it needed reform. It was light touch. It did not touch intensive support customers who needed a longer time to get started, but it still did a good job. In the last 32 years, there was only that two-year gap in 2009 to 2011 when there was not a national self-employment programme.
The demand is huge. Self-employment can be a great routeway for all the most complex barrier customers, particularly as regards health and single parents. We work with a lot of former offenders. The over-50s is a growing cohort in part-time self-employment. I have worked in the sector for 15 years and have helped over 75,000 people from long-term unemployed high-barrier backgrounds to start and grow businesses. It is definitely possible but everything needs to be right. The support needs to be there. The provision needs to be there.
At the moment, it is a bit of a perfect storm, with the Covid impact, the cost of living, IR35 and no NEA. Universal Credit is a huge challenge for the self-employed coming from a welfare background as well, and there are lots of challenges there.
I feel sorry for the jobcentre staff, because at the moment they are the only ones that can offer that support. With the greatest respect to them, they are not qualified. They have five or 10-minute appointments. Self-employment is complex, particularly judging if self-employment is right for someone. When they have not worked for a long time, that viability check and that diagnostic is important. They are being asked to make those decisions with a lack of training and support.
We work on the restart scheme at the moment, which is one DWP programme. In some areas, there is a self-employment offer, which is great. That has been successful, proving that the demand is there. However, my strong opinion is that there should be a national programme to seed those entrepreneurs.
Alex Till: Could I just pick up on a point that Matt made? We noticed that when NEA was stopped, there was a massive influx of people coming through from DWP to our members, who were then saying, “Can you support these clients within self-employment?” We were saying, “Yes, we can”, but that was because we had European social fund investment to deliver that self-employment programme. That is now coming to an end in June.
One concern we have is that a tsunami of people out there are currently not supported. Where do they go? The UK shared prosperity fund is a patchwork quilt of all sorts of tenders at the moment and is not necessarily being bottomed out at locality level. We see, as Matt says, a massive need for a programme of support. We are talking to Kevin Hollinrake and Liz Barclay, the Small Business Commissioner, and asking, “What is the strategy for enterprise from self-employment right the way through to growth ambition organisations as well, which are larger?” There is a fundamental need at the moment to address this.
Q359 Nigel Mills: Mr Briggs, talk us through the successes that Aviva has had in reaching the over-50s, why you did it and what worked.
Jonny Briggs: This goes back about five years when we first joined a campaign to recruit more over-50s. There was a target set to it that we would increase our population by over 1%. It suits us to recruit that. If you look at our business, the majority of our money is made within what we call life, which is pension savings and retirement. Individuals who want to speak to somebody might want to speak to someone who has more life experience in regard to that. For us, it is clear that we want to attract that.
A challenge that we have had is that quite a lot of individuals, particularly, as we know, during the pandemic, have made the choice to leave the labour market and we want individuals like that who are a bit more passive. We are quite keen to try to make sure that we can attract those individuals back to the workplace. It might be on different terms, as we talked about, with flexible working.
We are positioning ourselves, particularly for that group, about some different attraction points that you would have; for example, somebody joining as an early talent. If you look at someone in a contact centre and it is their first job, the first or second thing they look at is money. Probably the first thing they look at is money. We are clear, “This is the salary you will get and that is it”. Yes, you get a pension, but that is not as interesting. However, when you go to this group, which is quite a significant group that is attractive because you have a lot of great skills within it, you have to be a lot cleverer about how you go about trying to attract them. Some of them only want to work for organisations that have a strong commitment to sustainability. To the disability point that we have just talked about, individuals want to make sure that we do a lot around neurodiversity and physical conditions. We have a lot of pressure to make sure that within our organisation we create some role models around that.
Then, if somebody is in that position of not needing to but would go back to work, we have to be quite careful about what the conditions are around that. That is where the part-time and the flexible working comes into it. It has to work for both parties but we will try to make sure that we can, therefore, bring everybody into something that suits them and then suits us. We have to be a lot nimbler.
Nigel Mills: You do this because these people are good for your organisation. It is not a charity thing.
Jonny Briggs: No, these are brilliant. That is the point. I said at the beginning that we fill all our jobs and we do, but the goal is always to fill the jobs with the best people who are out there for our organisation. There is no question that they are highly skilled. We know that there is commentary around that particular group of over-50s who have made the choice to step out of the employment market and are now reconsidering whether they got the maths right in terms of how well they will do over the coming years. That is an attractive group for us to come into. That is why we have to be a bit nimbler around how we attract them.
Q360 Nigel Mills: Is there more that the Government can do or do employers just have to get this right for themselves and have the right roles structured in the right way? Could the Chancellor have tried to pull levers in his Budget that he did not pull that could make a difference? It is hard to see what they are.
Jonny Briggs: It has come up more recently that we offer 35 hours a year carer’s leave. That group is quite interesting because some of them will have stepped out of the market because they have caring responsibilities. Then it is, “I could do that”. The reality of our 35 hours is that it is not actually used that much but it is a great advert for people when they want to use it. I know that the Government have talked about that so you could go for that.
No, it is employers’ responsibility to make sure that they learn from each other, which we do. We join up as organisations to understand what others are offering. If you get it right, you will get the best candidates. Therefore, it will free competition.
Q361 Nigel Mills: Mr Hale, do small businesses need to try to get this right as well and perhaps look more at the over-50s and try to restructure their roles to be more attractive?
David Hale: Within the private sector, over-50s are more likely to work for small businesses than any others, on the whole. I would add the number of over-50s who certainly have in the past started businesses for themselves. We worry that people with that 50 years of experience are not necessarily starting businesses in the same numbers that they were before. That is either a business employing fewer people, full-time self-employment or part-time self-employment where they provide the skills and the expertise that they have to a business that needs those skills and expertise. Often, if it is a small business, it might need them just part-time and that might work well for both parties.
Again, on the over-50s, we worry about the self-employment aspect and then there are a few transitions. We worry about people who have worked in manual labour and want to transition into non-manual jobs when they get older. That is often a point when people go and start businesses or it has been in the past. That goes back to general conditions and the things that we talk a lot about starting businesses that create a lot of stress and make you think, “Maybe it would be better to retire”, things like late payments and all the different things that people have to experience. They all put people off.
It has not been the best three years to be self-employed with everything that has happened. It is not necessarily the Government’s fault. It has been a difficult few years. That self-employment point I would add to.
