 Welcome to the NU. My name is Mark Matthews. I'm the kind of in the departure lounge as executive director of the HBC Coons policy forum which is a think tank within the Australian National Institute for Public Policy. This is probably the last time I introduce a speaker which I'll miss. But before I send anything else I'd just like to express my respect to the normal people in this handbook meeting today. And it gives me really great pleasure to have Dan Finover from the UK. Not least we just discovered we went to warring schools in North London where we used to find what we didn't used to beat each other up. His school used to be like a school run. Tough North London. I'm really looking forward to this talk. I think it's going to be absolutely fascinating. Dan's here. He's been in Melbourne last week and with us this week. An incredibly hectic schedule. So we're very grateful for that. So Dan is Professor of Social Inclusion at the University of Portsmouth and he was previously co-director of the Independent Unemployment Unit. And he's really got this amazing track record in looking at employment for outsourcing of public employment services, various aspects of welfare. So I think it's going to be a real timely and interesting talk. The specific thing Dan's going to talk about is really lessons for Australian policy makers from his experience of welfare to work in like tough economic times. Looking at wider developments in OECD countries and in particular looking at some developments in the UK. Some sort of radical reform process is going on there which I think will be quite interesting. So really without saying any more I'll just hand over to Dan. I think we just had a quick discussion. Ideally if you've got questions of clarification over data or points we'd like to do that as you go through. But because we've got recording the roving mics it might be better to send all those things to the end and wait for the mic before we do that. So we'll just do about 40 minutes down and then we'll take questions. So thank you. Right, thanks for that. And I'd like to acknowledge the fact that I'm continuing a kind of long tradition of connections between Portsmouth and Australia because we were where the first fleet went from. Look at what we created. This is a kind of formal kind of academic structure. I'm much more used to talking in policy, career oriented circles and practitioners and public servants. So I thought I've nodded in the right direction of the academic world than the first couple of pages I've actually done formally tonight and then I'm going to relax a bit and get into the less formal part of what I want to talk about. And I thought it was quite interesting to try and frame what I want to say a bit more kind of tightly than I maybe would do in a more practitioner oriented kind of environment. So the third thing I want to acknowledge is the fact that we're not at the UK last week. The latest unemployment figures are just being announced. And our upward trend is continuing. We're now over 8% unemployment and the number of claimant unemployed, which is the people claiming the equipment, the new start allowance, our job seekers allowance, is now about 1.6 million people, which is starting to wedge back to the bad old days of the 80s for us. As in previous recessions, what's happening is that the people are getting in the next Thursday young people, but what we're also starting to see is an increase in durations of unemployment and that's really serious because in tough economic times when you get increases in durations, that's when you're ready to get that kind of awful economic, economic language of history says you get kind of almost permanent disconnection from the labour market and it's something that's very, very difficult to online. British economic projections, like most of the OECD published another set today, are all kind of trending downwards and even the kind of pessimistic projections that we were getting towards the end of last year have been revised significantly downwards over the kind of period. And even if we avoid a recession, which we're a bit of luck in the UK, we might, we're not going to be recovering all the projections are that we won't even get back to the employment levels pre-recession before 2015, 2016. So this is, we're going to be doing it tough in the UK over that period. Fortunate however, we're not Europe and some Europe is really grim at the moment. You know, you're talking about places like Greece and Spain with unemployment rates are hitting 20% now, youth unemployment hitting 40%. And the latest data I was looking at today showed that in Europe over 40% of the unemployed have now been out of work for over a year. So this has started to shift into structural unemployment rather than the frictional kind of unemployment we've been used to in Europe and in many other OECD countries over the last decade. Unfortunately Australia seems to be avoiding that cycle for now. Unfortunately these things were in a global world, these things will have effects there. Okay, I'm quite pessimistic about the future because if the prognosis, if the solution to our problems is austerity measures, which seems to be the way things are going, then we suck that much demand out of economies that the future for unemployment is not good and the future for employment isn't good. Now crucially macroeconomic policies are going to make or break the levels of employment in both the UK and other OECD countries and particularly in the Europe. But what we do know from the earlier periods is that bad policy decisions now in responding to the increase in unemployment can take a long, long time to unwind. And what we know is that the design and delivery of benefits systems can play a critical role in shaping how long unemployment lasts and how long increased welfare dependency actually lasts. And what we know from the last two recessions is that there's a risk that policies implemented to tackle the immediate consequences of unemployment may have actually exacerbated long term kind of difficult and the kind of trends that we're going to see. Crucially, the number of it is that the policy decisions in the 1980s and early 1990s exacerbated the persistence of long term unemployment and continued to increase economic inactivity, especially amongst the large numbers of working-age people who now receive disability benefits amongst old workers who took early retirement and to a lesser extent amongst our parents. And those are exactly the kinds of things that many people here in various departments and that many people like yourselves in the UK and in other European countries have been trying to unwind over the last ten years. So what I want to do is to critically review the kind of progress that was made in