CHAPTER 14 Employment Zones

Employment Zones (EZs) are a new and very different way of helping unemployed people get back to work. They are designed to give a much greater range of choice to unemployed individuals by using a Personal Job Account – a sum of money made available to the claimant to "tailor-make" help such as training, community work or a job subsidy. With an improved guidance and counselling service EZs will be much more client-centred.

Five "prototype" Zones and three further, smaller-scale development projects were set up during 1998. Having tested different models the Government decided, from April 2000, to provide help to 48,000 people by extending this approach across 15 parts of the country with high levels of long-term unemployment. These areas – which vary enormously in size and population – are in places where, despite falling unemployment, there remains a substantial core of benefit claimants who have been out of work for a very long time.

The Government has said that "existing strategies have not worked well enough" for these claimants and that efforts need to be concentrated on small areas of highest unemployment. Because the Government is "not convinced that more needs to be spent on this group", it is testing whether different approaches might result in more people getting back into sustainable employment.

Most importantly, the Government wants to see if it is more effective to pool all the different streams of available public funding and to use this more flexibly. And it wants to "make it easier for jobseekers to understand and influence" how these funds are spent. The Government says that people receiving support "have no idea how much it costs" and, because they are not involved in the financial decision, "have no incentive to go for value-for-money options."

So, the Zones will offer participants a "full personal adviser service" in which claimant and adviser will decide how funds pooled into a Personal Job Account (PJA) can be drawn upon to tailor-make a package of assistance. The PJA brings together resources drawn from the Government’s benefits, training and jobsearch budgets for the area.

You can spend your money on a wide range of help – training, community work or a job subsidy and then regular employment – providing it will succeed and the adviser and you agree that it is what you need. The pilot EZs, tested a number of possible types of help, for example:

Who runs EZs?

The Government decided that only about half the EZs should be run by public agencies and sought bidders from the private, public and voluntary sectors for each area. Even the Employment Service was required to bid. It set up a special partnership called "Working Links" with the employment agency Manpower and the management consultancy, Ernst & Young, which won eight of the contracts.

From the tenders, the Government has awarded contracts to:

These contractors will undertake to pay a sum to all participants that is at least equivalent to what they have been receiving on JSA. In return, contractors gain outcome-related rewards for those who are successfully placed into work. The major return on investment comes when a client ceases claiming benefits for at least 13 weeks, having gained a job whilst a participant in the zone.

Participation and eligibility

To be eligible for EZ help, you must be aged 25 or over and have been unemployed and claiming JSA for at least 18 months or 12 months, depending on the area (see table below) (EZB, Section 1.5). People who sign on for JSA but only get credits of National Insurance contributions are not eligible (EZQ-1c(13).

The areas are based on local authority boundaries and your eligibility depends on the postcode of where you live – not the Jobcentre where you sign on (EZQ-1c(15). If you change address and move out of a Zone, you are allowed to withdraw from EZ activity (EZQ-1a(3).

Eligibility periods for the 15 EZ areas

12 months plus unemployed

18 months plus unemployed

Southwark

Tower Hamlets

Nottingham City

Liverpool & Sefton *

Newham

Brent *

Haringey

Brighton & Hove

Doncaster

Birmingham *

Plymouth

South Tees (Middlesborough, Redcar & Cleveland) *

 

Glasgow *

 

Heads of the Valleys (Caerphilly, Merthyr Tydfil and Blaenau Gwent)

 

North West Wales *

* areas that experimented with EZs before April 2000

The Action Plan

You will be referred to the Zone by the ES. The contractors will provide you with an EZ personal adviser who will agree an Action Plan with you that aims to help you back into work. Not drawing up or completing an Action Plan does not cause a sanction to be applied automatically, but the ES could issue a Jobseeker’s Direction and failure to comply may then trigger a 2 or 4 week benefit cut.

An Action Plan or other means of ensuring an agreed programme of activities will be a key feature. Your Action Plan should set out your employability objectives and how to get there. Resources to support this activity will be identified as your PJA.

By agreement with your EZ personal adviser, you will be able to identify activities to make use of up to the total resources in your PJA.

Referral to EZ

Referrals to the Zones will be made by the ES only at the Restart interview point. You will not be able to nominate yourself to start on the Zone until your first Restart interview (EZQ-1c(3)).

In the Zones covering people who have been unemployed for at least 12 months, people will be referred at 12 months, 24 months, or 36 months after becoming unemployed or at each annual point following. For the Zones covering people who have been unemployed for at least 18 months referrals will take place at the mid-year review interview, i.e. at 18, 30, or 42 months after becoming unemployed and at annual points following (EZB, Section 2.16).