Q362 Nigel Mills: Anecdotally, from my constituency employers, I have seen a lot of even quite small businesses that have been manufacturing and have always done continental shifts, four on/four off, early/late, on a rota that people just do not want. They try to find ways of having more stable shift patterns, in part driven by Amazon offering choose your own hours and hoovering up every forklift truck driver within a 10-mile radius.
Are you seeing that in your members and trying to support them through that? Perhaps this is the time. Just because it is the way you have always done it, it might not be the way you should always do it going forward. It is about trying to find ways of structuring work that suits people rather than trying to find people who will fit into your work.
David Hale: Employers try to do everything they can. The unfortunate thing about the vacancies problem is that, as soon as you have vacancies in the business, it then becomes harder to offer flexibility to the staff that you have there. That is the real challenge at the moment because of the amount of churn that we have. As soon as someone leaves a business, it can put pressure on the business and that makes it harder to offer something that works for everyone. If you have six people, you can have fewer options in some regard. The vast majority of small businesses, especially when they are trying to fill vacancies, will try to make sure that it works for the best candidate for the role, as Jonny says.
Q363 Nigel Mills: That only works if you advertise your job. If I advertise a continental shift pattern at £25,000 for 40 hours a week, no one will apply who does not want a four-on/four-off shift pattern. You do not get them through the door to try to adapt it to them because they will go somewhere else. That is the distinction.
David Hale: It is always tempting to think of what the online job advert looks like. That still is not as usual a tool for recruiting as word of mouth. You tend to find with small businesses at the moment that they may be coming to online job adverts for the first time because they have been more used to being able to recruit through word of mouth. Businesses are trying to address the challenge of how they advertise online in a way that gets the right people through the door and gets those conversations. Businesses on the whole, once they talk to candidates, are keen to make sure it works for them. I would like to make sure that jobcentres and others make sure that candidates are aware of that message.
Q364 Selaine Saxby: A number of employment charters and employer schemes across the UK set a standard that employers need to meet to gain certain accreditations such as the Government’s Disability Confident employer scheme. Given their voluntary nature, to what extent do such charters improve the quality of jobs overall? Do they simply give an accreditation to those businesses that were already at that standard?
Jonny Briggs: There are unquestionably accreditations that we would look at and would satisfy without making any change. I acknowledge that some of them are already there. We are conscious of the fact that I could spend my life going to sign pledges because pledges come out for every different area of an organisation. We are conscious that for the bigger areas—disability, social and economic mobility, ethnicity—we will commit to things that we think will improve the organisation. However, some of them are valuable.
I point to the Business Disability Forum Audit, which will come in and look at your organisation and then tell you, from a disability point of view, how accessible you are, rate you bronze, silver or gold and then set some ambitions for you to go away and do. We are currently silver. We hope to achieve gold. It has meant that we have looked at our complete website and we have made amends to that to ensure it is accessible for everybody, whether it be neurological diversity or whether a physical disability or whatever. That is valuable because that has helped us in that regard.
It would be unfair to blanket. Some are more useful than others. That is probably fair. As an organisation, we know that—on that bit we were talking about on attracting candidates—some will look for things like that to make sure that they are there.
The other thing about the disability one is that it commits somebody who meets the minimum criteria to getting an interview. All that helps to educate and build. That is in our disability audit. That is valuable.
David Hale: I agree with loads of that. Loads of people sign up to Disability Confident for good reasons and try to do good things with it. There can be unintended consequences with accreditation schemes. Small businesses will never sign up to every single accreditation scheme going. It worries us that jobcentre might see a disabled candidate and then only try to show them opportunities with Disability Confident employers when there are lots more employers out there who will not be in the few thousand that have signed up to the scheme because they are aware of it.
For example, the DfE had to recently close its traineeship scheme because, it said, it was not getting numbers through of young people who wanted to do traineeships. If you click on the website for traineeships, you are greeted with, “What is your area? Tick for Disability Confident”. That is that landing page. I know this is a website. It is just an example. When I did it for Dudley, my home borough, and ticked the box for Disability Confident, it showed two jobs. When I ticked the box without it, there were over 100.
There is a real danger that when you have accreditation schemes and then you have a system like the jobcentre, they see Disability Confident employers as the only employers confident to employ people with disabilities. It is slightly unclear, but the evidence suggests, if anything, Disability Confident employers are no more likely than anybody else to employ people with disabilities. If we narrow down the opportunities that we show people too much just because an employer has not heard of or has not signed up to an accreditation scheme that they may think is just a piece of paper, it is a real problem.
Alex Till: The small businesses that we represent are heads down and trying to keep their business running. They do not necessarily focus on anything that is offside from where they are. They will see what will enable them to win maybe some local authority tenders and bits and pieces like that. If certain accreditations will enable them to score higher, they will look at the timescale and the effort that needs to be put into it, which enables them to have greater ambition.
Per se, we have been talking about all green credentials and things like that. One guy recently said to me, “Alex, I am looking at keeping my business alive. I am not looking at a ground-source heat pump”. Okay, that is the reality of it. He is trying to keep people in employment rather than lose the business.
Q365 Selaine Saxby: Just to share my own background, I ran a small business for 15 years. I have been self-employed for most of my working life. It is quite interesting to hear the evidence this morning. On reflection as well, in my own constituency I ran a jobs fair and the jobcentre came over. My jobcentre is award winning and I have thousands of job vacancies and nobody going to it. I recognise it is quite different to other parts of the country, but some great practices are going on. Perhaps there is an opportunity within this to share them. Every single business in the room, however small—and I had micro employers all the way through to big ones—was Disability Confident. The jobcentre went and spoke to the two that had not signed up while they were there. We had parents of disabled children come to the jobs fair to help them get a job because we are so short of staff. It is an interesting dynamic depending on what your jobcentre has to do. Because we have so many more vacancies than we have jobseekers, the relationship is completely topsy-turvy.
Sorry, that was an aside. Jonny, coming back to you on Aviva as a level 2 Disability Confident employer, how has that changed your workplace with that accreditation? Have you seen a difference in terms of disabled employees being able to apply for roles and progress through the business?
Jonny Briggs: Yes. We are collating the data so I cannot tell you. We are keen to understand how it affects the progression of individuals. That is important. We have nearly all our data for ethnicity but then, when you go into the other characteristics, it is between 40% and 50%. We do not have enough data yet. We have committed to setting targets once we have enough data so we will definitely get that.