the UK in particular over the last decade and to consider the kind of reforms that New Labour introduced, some of the effects they had and crucially also how well we managed the 2009-2009 recession. It doesn't mean we're going to manage the future kind of scenarios as well, but I think we went into this recession much better prepared than we were in the early 1990s and early 1980s. I then want to talk about the fundamental changes, some of its continuity, some of its radical change that are coming through from the new coalition government in the United Kingdom. And in a nutshell there are two kind of big changes taking place. From 2013 we're going to be moving towards a single working-age benefit. This is a major exercise that will affect 9 million people, 9 million people and families in the United Kingdom and will be implemented between 2013 and 2017 with consequential effects after that. So we're talking about the shape of our benefit system over the next decade at least, if not longer than that. The second kind of change is a pretty dramatic change in the way that we contract with employment service providers to actually engage with people on benefits and to reduce welfare dependency. From this year we've contracted out with 18 prime providers, a new contracting mechanism which basically is saying to those prime providers, you will only get paid if you get people in work and we will pay you for future benefit savings. It's a radical different and a very different way to the Australian system in contracting out those kinds of services and whilst it's, I have no kind of brief in terms of saying it's a better way or anything like that, it is a benchmark against which you can now compare how you're going to be looking at the future of the JSA system here as you go forward over the next period. Okay, so obviously we've got to keep in mind the big differences between the countries but I think the useful thing about looking at a country like the UK is there were some commonalities with both benchmark against each other and there are things to be learned. Not that you slightly follow them but they actually act as a kind of template which you can then look at what you're doing and how you're actually kind of progressing. And what I try and do at the end is just to suggest some kind of key points to me that I think the British developments and the way we've been approaching welfare reform throw up. Yeah, so I was just thinking about the, I don't know if it comes to you then for some reason, but you know bringing sharp relief, some of the kind of policy choices and decisions that maybe you need to be thinking about in Australia that you are thinking about frankly. Okay, the first thing is that we use language slightly differently. In Australia the language is one of participation, right? We've actually increased the number of people in employment but also with a slight tinge of social inclusion that employment is one of the key vehicles for getting people there. In Europe and more widely in the areas to do with the language we use is the language activation policies, but again they're very much about dealing with the same kinds of issues. We've got ageing populations, we've got long term technological and employment shifts taking place. We need to increase the participation rates, the economic participation rates of working class, working age people to meet the kind of challenges thrown up by those long term changes. What recession does is quite often accelerate the pace of some of that changes but it doesn't change the fundamentals. So participation or activation in the European and OECD sense is how do we actually get our working age populations more engaged with work into employment and becoming tax payers rather than benefit receivers. The initial focus was on the distinction between passive benefits and active labour market programmes. If you go back to the early 1980s that was the contrast that was being made and the implicit assumption was we need to shift from investing so much in employment benefits early in time and things like that into labour market programmes like training programmes, etc. I think there are now a significant group of OECD countries where what we're seeing is more comprehensive and systemic reforms. That second wave is not just about increased benefit conditionality or about the use of particular labour market programmes, it's about the design, sequencing and effectiveness of those interventions on the one hand in activated service delivery systems on the other. So it's a double activation that's taken place. There's an activation of benefits and the treatments that people receive when they're on benefits but an activation of the service delivery mechanisms, the centre links, the job services of Australia providers or the job centre plus in the UK or the German BA, much more fundamental reforms. So it's this combination of public sector reform, the welfare state and interacting with the labour market and it's this systemic kind of approach that I think is really important. And what's happened is that initially these programmes and these initiatives were targeted at the young and long term unemployed but over the last four to five years in particular we've seen them extended in the Anglo countries particularly to sole parents but also increasingly to people on disability benefits. What we found three or four years ago and the OECD has done a lot of really important work around this is that quite typically in northern Western European countries we had more people of working age on disability benefits than we did on regular job seeking benefits and that was a really difficult problem to start to my mind. Can I talk about the ways in which the UK has tried to do that. Activation reforms, there's no consensus about them. These are disputed, even if you think we should have gone down the shrew if some people, some of my academic colleagues have talked about correctly reserved omni of labour and forcing big wins about paid work etc. But even if you accept the kind of welfare states that need to be modernised, people need to be outspoken, we need to be reengaging people with work, there are big disputes about how you actually go about doing that. The two big ones are from my point of view on the one hand should these programmes be mandatory or should they be voluntary? And the second big dispute is should they be about employment first, work first, should we simply try to attach people into the labour market or should we build up their human capital before we try to attach them to the labour market. And there are various permutations about where individual systems end up on those kind of gradations. Scandinavian countries tend to be much more about human capital development. Yango countries