In most areas where the Zones have been established, the New Deal for 25+ and training programmes like WBLA have been suspended and the funding has been rolled-up into the budget for PJAs. So, EZs are the only way in which help is made available to long-term unemployed people aged 25 and over. However, in Doncaster; Middlesborough, Redcar & Cleveland; and North West Wales participants will be referred to the Zone at random by the ES. The Government says that this is to evaluate the Zones by "comparing the fortunes of non-Zone participants alongside those in the Zone." As a result, not all the eligible participants will be referred to the Zone. The remainder will still be eligible for other Government programmes.

The three steps

Your progression through the Employment Zone will be in three "steps":

If you find a job during Step One or Step Two but it does not last for 13 weeks, the EZ contractor is still responsible for making allowance payments to you and you will not be able to sign on for JSA.

If you sign off during Step One, you will be automatically referred back to the Zone if you sign on for JSA again within a 13 week period. The contractor is required to give you a maximum of 26 weeks on Step Two. So if you sign-off during Step Two – or get a job that does not last – but are still within 6 months of having started the Step Two, the EZ contractor will have to take you back on and resume payment of your allowance (EZQ-1c(5)).

You might start in a job that lasts for more than 13 weeks but be laid off. If this happens within 6 months of having started Step Two, the EZ contractor resumes payment of your allowance. But if it happens after completing the 6 month maximum period of Step Two, you no longer qualify for EZ assistance. You would have to be signed on continuously for JSA for 12 or 18 months (depending on the area) in order to re-qualify for EZ assistance (EZQ-1c(8)).

You are entitled to take up part-time work during Step Two and your EZ contractor will have the discretion to continue paying your subsistence support – even if you work for more than 16 hours per week (EZQ-1c(11)). Although each Zone is able to set its own rules, do remember that your ability to access passported benefits may stop if you work for more 16 hours per week.

You may remain on your PJA beyond the normal maximum of 26 weeks for Step Two, but the Zone will have to fund this and will be obliged to continue paying your subsistence payments unless you are in temporary employment covered by a wage subsidy (EZQ-1c(12,16)).

Payments

Your PJA contains a subsistence element equivalent to your net benefit entitlement. Ministers have emphasised that "entitlement to the funding currently provided through benefits should not be put in question". The subsistence element of your PJA will not be less that the weekly rate of benefit to which you would otherwise be entitled. However, benefit funds can be open to transfer so that you can be paid a wage while carrying out supported employment and training in preparation for regular unsupported employment.

The EZ provider is responsible for payment of the equivalent of your usual benefit entitlement – for a maximum of 26 weeks. You are guaranteed to receive payments with at least the same frequency as you would have received JSA (EZQ-1b(2)). Because JSA is paid in arrears, EZ contractors are not obliged to make payments to you in advance (EZQ-5(6)).

You are not required to sign on at the Jobcentre during your time on the EZ. But you must be available for and actively seeking work during your PJA period – how this is tested will be for the Zones to determine (EZQ-1c(9)).

Providers do not have to pay your travel costs, but have the discretion to do so without affecting any other payments that you receive (EZQ-1b(10)).

If the Zone pays you a bonus, to supplement your benefits, this will have no impact on your benefit levels or tax liability (EZQ-1c(2)).

To ensure that you remain eligible for passported benefits like Housing Benefit, Council Tax Benefit and free school meals, you will receive a separate giro payment from the BA during your PJA period. This is a nominal payment of 50p a week (EZQ-5(7)).

Your subsistence allowance is based on the level of benefit that you would otherwise be entitled to, so you must inform the ES if there is any change in your circumstances or those of any dependants. If you are on the Zone when the annual benefit uprating occurs, the BA will notify the EZ contractor of a revised subsistence payment and your allowance will be adjusted (EZQ-5(10)).

Sanctions

If you refuse to participate in the EZ, or you do not co-operate towards meeting your Agreed Action plan or, in the opinion of an ES official, you are not actively seeking work, then sanctions may begin (WRA 1999, Section 60 (2)(a)). Similar rules apply if EZ staff believe that you are not participating fully, but they will have to refer you to the ES which will start sanctions action. The regime will be the normal JSA sanctions regime which includes a period where appeals can be lodged and heard. A sanction will not be applied immediately because you are entitled to appeal – so the period between referral for sanction by the Zone and the actual sanction could be 3 weeks or more.

If you are referred for sanction action you will revert to full JSA and have your Zone participation suspended. The Zone is not expected to pay you anything until you resume. After serving whatever sanctions the ES determines, you will be referred back to the Zone and participation will re-commence at the point it left off. For example, if you are sanctioned at the 10 week point of Step Two, you will start again at that point – and have a maximum of 16 further weeks on EZ – regardless of how many weeks the sanction was for (EZQ-1a(1-2)).