It has unquestionably galvanised. We have six employer resource groups. Most big organisations will have something similar. One of them, Ability, looks at neurodiverse and physical conditions. It has grown as a community, particularly with those who are advocates for it rather than necessarily those who are within that community. We are now starting to get role models. We have a number of role models in our executive minus one who are standing up and talking about either their experience of neurodiverse or physical conditions or how they have seen it affecting other people’s living reality within the organisation. It is gaining a lot of traction.
Can I talk to you about any particular tangible change at the moment? No, but within the organisation having those role models will only help it, but it will take time. We will be able to track it once we have the right data.
Q366 Steve McCabe: I am interested in how the various work programmes help employers and whether things could work better. I was thinking particularly about kickstart, which we have looked quite a bit at on the Committee. I wondered how well you thought it considered the needs of employers, particularly small and medium-sized enterprises, and if there is anything that could be done in the future that would make schemes like that work better for employers.
David Hale: Following on from what I said before, particularly with people who have been out of the labour market for a long time with health conditions, we are keen to see a version of the kickstart scheme come back. There were real frustrations with how the kickstart scheme runs. They are similar frustrations to how the jobcentre runs in general. The difference with the kickstart scheme was you had lots of employers trying to access it at the same time because it was a good scheme and they felt that it could work for them and they could offer the placement. Particularly with the timing of it in the pandemic, there was a lot of interest.
Stories that we have heard, again, go to general frustrations with the jobcentre. If somebody wants to offer roles—in this case it was kickstart roles—and they want to do interviews in the business so that the candidates can come and see the business and see what it is like and can get a sense of whether they want to work there, different jobcentres are different but that particular jobcentre said, “No, you cannot do that. You have to interview them here”. That employer decided not to proceed with the scheme because it wanted to show people around the business and get a feel for who it was hiring. Things like that are challenges. We have seen people with long waits for several months.
Those are challenges with how the jobcentre works with small employers. The kickstart scheme was stood up quickly. A lot of those challenges got resolved the further we went through the scheme. It is a terrible shame that the scheme ended just when it was running well. In particular, the biggest problem in terms of getting candidates into it was, as well as the age limit, people on the Work and Health programme were not allowed to access kickstart schemes.
We heard about this through a jobcentre talking to one of our small businesses and saying, “We would love to offer you candidates who are particularly struggling with health conditions”, because of the business that that member ran, and he was told, “But we can’t because the rules of the scheme are that we cannot give you anybody who is on the Work and Health programme”. That was the main problem as we saw it with the scheme as it was running. It was not addressing the people who are increasingly part of the inactive labour market.
Q367 Steve McCabe: How much say do employers get or how much are you consulted on the design of a scheme or is a scheme like kickstart presented to you and you are told to get on and see if you can make use of it?
Alex Till: Honestly, a lot of programmes are just put out as products and we are not necessarily looking at the journey and the support for the businesses. One of the biggest issues that we found was that kickstart was out and we had apprenticeship programmes running as well and some of the employers were confused as to which route they needed to take. Different people were pushing different products to gain numbers rather than for the benefit of the individuals and the organisations.
We see that quite a lot. One of my biggest bugbears is that we put products in place, whether it be ERDF funding with 12 hours’ business support or whether we put a programme on for X number of weeks. This is not about the journey of the individual or about the journey of that business supporting that individual. It is very much offered to you as a product and then you see how that works and sometimes it does not always fit.
Q368 Steve McCabe: David, you referred a number of times to the jobcentre. Is this down to the behaviour of individual jobcentres in particular areas or is there quite a strong steer from the centre that shapes the relationships you end up having?
David Hale: It depends which aspect you mean.
Steve McCabe: I am thinking about when you are presented with a scheme like restart. I do not want to put words in your mouth but it sounds to me like you are told, “Get on with it and make the best of it”.
David Hale: Matt has talked about restart and it is good to hear it being used for self-employment, but we have always had a concern about restart and the work programme before it, that that was not providing what employers needed. There is an element where it is not just the employers who find it difficult to influence schemes; jobcentre staff in many cases are very frustrated—from the reports that we get—with how schemes are designed and run. They are typically quite top-down schemes. That is true of employment support in this country.
Q369 Steve McCabe: I have two other points. How much do you think that DWP programmes should continue to support participants once they have obtained employment? In your experience, is that something that would help people stay in work, and would help the relationship or the benefits that the employer gains, or do you think that it is support that should cease once the person is in employment?
Alex Till: It is an interesting concept, because different people are going to need different skills at different points as they progress. I think that there should be some support from DWP as they move forward but that should be transitioned to the employer. That individual is going to need role-modelling and they are going to need support. In some instances, it is going to be looking at how they manage their benefits and how they manage housing and all those elements together. That cannot suddenly cut off. This is one of the things that we find sometimes; It’s: “It’s great you’ve got a job, thank you very much, we’re all happy”. No, we are not all happy, because there are still some personal issues that need to be dealt with that are not necessarily the responsibility of that employer. Sometimes there is a very thin divide as to how that works. There should be some continuity with it, rather than just a final cliff edge.
Matt Dooley: I cannot speak to employment schemes, but on the last point, on self-employment schemes, that ongoing support is vital. That does need to be built into any future DWP or other Department provision, because when starting a business, a lot more support is required and is crucial. That early six months’ or 12 months’ support is vital to how the business is sustained and grown. It needs to be quite intensive.
On your previous question, again I cannot speak for employment programmes, but in the past when NEA, new enterprise allowance, was around, DWP did consult with the provider network. Obviously, the programme was shaped a certain way, top down, but certainly bits were consulted and listened to. The replacement service that they were working on was called the future self-employment programme. Again, they were consulting on that programme, which was shaping up to be reasonable. However, because of budget constraints and things like that, and a few other things about payment triggers and eligibility, that programme got parked. It is a good time to bring it back.
Q370 Steve McCabe: How do you see that working? Would that be some contractual arrangement at the point when you first get involved?
Matt Dooley: I can speak for most self-employment providers: we would do that for free. We have models we could share for the greater good, absolutely. You need to get that perfect blend of what is right for the customer, to help them grow and sustain viable businesses, what works for the funder, so that it is affordable, you get value for money, and you can see progression, and what is right for the delivery partner. It has to be well funded enough that you can get those two other outcomes that your customer and funder need. There is a combination of programmes from present and past that could be combined to make a very good and intensive service.