have tended sort of up for the employment first type of approach or the work first type of approach. So I wanted to note New Labour tried to be more. The first thing is it was the first self-conscious welfare to work government. Within weeks of taking office in 1997 it passed an emergency budget which was called the welfare to work budget. And the whole kind of construction of New Labour was around one of its key purposes was to reform the welfare state. Not to get rid of it but to actually re-legitimise it and make it fit for purpose for where we were in the late 1990s. It was the only thing that had new resources attached to it. New Labour to get elected committed itself to an austerity programme inherited from the previous government. But it decided to tax a bunch of very unpopular people called the privatised utilities who were making super profits at the time. And with that 5 billion pound we actually invested a lot of money into welfare to work progress. Particularly for the young employee but more widely after that. And the bank has come in mind as a useful target for a second welfare reform tax in the future. But we'll leave that to another moment. Labour gave into all kinds of political strife. But one of the key things I think about why new Labour was able to drive its reform agenda in a way that the previous Conservative administration haven't been able to experience a lot of opposition was it wasn't just about reducing the number of people on welfare. It was also very much from 1999 about the parallel commitment to end child poverty. And this wasn't a Bob Hawke commitment to end child poverty. We never kind of got realised this was a serious commitment. And that would be another kind of lecture in terms of how they actually went about achieving that. But it was a combination both of tax and benefit reform on the one hand, but also about increasing the employment rate of workers' households in particular. The employment rate of sole parents families. Alongside that core theme of welfare reform, there are a number of parallel kind of developments. One of which was a concern about social exclusion and a concern about those concentrated areas of deprivation and social exclusion, which weren't just, you can't just have blanket policies need targeted, neighbourhood type policies. And this came from the Work and Social Exclusion Unit. There was also a set of reformed public sector institutions about how we modernise them, how we actually get them fit for purpose to deliver the type of active welfare state that we wanted. And also there was a commitment to evidence-based policy making. That is you shouldn't just do things because you've instinctively built there the right things to do. You should somehow test what they are and then do what it is you decided to do in the first place anyway. But now you've got some legitimacy for what you're actually doing. I prefer to use the phrase evidence-import social policy rather than evidence-based. A number of things. Again, I don't want to go too much into them. But what comes out of this period and a number of innovations, right? These aren't, you know, these aren't, you know, start in eureka moments, but they're really important things in terms of how you reorganise and redefine delivery systems. We created these new deal employment programmes. We looked at working nation as one of the examples about things we should learn from. So one of the first things we did, yes, we had a job guarantee for long-term unemployed people, but we said the emphasis should be on getting people into one of the subsidised jobs rather than the programmes. And that was, for those of you with long enough kind of memories, one of the problems with working nation was that there was as much emphasis on getting people into programmes as there wasn't actually getting them into jobs. So we created what we call the gateway period before we then used more intensive employment and training programmes for people who couldn't be placed into one of the subsidised jobs. The key thing we decided, defined was to change the role of the frontline workers, working with long-term unemployed people in particular, and we started to build what we described as personal biases. In other systems they would be called case managers as they were here during that period. Now I think they're called recruitment consultants, and maybe they don't do quite the same job. Alongside the new deal programmes, there's a whole set of things around making work paid. This is a really important part of the UK system, not immediately transferable into an Australian system and your award system and the complexities of how your family tax benefit system works. But the key message was we needed a floor out there, which is the national minimum wage, we didn't have one previous to that, but we used an extensive tax credit system to make work paid. So the national minimum wage meant there was an equity, everybody got a fair go in terms of the minimum wage they were entitled to, but on top of that we had tax credits which were sensitive to family circumstances. So you could target resources, particularly at those children who would otherwise be in families in poverty. By the time new labour leaves office, over 16% of working families in the United Kingdom are having their income supplemented through the tax credit system in one way or the other. The other crucial thing about this, and this is one of the things that will change in the British system, but the crucial thing about the policy decision that was made is that when you move into the tax credit system at the minimum 16 hours work a week, you become a taxpayer, not a welfare dependent, a welfare client. So you can have whatever savings you want, you're not needs tested in the same kind of way, and it was constructed as this was a real mark, it changed in your kind of status. But the minimum wage of course, that whole bunch of people who were working under 16 hours a week, you stayed in the means tested welfare system. Make work possible, you can make work pay, you can have new deal employment programmes, but if you're not creating a working environment where people with childcare responsibilities, other care responsibilities, or with limited health opportunities can actually work, then it's not going to work. So there's a whole set of other policies around family-friendly working environments, about anti-discrimination legislation which are geared to actually make work possible as well as make work pay. And then in terms of the service delivery side, we made a very different decision to the Australian system. And Australia again is an outlier in this partly because of the way you contracted out employment services, which is in most other systems what you see taking place