Employment Zones are best

What might the employment and training programmes of 2002 look like? As we go into the second year of the Parliament, the shape of programmes for the Government's second term are starting to emerge.

One vision is provided by the Employment Zone model which is being tested in 5 pilot areas. These zones represent a significant break with the past. They are not homogenous national programmes targetted at rigidly pre-defined categories of unemployed people. Instead, Employment Zones (EZs) give a high degree of flexibility to locally formed partnerships to achieve at least 4 goals which have considerable significance.

Firtly, they are not like the comprehensive, nationwide programmes that have diminishing returns and substantial deadweight costs when operated in areas of relatively low unemployment. Instead, they concentrate on geographical areas with high levels of long term unemployed. These may be in regions which are enjoying relatively strong jobs growth but have locked-out people from peripheral areas. They may also have experienced rapid industrial change which has left some population groups permanently dislocated.

Secondly, EZs devolve their ownership, control and design to local interests. For a country where Government is traditionally so centralised, this in itself is a breath of fresh air. But EZs also expect that local interests willl make the most of this - by integrating all their employment activity and then linking it to the other social and regeneration work in their area - business development, housing rehabilitiation, educational improvement or action to improve the environment.

Thirdly, they give a much greater range of choice to unemployed individuals - waged employment in community projects (the "intermediate labour market"), self employment, a job subsidy or access to education and training - without straightjacketing the courses. They are also testing the idea of a "personal job account" - a sum of money made available to the claimant to tailor-make a mix of help that could include a bit of everything - training, community work, a job subsidy and then regular employment - if that is what they need. So, with an improved guidance and counselling service, EZs are much more client centred.

Lastly, EZs are allowed to "rub out the rules" which stifle current programmes or constrain the effectiveness of much public spending. Too many areas of the country have a raft of different measures, all of which are funded separately like ES schemes, TEC programmes, European Funds or the Single Regeneration Budget. All have their own overheads and fixed costs. All have rigid eligibility rules which conflict or overlap. So in their pilot areas, EZs are trying to make sense from this confusion by bundling together as many of the funding sources as legislation currently permits. So far, this means TEC funds for TfW (Work Based Training for Adults) and some European money. But the ambitions for EZs are wider and the candidates include the SRB, ES programmes and the benefit budget. It is this last item - "benefit transfer" - which offers enormous scope but requires far-reaching legislation.

Benefit transfer is the make or break item for the EZ approach. There are substantial funds locked up in JSA, Income Support and even Incapacity Benefit that could be converted into job subsidies or training grants which might then release a jobless individual out of unemployment and back into a regular job that lasts. This was first seriously proposed in 1996 by the then Labour Opposition. Although their document "Getting Welfare to Work: A new vision for Social Security" is often quoted, not all of it represents the policy subsequently adopted by the new Government. But it contains a strategy that is worth fighting for and benefit transfer is being considered by Ministers right now.

Legislation could be enacted next year but the Treasury needs to change its century-old mindset. Fortunately the Chancellor should be sympathetic. After all, this is a practical way of achieving one of New Labour's touchstone concepts - converting the exchequer costs of economic failure into renewal expenditure. From consumption to investment: a classic Gordon Brown text.

Alongside benefit transfer, some pilots are also trying to "loosen" the benefit system and test new approaches to tax and benefit reform that might help ease the transition into work - particularly for people going into lower paid jobs. These include bending the rules that claw back a partner's earnings or the wages from casual or part-time work.

But real innovation could come from trialling a new housing benefit for mortgage payers. Or creating an individual benefit status to replace the household basis for claiming means tested benefit. If women are being recognised as equal (or even principle) wage earners in a household, why do almost 60% of unemployed women not qualify for an unemployment related benefit in their own right? And why, after the first measly 10 do their part-time earnings get clawed back for if their husband or partner is claiming JSA? Indeed, why does their husband or partner's JSA disappear altogether if they get a full-time job? It is these daft anomalies - not the indolence of "dole families" - that have driven up the number of workless households.

If Employment Zones can prove that these work, expect the whole face of social security, employment and training to be changed by 2002.