There are some lessons from the Scottish Government, in terms of the voluntary nature of their programme, which is attracting economically inactive customers and the unemployed in general to their programme. There should be wide eligibility, so that it does not matter which DWP programme you are on. If you are on the work and health programme or IPES or restart, you can still access self-employment support from the jobcentre because it is a self-employment scheme. Intensive support could be tiered as well. You have a lower unit rate for ones that need more light-touch support, a bit like NEA was, and then a more intensive strand for those who have higher barriers who need more intensive support. There are definitely things that could be looked at.
The GMCA in Manchester just finished a great pilot programme through “test and learn” called EnterprisingYou. It is a £10 million funded programme, with a £4,000 unit fee. It led to great revenue generation for those businesses and increased profit. It paid for itself. It is an intensive 18-month support programme. That specification is out there. There is a lot out there that could help, and certainly other providers and I would be glad to help.
Q371 Steve McCabe: Finally, there is a bit of a debate at the moment about whether employment support schemes are better driven from the centre, conceived and presented to you, or whether they should be more locally designed with more local participation. If the design and delivery was devolved to local areas, how would it affect employers?
Alex Till: That is an interesting question in the current scenario. One of the things that we are pushing for quite heavily is a national programme of support that is non-politically biased. That can then come down to local nuances; they can start to understand what is required at the local level. With some county deals and devolution agendas that are going on at the minute, that is very messy. 2025 seems to be the space that we are looking at the moment in terms of coming back into county councils and things like that.
We have to understand what that provision would look like at the local level, how that was going to be supported, and how that is positioned with national programmes, so that there is funding at both levels, and so that nationally we understand what is happening, and we have a strategy in place, but locally, we say, “This is what we are setting out to deliver for the nuances in those local areas.” There is a twin-track approach to it.
Matt Dooley: From a slightly different angle, looking at self-employment provision, it sits better nationally. It needs that, because the volume of demand is so high. Local authorities in particular have struggled, particularly with that entry-level welfare provision that is needed, like an NEA replacement for welfare customers, or a community renewal fund. We looked at all the offers that came out and we identified about 14 out of 225 that had just a little bit of an enterprise/welfare element. Most were focused on SME growth and growth in hire. That gives an indication of where that funding is potentially going, and what little funding there is. I certainly think that it needs to sit centrally, and it would also be easier to get performance and consistency as well.
David Hale: EnterprisingYou—we were involved in it originally—is a great example of a scheme that is delivering for self-employed people in Manchester. It is also a great example of a pilot scheme, and it would be of real benefit to scale it up and put it around the country. The challenge is twofold. How do you get innovative new approaches or test approaches locally, like EnterprisingYou in Manchester, and once those schemes work, how do you then spread them across the country? A single, uniform approach delivered by a smallish number of national contractors is probably not the way to get an innovative landscape of support for getting people into work.
Q372 Chair: Thank you very much. Mr Dooley, on that last point, you were arguing for national provision, but then you gave us the very good example of the Manchester initiative, which is locally commissioned. Clearly, there is potential for good provision locally commissioned.
Matt Dooley: There is, but they are very few and far between. That is one great example and it is aimed at existing businesses rather than pre-start businesses. The bigger demand is and historically has been for pre-start. Programmes like NEA, with 300,000 people, are hugely oversubscribed, let alone the other DWP programmes. We get calls from the jobcentres all the time wanting to refer to our provision, but their customers are not eligible. Whenever we do engage with local authorities, with great respect I am not sure that they all understand that the long-term unemployed could be a good customer group to help as a stepping-stone into self-employment and on to higher growth, or understand the economic benefit that that can then bring.
A programme like EnterprisingYou, with a few tweaks to turn it into a pre-start programme, is a great example of what could be then commissioned on a larger scale, perhaps with a local flavour, as has happened with other provision, which has been split up in CPAs for local differences. However, that community renewal fund and shared prosperity that we are looking at now shows the direction of travel that those funders are looking at. They are not putting out schemes like that; they are focusing on the higher-growth businesses.
Q373 Chair: A couple of you have made the point to us that there has been quite a big reduction in the number of self-employed people since the pandemic began. You said the number of full-time self-employed people had fallen by 750,000. Why has that happened?
Matt Dooley: My view is that it was a perfect storm. Most of the staff at Momentic were working on NEA at the time, and the pandemic is one of the big influencers to that. A lot of businesses had to stop; a lot of businesses had to stall; a lot of businesses did not start in the first place because of the pandemic.
Coupled with the other challenges for welfare business start-up, IR35 is a challenge. The cost of living at the moment is probably putting some people off as well. Particularly for us is that lack of provision and lack of support. Couple all that with no new enterprise allowance scheme. There is not that provision there to help people get up and running, which is having an impact. Some have gone into economically inactive as well. Some of that 700,000 drop, from just over 5 million pre-pandemic to 4.3 million now, would have gone into economically inactive. Universal Credit and how that is set up is very challenging for the self-employed.
Q374 Chair: Is that because of the minimum income floor?
Matt Dooley: It is a whole number of things. Probably the biggest driver is the minimum income floor. Once we explain how that works to customers, it does put some people off, some absolutely rightly—don’t get me wrong. It is being reformed, I understand. There were difficulties in the past with self-employment but the process that the jobcentres have to go through now is challenging. There is something called the gateway interview that the jobcentre work coach delivers, with evidence. It has 43 questions. They make a decision on that person’s viability, and on if they get a 12-month start-up period or not. That causes a lot of challenges with incorrect decisions and lack of evidence decisions, but that minimum income floor at 12 months, we think, is too high. It is the equivalent, for a full-time self-employed person, of £19,000 net profit a year. Fifty per cent of the majority of businesses in the UK do not make a profit in their first year anyway, and this policy is expecting the longest-term unemployed to buck that trend and make £19,000 profit in the first year after expenses, or the support with benefit stops.
The minimum income floor is an assumed level of earnings, not an actual level of earnings. You get to 12 months and you would have a bit of support with Universal Credit to grow your business over that 12 months. If you are not there in 12 months, the UC assumes that you are and it uses £19,000 as your calculation point. It says, “You’re earning £19,000” and with most customers their support with benefit stops, which then means some customers cannot continue with their business because that bridge has been taken away from them.