is an integration of benefit administration and employment systems, rather than a complete distinction as happens in the Australian system. The form of that in the United Kingdom was the creation of an agency called Job Center Plus, which in many respects if you go into a Job Center Plus office, it looks fairly similar to a centre in office. The difference is that it's work is about getting people into work, not about paying benefits. As much as possible that's dealt with through call centres and behind the scenes and the wiring of the system, not in terms of the frontline relationship between claimants and the welfare system. And the other thing which I just want to put out there is a really important innovation, very simple kind of idea that incredibly difficult to get up and practice was the idea of compulsory work focused interviews. So we work in a full-slown pair of people on disability benefits into jobs. They were jobs because they were different to that. But from 1999 when the legislation went through Parliament, it became possible to require people to attend an interview and if they didn't attend to talk about their important circumstances and barriers they might have an action plan about having what they think about their future that they would be subject to a fairly mild benefit kind of penalty. And that changed things because what it meant was that the relationship between your whole working-age claimant population was a more active one with the system. So it's a really useful kind of instrument. It's not quite the same as saying people got to search for work and be available for war and immediately take any job that's available but it's an intermediate kind of set. And finally the thing we did was contestability. We looked at the Australian job network and we created a thing called employment zones which we used to experiment with using private sector contractors, third sector, for-profit contractors to deliver employment services payment throughout homes rather than processes. Okay, so progress. Unemployment not just due to clearly to welfare reforms but unemployment falls continuously from 1993 with long-term unemployment following and following more quickly than it did in the 1980s recession partly to do with the welfare reforms that we experienced. Difficulty was of course because we had a work-first strategy we saw the emergence of what in the jargon became repeaters and recyclers. People who were going into jobs very quickly but didn't stick in those jobs very long. This is particularly the case with many sole parents and we were very good at getting into jobs very quickly but they fell out of jobs at twice the rate of normal the normal JSA population and that was clearly things to do with nature of childcare etc etc etc. The increase in the sole parent rate was up by 7% but fully short of the rate we needed for the 70% of it. Just out of interest the increase in the sole parent employment rate sorry we say loan parents, we say sole parents sorry I've wobbled between the two kind of thing. But in the sole parent employment rate the econometric analysis that's been done of it attributes nearly half of the increase in the employment rate to policy change. Over half to labour market increase in labour market demand etc etc but half of it attributed to policy change. Child poverty was down but not of the rate needed to reach the target The influence of disability benefit we focus very much on the gate keeping the entry into the disability system which is where Australian policy is focused on at the moment from what I see of it. But the case load continues to rise and that's largely to do with the fact that people are staying on that benefit for much longer. In 2003 the average duration of our disability benefits was 9 years and I think you've got similar kind of statistics that say you're more likely to die than to come up with disability benefit and get a job and things like that. And that just gives you, this is the day talking to 2005 the bottom line is the number of loan parents and you can see our tax credits, the work post interviews the focus on loan parents starts to have an effect the unemployment these are the unemployed people claiming job seekers allowance the ones on benefit a bit more complicated than that in reality but those on the benefit you can see following the cyclical pattern of the cycles but that's our big problem and I think frankly although the pattern might be slightly different if somebody from the Australian department stands up here giving a kind of timelines of benefit receipt over that period you wouldn't look that dissimilar your DSP cycle would be going up whilst your unemployment cycle was coming down. In the meantime we're committed to lots of evidence based policy we spend ahead of, oh sorry we spent it's not possessive right, they spent right but I find myself being very English or British rather in this kind of context so the department spent a hell of a lot of money on evaluations not just within DWP but more widely than this and tested lots of things you know we actually had loads of pilots, pathfinders because we genuinely didn't know whether a lot of the things would work okay work focus interview with what kind of service offering together let's try one in one kind of area compare it with another and do a proper evaluation about what seems to work more effectively and what we start to build up is a repository of evidence which alongside the evidence coming from places like the United States and from the northern and western European countries where evaluations are starting to get better in quality and scale over this period is what we find is that mandatory job search plays with itself services and sanctions as many people kind of call it large scale training and temporary employment programmes are pretty ineffective they're usually ineffective because you introduce them during a recession when it's really tough to get people into jobs they have another purpose other than simply getting people into jobs but what we learn also is that focus targeted training and employment programmes were capable of generating real net impacts over and above what will be happening in the labour market and paying to themselves over the longer term the other thing is that whilst job search support works it needs to be integrated with more expensive things so you couldn't take from the evidence the conclusion that all we need to do is provide job search and sanctions and that would fit the bill all you needed to do was again to create a system where the more intensive and more expensive forms of support came out at a later stage you focused initially on job search and job placement the other thing we found was the lack of flexibility in programme design and service