Chair: Some of my colleagues want to talk about some of these areas in a bit more detail.
Q375 Neil Coyle: As a clarification of something Alex said, you referenced a preference for national, non-politically biased programmes. Can you expand on that a bit? I was not sure what you meant.
Alex Till: What we find at both national level and local level is that if there is a change of administration within some of the local authorities, they will change some of the programmes that are being delivered. What we are finding at the moment is that where we have had any aid previously, we have other agencies that we represent that are not-for-profits delivering enterprise support to microbusinesses. They are then saying that we now have to try to fight for tenders in other areas, looking at the LEP agenda and growth hub agenda, and we have externals coming out of the local environment. We have nationals coming in to try to deliver stuff in the local area, which would then just be for a period of 18 months. They take the funds and they then withdraw.
There is a real mix of things that are happening at the moment. We are saying that if you look at some of the other countries overseas, they will have a programme of business support, whether it is from prestart, start-up, microbusiness, that everyone can become involved with, even private sector, and looking at it from their supply chain opportunities as well, saying that these are the areas that we are going to need to be supported on. That then starts to enable us to look at the whole skills enterprise and employability agenda, which becomes far more embedded rather than, as Matt has referred to, changes in programmes, changes in different need and not taking into consideration what is good for economic growth for the UK plc. That is where I was coming from.
Q376 Neil Coyle: Specific examples of where a council has changed or a mayoral change has led to the cancellation of an existing programme?
Alex Till: Yes, we are seeing it at the moment. Where you have devolution and county deals coming into place, we have some looking at how they are going to be positioning their territory. I am based down in New Anglia, for example. We have Norfolk and Suffolk there. There are changes going on within Norfolk County Council and Suffolk County Council. They are then looking at the provision of high-growth, ambitious businesses and removing pre-start as an agenda.
My discussions with the CEO at the LEP is that we are not focusing on pre-start microbusinesses, we just want to see growth businesses, aka we change the provision at a local level that then means that there is confusion in the marketplace. Where NEA has been removed and European funds are being removed and funds directly coming from BEIS or other central government pots are being removed, that has a direct impact on those smaller microbusinesses that we are working with.
Q377 Shaun Bailey: I want to look a bit more about how schemes like restart, for example, help with routes into particularly self-employment. What is interesting in listening to the panel today and also more broadly on this is that we talk of that interchangeability between employment and self-employment, but that self-employment space in some of these schemes, there does seem to be opportunities there but maybe not realised at the moment. I am keen to understand how, if you take a scheme like restart, which is very tailored support—certainly the sell of it was that it was focused on tailored, specific support—is there scope to build a scheme like that or utilise an existing scheme that focuses on self-employment?
Matt Dooley: We deliver restart in 50% of the country and six of the CPAs on a self-employment basis. It is going well for us in that sense. Demand is really high, but it is a bit of a patchwork of coverage. The DWP is now reporting the self-employment numbers, which I think is the first time inside an employment programme, which is great to see. The numbers and the volume vary massively from CPA to CPA. That could be down to the support that is available.
In the specification self-employment is talked about and referenced but ultimately it is down to the prime provider to decide whether they do include a self-employment offer or not or what that looks like. It is not a standalone self-employment programme like NEA was, it is mainly an employment scheme. Therefore, it is down to the bidders to decide whether they do include self-employment.
Q378 Shaun Bailey: I am sorry to cut across you. Do you think that the providers understand that need for a self-employment offering?
Matt Dooley: Some, but some others, no. That is clear from the performance numbers. Others have brought us in throughout the duration of the last two years at different stages, when they have seen the demand and the numbers from other regions. The real positive about restart compared to something like NEA is that it is better funded, so we can offer a more intensive model and we can help some of those who are harder to reach. We have an intensive delivery model that does engagement, tests ideas, viability checks and diagnostics—it is like a pre-pre-start—before they even start a course to look to get towards self-employment with all the traditional business planning, marketing and social media.
Our numbers are good and our success rates are good. The demand is very high. We get a lot of inquiries from Jobcentre Plus about whether it can send its customers that are not eligible for restart on to restart in order to get to Momentic. Likewise, we get inquiries from other CPAs. The eligibility is nine months to 24 months. Those nought-to-nine-months employed is where the big challenge is, and then there is the longer term as well. It is a mixed story, and jobcentres are doing what they can, but the self-employment element is performing higher than expected as well.
Alex Till: From my perspective, when we talk about employment programmes I put “self” in brackets before it. I am quite active around that with some of the discussion that we have. I say, “Don’t forget the self-employment agenda”, because it is fundamentally important and those people can work it around their needs depending upon what those needs are within what they are doing. Yes, it is fundamental.
Shaun Bailey: David, do you have any perspectives to add to that?
David Hale: One in seven of the workforce is self-employed. It should be at least a seventh of the focus on employment support and it is not. Self-employment is particularly relevant for people who are far from the labour market.
I would add that it does have a relationship with employment because we know from work that we have done that people who are disabled employers themselves are 30% more likely to at least know that they have disabled staff. Therefore, the more people you get into self-employment who may or may not go on to be employers when they do employ people, you should see a positive effect on the employment side as well as the self-employed side. It is fundamental.
Q379 Shaun Bailey: On that accessibility point, because there is an important question around that, particularly those with health barriers or things like that, as a barrier to self-employment how are you finding that these schemes are helping in that particular way? We have just had the point raised there by David that those with disabilities or additional needs, if they become employers themselves, it creates a cycle that is more inclusive and brings more people, or should bring more people, into the labour market. How do you find it in terms of breaking down those barriers a little bit within the self-employment space?
Matt Dooley: Predominantly for us, that is our sole customer base. Once a customer gets to us, they have been at the jobcentre, so the jobcentre would have tried to support them into self-employment. They have been nought to nine months already. They have been on to restart and worked a bit with prime. We deal with predominantly high barriers. On some of our programmes 30% are refugees. On other programmes there are high health barriers and disabilities, over-50s, and single parents. That is our core market.