delivery was limited in impacts and also the department of silos would prevent you from joining up at a local level this probably sounds very familiar to many of you in terms of issues delivering things here we also found that voluntary programmes following parents and those in disability benefits were working and there was a close benefit increasing the number of people going into jobs but at a very small scale and the problem was they weren't reaching the people who were inactive and the difficulty about the people and the people in disability benefits is that they were inactive that was a starting point for them and this is just lifted from we have a thing called labour full survey it basically is kind of an investigation of the equivalence of the ASAL survey that has done in Australia but what you see in these groups is whatever you think about it if people were inactive they are not going to get in touch with labour markets so there is plenty of research showing that 90% of people going into disability benefits or health problems want to see themselves as a return to work want to go back into work in the future but within six months within a year they are into long term cycles of being on the kind of benefit so our starting point was again work focus interviews with employment and why are we so surprised that very few of them actually get a job so, second wave of reform and the first thing is this is the Halcyon days they seem a long time ago now when we envisaged where we could move towards full employment by which we were talking about an 80% employment rate Scandinavian countries, the Netherlands, countries like the UK were starting to talk in those terms about how the 73% employment rate from about 2000 and we've been boggling along just inching up gradually in relationship to that and add down to about 70% we also had a whole process of experimentation with new approaches talking to the people on disability benefits and the sole parents and then really started to bite the bullets okay public opinion had been softened up sorry we were working with grain and public opinion on benefit systems and a new kind of social contract a new social consensus was emerging that maybe it wasn't such a broad idea that sole parents should not have any work requirements until the youngest child was 16 at which point we bumped them on to a job seeking allowance on which they stayed for another 15 years because they were never actually connected with work in the first place maybe that wasn't such a good idea maybe they weren't acting as good role models but we started to move to think differently about the disability benefits and again I think this is a math difference to the Australian situation in Australia as I can see it what's happening is that you're changing the rules of access to the SP keeping the fundamentals of the benefit system as they are it's just that the people in you're shifting the balance back that way particularly in terms of the flow coming into the system in the UK there's been a rethinking that the benefit is about in itself and so our incapacity benefit is now being replaced by a thing we call the employment support allowance so again the name says a lot you know we shifted from unemployment benefit to job seekers allowance you get it because you're a job seeker not because you're unemployed in the same way as the original impetus behind new style I think you actually had a job search allowance at one point before new style started a one year unemployed equally with disability benefits not disability benefit and we then in 2010 so initially because these things are these are big system kind of changes it takes a long time to kind of re-gear systems and re-engineer systems to do this we initially focused on the flow into the benefit similar to what you're doing with the SP but then the kind of consensus built up that we had to be more radical than this and now from 2011 it was committed to carried through by the existing coalition government it was now in the process of reassessing one and a half million people the people you've grandfathered in your system are now going to be reassessed under our system because clearly if you really want to make a difference for those totals it's the pot stock as well as the flow that you've got to pay attention to and we learnt that lesson from the Netherlands which is they went through this process three or four years before we did we got to the situation where we were just dying on the labour to grapple with the idea that what we need is a single working age benefit where we get rid of some of the kind of first incentives they're not the first incentives but it's really hard to online these things my perception of the Australian system is you've got the pension system and you've got the allowance system and for all kinds of reasons you have pensions because that recognises the nature of the difficulties that people have and you're trying to help people manage those kind of difficulties is we create kind of weird kind of incentives in the system whereby to get the pension you've got to show how bad you are rather than how fit you are so we have those similar kinds of problems that we've been trying to unravel and so basically what the legislation in 2010 said what it is is that working age people should basically have the same kind of entitlements if they've got differences we should deal with them in a different way we should deal with them in a different fashion what we want is that anybody in the benefit system should be either preparing for or looking for work so the differences would be around conditionality not around the benefit category you actually fell into and the crude kind of expression was you would have a work-ready group the new start allows job seekers allowance kind of group who are immediately available had to show their activity seeking work a progression to work group which are people who could be required to engage in work-related activities attend work-focused interviews and then a third group the non-conditionality group who you would decide particularly for health reasons if they've got terminal conditions would stay outside of the system so it's a radical kind of change in how you think about the kind of benefit system then there was a lot of kind of group six minutes delivery forms are interesting I think there's a repository of interesting kind of developments in the UK you know again I've noticed in the kind of building of Australia's workplace futures I think that's what it's called by balls isn't it that story? but it's a bit of a mouthful but there's obviously this kind of real emphasis on localism the handy kind of leverage the siloed kind of government kind of investments going into an area making them more flexible and