What I always say to our providers is that the self-employed have a wide mindset. We have had every background that you can possibly imagine. Some of those customers are better for self-employment, particularly with regard to health. In most of our programmes in the last 15 years, that has been the highest performing self-employment cohort. Yes, it is very challenging, and there is more work needed to get them into self-employment, given the pace that you have to go at and the delivery style and so on, but once they are in, the sustainability is good, because they can work around the health condition, work at their own pace and work from home—all the things that were mentioned earlier on.
Self-employment can be a great routeway for high-barrier customers and in some cases one of the only routeways if traditional employment is challenging to get, like ex-offenders, for example. It is good for those cohorts. That accessibility point is more of a challenge because of the current provision of market, so it is even more difficult for those customers to get access to that specialist support that they need. As I said, self-employment support is not widely available at the moment. It is only in a few areas of the restart scheme. I am not sure that it is widely available in other DWP schemes.
Alex Till: One of the interesting things is that when we talk with BEIS and some of the other organisations around their enterprise strategy, it is all about high-tech, high-growth, ambitious businesses. This is not what we are talking about. This is about getting people into self-employment who save the UK plc public purse string and enable them to benefit for themselves. There are two elements there that we need to consider. Self-employment is not all about high-tech companies.
David Hale: In terms of self-employment in general, and apologies if this slightly goes back to Stephen’s point earlier, Universal Credit itself does not really work for the self-employed. The self-employed do not get paid every month and they do not get paid the same every month. It does seem possible to us to put it on a quarterly basis. That would be incredibly helpful on the minimum income floor, as well as what Matt said about it taking more than a year to start a business. However, even when you are up and running you are not going to get paid the same every month. That is not a reality of self-employment.
Q380 Debbie Abrahams: You have probably covered my question in relation to self-employment so I am going to ask a slightly different one. Given what you have said about the NEA and about the withdrawal of European funding in the next couple of months, that it is a route for people who are economically inactive, although you have seen a decline in that over the last couple of years related to the pandemic, what are the two things that you would like to see in terms of a change in offer from the Government around encouraging and supporting people moving into self-employment?
Matt Dooley: I would like to see two national schemes. There are a couple of ways that they could do that. If you look at where Alex and I are, we are at the lower end of the scale in terms of welfare start-ups. The NEA service, with 32 years, there has always been a consistent central government-funded programme for that. New deal for self-employment was a good example. I definitely think that there is a demand and need for that programme, because it can feed into perhaps a second national programme more for that SME growth, and for scaling up microbusinesses that want to employ and move on. There is space for both of them.
An alternative would be to have a consistent self-employment offer available within all DWP programmes, where eligibility is wide, and where customers can access a national programme, regardless of what other scheme they are on or whether they are unemployed or not, or economically inactive or not. They can have that within their current programme. If they are on a specialist health programme, for example, ensure that there is still a self-employment offer within there as well.
Alex Till: I would agree with Matt on those two aspects and the transition between the two is important so that people can feel that there is progression. I also think that that can then dovetail in with some of the local programmes that are being delivered, whether that be through local authorities and so on, because there is once again a patchwork quilt of different grant options. In West Suffolk at the moment you can have £1,500 towards starting your business. In East Suffolk there is zero, but there might be some stuff around digital. It is about making sure that people understand what that offer is and how they can use that best to their advantage, with government intervention to start with.
David Hale: A new enterprise allowance does not have to be exactly the same and probably should not be exactly the same, but a new one would be welcome, and then a national version of the EnterprisingYou pilot in Manchester. The purpose of pilots is if they work to roll them out and that is what I think should happen. Secondly, a minimum income floor. It might be difficult to get the IT systems. I think that you cannot have a system that does not work for how one in seven of the workforce are paid, so moving that to quarterly would be a huge difference. We did see it suspended in the pandemic, so there are options.
Debbie Abrahams: Mr Briggs, do you want to add anything?
Jonny Briggs: I have nothing to add. It is not our area. It would be opinion on opinion.
Q381 Debbie Abrahams: I would like to ask a couple of other things as well. I met with one of my business owners, a small hospitality business. He has 70 largely part-time employees. He wanted to describe the issues that he is facing. His top three were business rates, CBILS repayments, particularly the commercial interest rates being charged, and then he was concerned—he seems a good employer. I was at his business and I could see how he was interacting with his employees, but he was concerned about their health and wellbeing. He said, “I’ve had five who aren’t turning up today because they’re not well and I have seen this dipping in and dipping out of employment or not being able to do shifts because of health from the pandemic”. I have worked a lot on issues for small businesses. The top two were always access to finance and late payments. Could you put it into context, from your members, what you think the top two issues still are?
David Hale: General economic conditions and the uncertainty plus the staff issue have been the top two issues for a while. A lot of things sit under that. That sounds very typical to be concerned about the number of staff who are unwell. Business rates, as you know, are again a very typical thing for a business to be worried about, and late payments. If you look at late payment and then you talk to people like Business Debtline, or Debtline for the self-employed, that in itself is a real stressor and puts people off. Yes, business rates, late payment, the difficulty getting staff and the general economic conditions are definitely the two big concerns. Obviously, it depends on the business.
Alex Till: Where we are at the moment it is primarily staffing and cash flow. We see that there are a number of small businesses that are seeing the younger members of their workforce finding it difficult to be resilient in the current climate so they would be taking time out. They will ask if they can come in late. As an employer of a small organisation you try to accommodate that but it then starts putting pressure on other areas of the organisation.
The cash flow issue is an interesting one. There are some that we have seen live recently whereby larger organisations have suddenly said, “We are only going to pay you within 90 days. I know we have been doing it in 30 days but we too have cash flow issues”. It is all pushing back. As a result of that, one business that I was speaking with had to lay off three members of staff. They have to react accordingly. That is where the biggest concern is.
There is, however, excitement that the world is changing, that there is progression within some businesses. Working with some manufacturing organisations, they have taken on an increased number of clients, so there is some excitement out there but they are still worrying about the cash flow and staffing piece and how they fulfil the requirements.
Matt Dooley: For our customer base, access to training and support would be No. 1, and then probably Universal Credit and finance linked together, because staff and finances are intrinsically linked to Universal Credit, for our customer base, when they are starting. We do support around health and resilience, and quite often we have to address that before we can get into the bones of the business support, barriers and issues in their personal life and financial situation. Then we can move on to the research for the business.
Alex Till: To add to Matt’s point, I do not think that start-up loans is the answer for everybody in the environment either. That is often put out as an option, “You’ve got start-up loans”. People do not necessarily have the personal credit availability to access the start-up loan because it is against personal debt.
Jonny Briggs: I would definitely add that it should not be the right just for people who work for large employers to have things like wellbeing and midlife MOTs and all the things that come in regard to that. If there is some proactivity around that, that would help individuals to reduce their absences. We are very aware of stresses in the working environment and their return after the pandemic. Things like health, welfare and wellbeing are really important to us, which we pass to clients as well. Just because you work for a big company you should not just be entitled to that. Every person, whether self-employed or not, should be able to find resource that can help them in those regards. We know that it unquestionably makes a more productive workforce and a more present workforce.
Q382 Debbie Abrahams: I have one small question. I understand very much the issues that micro and small businesses face when thinking about the flexibility that we agree that we need to adopt. Are there any examples of good practice that you could provide to the Committee about how this is being tackled? For example, I am thinking about federated occupational health and access to occupational health to help employees who may have long Covid issues. There are 4 million we know of working age in the country who are experiencing long Covid and that is obviously affecting what they can do at work and so on. It is similar around caring responsibilities as well. If you are able to provide the Committee with any examples of good practice, that would be incredibly useful.
Matt Dooley: My examples are in the restart scheme. We have the support of the wider suite of services that the restart prime provider can offer, health and wellbeing being one of them, and some of those offers are great. We can cross-refer internally, almost. We are like a specialist intervention, end-to-end delivery partner, but we can also tap into the support of other services as well. Yes, they have all the interview techniques and CV works and all that great stuff, but they also have health and wellbeing, which is good extra support.
Alex Till: What is interesting is that there is not a vast amount of health and wellbeing for the owner managers of those small businesses. We are going through a number of discussions at the moment about what programme could be developed, because the person at the top is finding it very difficult as to who they converse with and all the pressures around cash flows, CBILS paybacks and everything else. What we are seeing is that there is a number of individuals who are looking for that support but not knowing where to go. We are looking at what programmes can support them. It is not always about going and talking to Mind, the national charity, which says, “Are you awake at 4.30 am? Are you worried about cash flow? Are you worried about staffing? If so, you have a mental health issue”. That is the lifestyle of a small business owner. There is a number of ways in which that needs to be addressed now.
Jonny Briggs: Carers UK is a good example of somebody that we as an organisation remember and then we ask individuals if they wish to go and use it. There are loads of resources online that people have been directed towards and can go and use, whether they are an employee of a big company or whether they are self-employed. There is an element of proactivity if somebody wants some help.
Q383 Debbie Abrahams: It was more about the right to request flexible working and how that is being dealt and the issues. It is not just the resources. It is if you have somebody you are now having to care for as a consequence or not of the pandemic and how that is being accommodated and the particular issues that small businesses face around that statutory right to request flexible leave.
Chair: If there are some resources, you could drop us a line. That could be useful for us to see.
David Hale: I was going to say—obviously I would say this—in terms of federated support we do run FSB Care, which provides a nursing staff helpline for owner/managers. We run something called FSB Pirkx, which provides wellbeing benefits to staff. We are doing this ourselves for businesses and self-employed who want to access that support.
Q384 Siobhan Baillie: You have addressed quite a lot of my questions on the self-employment side, but I did notice that the main blame for the downturn in self-employment starts—on our figures it is about 800,000 from 2019 to 2022—is on the state, DWP and local authorities because of funding and schemes changing. That is my understanding of the evidence that we have had so far.
I want to put on record that the conversations that I have had locally about this have been that the pandemic had a massive impact on businesses closing and all that that we already know, but also because it has led people to want security. PAYE is often considered much more secure in terms of jobs. That is something that has been raised and I am interested in your comments on that.
Secondly is the flexibility. Self-employment is hard graft but the benefits that came with that is the flexible nature of it and that you are in control of your own destiny. However, so many jobs are offering that post-pandemic—the world has changed a little bit—that people are changing their behaviour slightly and I am interested in that.
Finally, I did not know whether there was a natural—when the cycle is that there are lots of jobs available, albeit I realise that we are in an unprecedented period of low unemployment, is it often the case that there is a downturn in self-employment where people can go and get a job pretty easily without doing the legwork?
Chair: I will ask each of you to comment, but I would be interested to know from Aviva’s point of view, in struggling to fill the vacancies that you talked about at the beginning, whether self-employed people is a group who you would target to recruit from. Let’s ask each of you to comment on those points.
Matt Dooley: As I said earlier on, definitely the pandemic is the biggest contributor to that drop, but that is not helped by those other factors in terms of some provision, Universal Credit being there for a while. Definitely, the pandemic and the current economic climate is a big contributor to that fact. The start of 2022 has started to see the numbers of self-employment go back up. It is nowhere near pre-pandemic levels yet, but it had something like nine out of 11 consecutive months of growth or something like that. Therefore, the self-employed are coming back even in these difficult economic times.
Traditionally, when you look back at the last 20 or 25 years, it has been consistent growth in self-employment, spiking perhaps even more at difficult economic times—after the last financial crisis, for example. When there are challenges in the labour market, almost either way, the self-employed are resilient and they will turn to it. That rise in part-time self-employment is interesting as well, where people are turning to a second job or to supplement a part-time job because maybe they have come out of the labour market. On restart, we are seeing people who have had careers in retail or hospitality that do not exist anymore. Perhaps they were made redundant and now they are turning to a hobby or completely retraining to do something different on a self-employment basis. We are seeing all kinds of that effect. There is definitely a need and a demand.
I take the point around it being at the moment, but it does feel like there is a big drop for UK plc’s GDP. There are and various different estimates of what that drop is costing—it is £45 billion, or something like that. There is a big gap there, and we are seeing the demand on a big scale. It is probably the ones who need the help the most who are missing out. Perhaps some have gone into economically inactive as well.
Alex Till: It is interesting, picking up on your points, Matt. We are seeing an increase in numbers of people coming forward for self-employment and looking at new, early-stage businesses as well. I call it the concertina of business. Sometimes it stretches out and there are a lot of people doing a lot of things and then it would just come back in again. We are seeing that the smaller businesses did pull their belt in. They were looking at where they were managing themselves during the pandemic. They are now looking at how they go forward, not only with their existing ventures but new ventures in terms of what is identified.