joining them on that kind of local kind of basis we've had similar problems in the UK and we were making some progress to actually dealing with them with things called the city strategies important and skill boards so the repository of things there which are point people so there's again not things you copy but just examples of how you might stop to think about service delivery in different kinds of ways or about how you might develop some of the power the response to the recession what we get hit by the recession I think it's very good and these are the kind of key things first of all reduced disconnection from work so that we have rapid redundancy services try and support the apprenticeship system the kind of things that are obvious but they cost a fair bit of money crucially though this time sorry yeah reduced transitions into long term unemployment basically a job guarantee particularly for young people we don't make jobs 30 hours a week that kind of thing but the crucial thing this time and it was different to the previous recessions is we carried on the welfare reform while we're going on we weren't going to shift people into active benefits which was the mistake we made in the 80s and 90s or into early retirement job centre class was incredibly resilient as an organisation and what we found slightly so as a surprise but if you look at the evidence in terms of people not falling back onto the benefit system so for example the classic two parent household when one wage was lost they were able to through the tax credit system to actually sustain themselves in the workforce in that kind of way and again the number crunch that's gone on is basically saying that the forming unemployment the GDP fell by about 6% the continuing unemployment period unemployment only increased by about 1.6% those numbers are far, far better than in previous recessions the analysis being done on it says about a third of the unexpected basically a third of the amelioration of the effect the increased unemployment you would have expected about a third of what didn't happen was to do with activation reforms and labour market programmes to do with labour employers being slightly different the tax credit system and people being actually kept in work and what we've now got is this is the changed composition of workers this is a really helpful kind of table people be fascinating to seeing one for the Australian kinds of equivalents slight kind of concern here that the blue line these are lone parents again people with disability benefits the blue line are the people who are unemployed but don't get benefits so one of the concerns is do all our activation reforms have the effect of shifting people out of the benefits system but they're still actually looking for work and that may be a desirable policy effect anyway if you want to target your resources more effectively one of the things that's going on there is a lot of full time students who are looking for work you get picked up by the kind of things there's a lot of women who are still means testing they're not eligible for kind of benefit in their own kind of right but it's a noticeable kind of training the other thing that's starting to happen is because of the activation reforms we're now starting to see the durations of job seekers allowance increase isn't just simply to do with what's happening in the labour market it's also because we're shifting more difficult to place people back into that active benefit and whilst it's working to some of them that I pay employment rate achievement I think something to do with the fact that increase the introduced conditionality there but you can see we're dealing with a different combination of events the three factors that are going to be shaping the policy environment in the UK over the next decade are on the one hand the austerity package and it's a serious big it's both in terms of the benefit system itself by 2014-15 some of our £18 billion a year we've been taking out of benefit entitlements and alongside that we've then got large scale cuts taking place in the public sector so public servants like yourselves are having to get smarter and more efficient as well as deal with the consequence that colleagues will be signing on unfortunately but again it's that kind of classic thing the crisis is provoking really interesting sort of delivery changes you know the shift over to internet based kind of access for the benefit system is being accelerated because of these kinds of changes which are in a really important way Universal credit means that basically from 2013 all the flow into the new benefit system will be on this standardised benefit which has some kind of differences within it but largely is a single working age benefit for all people of working age and gradually over a four year period everybody will migrate into the system at the end of 2017 it will be about a million families within the universal credit system and then finally we've got our work programme and other kind of employment measures to deal with that well some issues one minute so this is the bits that are kind of provocative I can't believe that they're not quite a few of these already on the agenda here but they're useful just to kind of put them out first of all redefining disability benefits I think it was really important that we decided to go down the ESA road rather than just simply redefine the way our ID system actually worked we've done that reform previously because somehow we have to unlock the idea that being found fit for work or fit capable of some work is a failure which is the way our system works at the moment and sorry from what I see of it a similar kind of lock in effect in the Australian system and part of that is getting across because this is no easy thing because it's easy to say it but to do it it's different but when we're doing work capacity assessments that they're not saying anything about the fact that you're genuinely or you have a genuine health condition you can have a genuine health condition you still want people able to work and capable of some work those are two very simple propositions and I think they're a good starting point thinking about policy and where you want policies to go but they're really difficult to do it's about ability a single benefit there are pros and cons about that but at the very least what you need to do is to coordinate activation and participation requirements across your different benefits what we don't want is activation targeted here and long term welfare dependency popping up there or activation targeted here and permanent disconnection emerging here you can go down the American route and it helps people go away or you can go down a welfare system that actually says we want to help you get a job