We have seen tech companies moving into training and development to redevelop other cluster models so that they can engage with those. What they are doing, interestingly, is looking at your sole traders and your freelancers to bring into wider business remits, not necessarily taking them on board themselves but having them there as a resource. That flicks back into what you are saying, that there is a number of people who are looking at self-employment as that option. Yes, there are a lot of jobs available to them but they feel that they do not fit into those job remits.
Siobhan Baillie: The demand is still there despite all these behaviour changes.
Alex Till: The demand is still there, without a doubt. We also saw that where there were larger employers who either put people on to furlough or curtailed their job with them, they are going into that freelance space. That is a lot around tech at the moment. There are a lot of programmers, developers, people looking at security and things like that, because they have realised that they have the skills to be able to do it with this big employer no longer there and they can still offer services out to a whole range of different people.
David Hale: The blame is definitely on the economic conditions and the economic situation of the last three years, but what is unnerving is that the fall in self-employment is not explained by people moving to jobs. It is also partly explained by people moving outside of the labour market, whether that is over-50 or health conditions. That is unnerving because if we look at what happened after the financial crash, nine in 10 people who got back into work got back into work for a small business, but around a third of that was by becoming self-employed and setting one up themselves. If we are not seeing that and we are seeing increases in the level of inactivity among over-50s and among other hard-to-reach groups, that suggests that people are not going into self-employment either because they either can see or have experienced how much of a stress everything that has happened in the last few years has been or because of those perennial issues that we talked about around low payment and around all the things that make it quite uncomfortable at times to be self-employed. That is what is unnerving because self-employment is a great option that a lot of people can get massive potential out of. That is important.
The concern with the state is that the state is focused on employment, meaning employees, and one in seven people in employment work for themselves. That is where the concern from the state comes in. It is looking at the labour market but taking quite an old-fashioned view of the labour market where not that many people work for themselves. That is the concern about the state. It is not about the blame for the entire last three years.
Jonny Briggs: Very quickly, we would definitely take people who are self-employed. One of the big challenges in financial services is that we do not have enough diversity of background of where individuals come from. A lot of the recent stats have shown that of new grads, for example, only 10% would even consider financial services, let alone go into it. We are keen to open the background and we take from any background and we focus on capability, not on technical skills. We would definitely look at, as most big employers would, somebody who is self-employed, as long as they had the right capability.
Q385 Siobhan Baillie: I have two quick final questions. I have heard the disappointment of the closure of the new enterprise allowance. The figures that we have was that over 275,000 benefit claimants went into that scheme. Of that, 157,000 businesses were set up. There was quite a high proportion who were disabled and over 50. What was the success? How was success measured? Was it the length of time the business lasted? Was it the ability to turn it into an income generator and get them off benefits? How did that work?
Matt Dooley: There were two schemes. There is a new business support side, and then a service to existing businesses. On the new business side, the KPIs for providers like ourselves were numbers of people into self-employment and numbers still trading at the six-month point.
Q386 Siobhan Baillie: Only six months. Of the 157,000, do you know how many were trading at six months?
Matt Dooley: The sustainment rate nationally was around 70%; it was pretty high. One of the challenges with NEA is that because of how it was set up, it could not monitor income, or income progression. It did track customers to 52 weeks also, but the payment trigger was at 26 weeks. The pilot that we mentioned earlier on, Enterprise New, is probably six or seven times better funded than NEA. Therefore, you could get into the detail and support a customer for longer—for 18 months, right through that first year and a bit of business. You could also track the income of the business to see what they were earning to better measure the return on investment for the Government. The existing business strand of NEA tried to do that but on a very low unit fee and it did not work. I think there were 12,000 profiles expected and only 20 or something reached their target income figure.
Q387 Siobhan Baillie: We have no information about whether the 70% that were still surviving at six months were still surviving at 12 months and we have no indication of income?
Matt Dooley: Not of their income level either, no.
Siobhan Baillie: I am not surprised that it was pulled.
Matt Dooley: It definitely needed reform in that sense. The eligibility was tight as well. Again, because of how it was set up, you could not support customers who needed intensive support. It was four one-on-one interventions and two workshops. Compared to what we deliver now on restart, which is 15 interventions plus six months of in-work support, it is a very different intensity level programme.
Q388 Siobhan Baillie: David, I wrote down what you said about work experience being the best way to get work ready. I completely agree with that. Has anybody done any work to repurpose a restart-style scheme and what that would look like, whether it was shorter than the six months and what that would cost? Do you know if that is floating around anywhere? Could you send it?
David Hale: A kickstart scheme?
Siobhan Baillie: Yes. You said that there should be a version of that, not necessarily so intensive.
David Hale: Yes, we have done lots of work. You might want to run it in a different way because you might want to run it with fewer hours. You might want to say that this group in general might want to work fewer hours. You might only want to work two days a week for six months. That obviously brings the cost down.
Chair: David, have you written anything about this that you can send us?
David Hale: On a health kickstart, yes.
Chair: That would be of interest. Our time is up but Neil wanted to come in with a really quick question.
Q389 Neil Coyle: Yes, it is just a quick one. It is on the self-employment drop again. Matt, you mentioned IR35s and the Committee has previously looked at what we term bogus self-employment—Uber and Hermes-type companies—requiring people to appear self-employed who only have one employer and one role. Are you aware of any work or have your organisations done any work on the sectors or areas of work that have seen such a significant drop in self-employment since Covid? If it is a no, that is fine, we can move on and we can look at that.
Matt Dooley: We have on our customer base. Construction, retail and hospitality are the three that have dropped the most. Again, that is just in our customer base. Creative and online has gone up. That goes back to your point that people in construction might have gone to work for an employer because of more security. That would have had an impact there. Retail and hospitality traditionally used to employ a lot of self-employed anyway, and those sectors were hit by the pandemic. Some of those other sectors are growing, like online, which we mentioned earlier.
Alex Till: It is also good to look at it geographically: urban communities, rural communities and coastal. Coastal has taken a massive hit in some of those areas, going back to the same point that you made around retail and hospitality areas. We cannot look at it in isolation and ask, “What sectors?” It is also where those sectors are positioned and what the economic impact is in those areas.
Chair: Thank you all for a very useful session. If there are any further points that occur to you afterwards that you would like to drop us a line about, we would be interested to hear those. We are grateful to you all for the information that you have given us. Thank you very much indeed.