again activation this is just I think this is about design it's about targeting the right appropriate mix of measures to target people and what I'd say when you look at the British system is things like having a tool like the work coach's interview as part of the mix of activation measures will be really important as people make the journey into the job condition back into the kind of workplace you don't want to kind of just say you're either permanently sick completely disabled or you're ready to start work tomorrow kind of thing you need some intermediate kind of measures once you stop down that route that's going to change the composition of your new start population inevitably there are going to be people with more difficulties in that group which means that has challenges for your JSA providers and also a new start kind of recipients which obviously you're starting to get to with the work experience that happens at the end of the year Could the design job service Australia be better focused on both on one end longer term outcomes it's 13 weeks, 26 weeks at the moment that held a lot of service fees in your system with some of the consequences that come with that and also as the banished work was sent to me was probably made a different choice at an earlier stage but high volume transactional kind of systems the public sector does that really well why would you load up the people who you want to be flexible working intensively with clients why you load them then would load to process requirements as you stop them doing the things they say they're really good at and some of them are really good at Right and finally whilst the work first systems that Australia, the United Kingdom and the US in particular have actually pioneered are really good we've got to wait for this idea that there's only so many jobs out there and it's really impossible to get people a job because we look at labour market flows and there are always vacancies in the economy even at the moment we're getting some of that 500,000 job vacancies every quarter notified to job centre plus even though we've got much higher unemployment than we previously had we've got a lot of forces changing over the future so we need to get smarter about the way we use great employment skills difficult as it is in the United Kingdom I think it's even more difficult in Australia because you've got a bloody state in there somewhere Okay, so that's it That's great Still quite a bit of time for questions could you wait for the mic though because we're recording this to put it on YouTube so first question Thank you I think that you were going to be that the British government was going to be re-testing people on incapacity benefit starting from 2011 the people that our government has chosen to grandfather Is there any early data yet about how many people have been judged to come off incapacity benefits and onto another pain at all or something altogether different As you can imagine there's incredible controversy around the nature of the test the actual details of it the impact on people with mental health problems people with fluctuating conditions there's a whole real difficult stress thing of the stuff going on here At the moment there's a bunch of people who sign off when they're actually called in for the interview we've had some implementation problems again as you can imagine but the projections are that something like 10% will go into the what you call the support group which is the unconditional part for benefit about a quarter will go into the paid activity group these are the ones that go through the full assessment process and about 60% are being found for the work or capable of some work and they go on to the new start allowance I mean that's sort of a fantastically high rate because here in Australia we do reviews of people on disability pension but the end result is that very very small percentage of people end up coming off deals because you've got the same test this test is very different to the previous way that you accessed the benefit system Can you explain what the test is for you? There's a big debate going on about whether our test is to function it's carried out by health professionals and our health professionals it's all delivered by a monopoly provide which I think has been a mistake which is the battles origin which has screwed up the implementation of it and essentially it's kind of there's a functional kind of set descriptors sorry there's two classes first of all are you capable of work which is then used to discriminate between the support group and the sorry I'm going to get myself a kind of job and I'm a bit reluctant to do this because if you want to speak to me off it's like an easy essential thing and it's much easier to do in a debt fund right now but the essential principle is that are you not fit for work then if you're found not to be fit for work are you in the activity group or are you in the support group and it's all subject to an appeal process which at the moment is getting gummed up because of the advocacy next question just a quick moment this isn't my area down but obviously 2011 was the first year that the baby boom was by some definition so there's a demographic gain going on when we look particularly at that last part he's and forgive my fun naive but the incapacity benefit does that stop when you reach statutory pension as it continues so I just kind of want it to stop so I just kind of wonder what a demographic impact will that be because it's not really back to then one of the things that's going on in here is in terms of increasing the participation age we've got I'm not sure where Australia is on the cycle but where in the process the women are going up to 65 and then beyond 65 67 working age by 2020 so that's one of the other things that's driving and at the moment what we've got is an increased participation age around older age groups which we didn't have in the earlier recessions when the reverse was taking place and what we're finding as well how bad our pension system is is that the post was on age the employment rates have been increasing in most groups the questions actually you were talking about shifting payments for employment service providers on to outcomes based contracts paid for out of the savings has that actually happened yet and how does that work the contracts that the work programme provides are signed up to some of whom are Australian providers so they've probably logged in for that quite actively down here at the moment but essentially from the government's point of view the future funding system in an actual big contract contracts they last for a lot longer so larger, longer and more secure kind of contracts but much higher risk for providers so that's why the primary providers are primarily for profit organisations who can take on big risk so some familiar names from other service delivery parts of the Australian kind of families that they speak but who don't do welfare to work people like CERCOG for us and the public sector are starting to become involved in the welfare to work programmes the funding mechanism basically means that contracts last for five years people are with the provider for a two year time period including people on disability benefits the provider basically gets for the first couple of years a £400 attachment fee whenever anybody starts has to get the system up and running then after that most of the money depends on there's no job entry payment there's a job outcome payment and then after that depending on which clients you're working with you get four weekly sustainment payments for keeping them in jobs for up to two years so the smart bit of the design and this has been argued through with the Treasury is that that funding model is attached then to minimum levels of performance in each contract area which says that you've got to deliver more than what would have happened so there's a net benefit to government and basically you're only being paid on the basis of the benefits savings and we know we're actually improving so in the first two years this programme in the UK has actually been funded by the providers the public sector is probably going to have to pay five years down the road for this but all the start-up risk apart from that £200 attachment fee is at the moment being born by the provider big politics in the UK is on the minister's door and say by the way we've got enough money it's not quite what we had to sustain when we signed up to those performance targets in the first place but that's the model so it's a funding model it's a fairly smart combination classic PFI model with for the first time unlocking future benefits savings but doing it in a way that's certainly on paper is rigorous we get to see and practice what happens ok, one more question before we end or can I get a drink one more it's a pretty good place to be how do you think there's two more in that note I guess in the last few years we've seen an emphasis on attaining a year 12 or finishing secondary school in Australia it's a sort of capacity building exercise for young people and I saw on the weekend a sense about a similar kind of earn or learn initiative in the UK could you talk about that a little bit more sure I know one on the other that's fine ok yeah the the last way the government has already enacted that we will be going to a compulsory participation in the age of 18 years so what you've seen is slightly different to that one I'll come back to that in a second but in terms of 17 18 year olds from 2013 because participation age goes up to 17 17 yeah and then from 2015 it goes up to 18 and it's participation age so a bit like here you know you wouldn't be forcing people to say at school we know what that could go quite quickly but you will be requiring them to be engaged in a minimum amount of training each week or engaging full time education the trend has been going that way now anyways over 94% I think it is a 16 year olds in full time education and it's about 72% a 17 year olds in full time education at the moment so that will accelerate and that's already enacted and the coalition government has committed to do that as well the coalition government took away a number of support for 16 and 17 year olds as part of the austerity package that won't particularly go down that road the earn a land thing in Duncan Smith was out here recently our secretary of state for employment so undoubtedly we saw earn and learn which is why we've got that in our package and basically it's the first package of measures partially reintroducing some of the things that have already been cut that the big panic was that last week the number of young and employed people topped a million people so they needed to have an emergency kind of response and it's called a thing of the youth contract so basically it's got nine months unemployment and people will be mandated it's kind of engaging with and this goes up to 25 it will be 18 to 25 as the focus is on really the under 18s then it's going to be full time participation and we're seeing an expansion of the apprenticeship system for that kind of group as well as full time roots in further education colleges and in schools Last question This question is on youth unemployment as well Wrote an article in The Guardian recently about young and employed people through the job centre plus volunteering for work volunteering for work experience with large supermarket chains and then working for 30 hours plus a week and if they would not pay at all other than continuing receiving their benefits and it was a condition of continued receiving their benefits that they continued to provide free labour to these large supermarket chains and I was wondering whereabouts that fits into everything you've spoken about and whether that's an accident or it's meant to happen Well okay basically they're called women's hardships lots of middle class kids do it already they work enough to become lawyers for a year and that gets exploited as well kind of thing so there's an exploitation thing going on there it's a classic art in a story it's a germ truth it's if there's a germ truth on it and they've seized on it the interest in policy talk is a thing called work trials which previously were restricted to 2 weeks and I think that's where they should start so basically part of saying to an employer take a risk on this person to the person take a risk on this job for 2 weeks you can do it you don't have to be actively seeking work you don't have to come off benefit you don't have to risk coming off benefit and to the employer just try the person out they turn up and give them a go get them a kind of job usually we tie this in with the idea of a guaranteed job interview at the end of the kind of thing unwise the I think that's now being extended to up to 8 weeks because our minister seems to think that middle class internship model could be rolled out through our jobs after plus kind of system I doubt if anybody would be sanctioned in the way that the guardian can't suggest it because the moment you appealed it it would break down we do have a due process kind of set of constraints on these kinds of things the UIS is a really kind of worrying kind of element to it and it actually kind of corrupts was actually quite a good idea the idea of work trials I'm sure in the Australian system there must have been a work trial kind of element to it but yeah so middle class ministers should think outside the box a bit okay well we've got a small I'm sure it's not number 4 thanks very much