Meeting of the Parliament

Meeting date: Wednesday, October 4, 2017

Official Report 834KB pdf

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Employment Support

The next item of business is a statement by Jamie Hepburn on delivering employment support for Scotland. The minister will take questions at the end of his statement, so there should be no interruptions or interventions.

14:40  

I welcome this opportunity to update Parliament on progress towards the delivery of the fair start Scotland employment support service, one of the first powers devolved under the Scotland Act 2016. This is an important milestone for employment support in Scotland and an opportunity to make employment services work differently and more effectively for the people of Scotland. The Scottish Government is already using new powers to deliver one-year transitional employment support services and those are already helping unemployed people with health conditions and disabilities across the country to find work and to stay in work. Those services are providing continuity of support while we progress towards delivering fair start Scotland from April 2018.

We all understand the health, social and economic benefits of getting more people into good, rewarding and fair work. That is at the heart of our ambition to deliver inclusive economic growth. That ambition is laid out in our economic and labour market strategies and demonstrated through our commitment to the fair work agenda being promoted by the fair work convention; and that ambition is writ through fair start Scotland as well.

Today, following the conclusion of a rigorous and open procurement process, I can announce that we have signed contracts for up to five years to deliver fair start Scotland from April next year. Fair start Scotland will provide tailored, person-centred support to a minimum of 38,000 people who are further removed from the labour market and for whom work is a realistic prospect.

Before I outline the successful bids, I thank all the organisations that have taken part in the process. Engaging in any procurement process requires a significant investment and, whilst I know that those who have secured the contracts will have been pleased to do so, there will be others who feel that they have missed out. Every bid that we received showed the real commitment, dedication and desire of organisations in the public, private and third sectors to help support people into work. I appreciate the work that all those involved put into the process.

In announcing who has been successful today, I am confident that we have been able to award contracts to a range of providers that have demonstrated strong, collaborative proposals that will deliver our shared ambitions. Let me now outline the detail of the nine contracts that I am announcing today.

Contract area 1 covers the city of Glasgow. The contract has been awarded to PeoplePlus Group Ltd, to be delivered in partnership with Remploy Ltd, and third sector partners Momentum Scotland and the Lennox Partnership. The estimated value of the contract is £19.1 million.

Contract area 2 covers the North Lanarkshire and South Lanarkshire local authority areas. The contract has been awarded to Remploy Ltd, to be delivered in partnership with third sector partners Enable Scotland and Routes to Work South. The estimated value of the contract is £12.6 million.

Contract area 3 is Tayside and covers the Perth and Kinross, Angus and Dundee local authority areas. The contract has been awarded to Remploy Ltd, to be delivered in partnership with third sector partners Rathbone Training and the Wise Group. The estimated value of the contract is £7.3 million.

Contract Area 4 is Forth valley and covers the Falkirk, Stirling and Clackmannanshire local authority areas. The contract has been awarded to Falkirk Council, to be delivered in partnership with public sector partners Clackmannanshire Council, Stirling Council and NHS Forth Valley. The estimated value of the contract is £5 million.

Contract area 5 is the east and covers the Edinburgh, Midlothian, East and West Lothian, Fife and the Borders local authority areas. The contract has been awarded to Start Scotland Ltd, to be delivered in partnership with Working Links, Triage and third sector partner Momentum Scotland. The estimated value of the contract is £21.3 million.

Contract area 6 is the south-west and covers Dumfries and Galloway and the three Ayrshire local authority areas. The contract has been awarded to Start Scotland Ltd, to be delivered in partnership with Working Links and third sector partners Rathbone Training, the Lennox Partnership and the Wise Group. The estimated value of the contract is £10.1 million.

Contract area 7 is the north-east and covers the Aberdeen City and Aberdeenshire local authority areas. The contract has been awarded to third sector organisation Momentum Scotland, to be delivered in partnership with Life Skills Centres Ltd and Enterprise Mentoring Ltd. The contract will be delivered alongside third sector partners Enable Scotland, Aberdeen Foyer and the Scottish Association for Mental Health. The estimated value of the contract is £5.6 million.

Contract area 8 is the Highlands and Islands and covers Argyll and Bute, Eilean Siar, Highland, Moray, Orkney and Shetland. The contract has been awarded to People Plus Ltd. It will be delivered in partnership with a mixture of public, private and third sector partners of Argyll and Bute Council, Life Skills Centres Ltd, Lochaber Hope, Momentum Scotland, Third Sector Hebrides and 20/20 Clearview Ltd. The estimated value of the contract is £6.2 million.

Finally, contract area 9 is the west and covers East and West Dunbartonshire, East Renfrewshire, Inverclyde and Renfrewshire. The contract has been awarded to third sector organisation the Wise Group and will be delivered in partnership with Working Links and third sector partners the Scottish Association for Mental Health, the Lennox Partnership, Enable Scotland and the Royal National Institute of Blind People. The estimated value of the contract is £8.8 million.

Under the provisions that we laid out, the contract for the west area was specifically reserved for supported businesses to bid into. This is the first time that we have exercised that power, demonstrating the Government’s commitment to that sector. Supported businesses provide vital permanent employment for those who are disadvantaged in the labour market. We are determined to develop a more diverse delivery market for employment support through devolution, and that is why our approach, unlike previous approaches, used devolved powers to reserve one area for bids from supported businesses. The Wise Group has secured that specific contract under the reservation for supported businesses in the west area, but we have also seen successful bids from a supported business, Remploy, in two other lots—Lanarkshire and Tayside—and involvement of both organisations in other areas as delivery partners, demonstrating the strength of that business model.

We evaluated the bids that we received in order to secure best quality and consistent provision across Scotland and we will rigorously performance manage the service to ensure that those are delivered. That is crucial to help us to ensure that there is continuous improvement in the public services that we can offer people.

We have listened in public consultation and in on-going stakeholder engagement, and we have listened to Scotland’s devolved employment services advisory group, which has helped to shape, develop and test our devolved employability approach. I place on record my thanks to the group’s chair, Professor Alan McGregor, and its third, private and public sector members.

As we enter the delivery phase of fair start Scotland, I confirm that I plan to develop that consultative approach further and to continue to listen to a diverse range of voices as we deliver the programme and a more aligned, wider employment support landscape. Fair start Scotland will see unprecedented levels of partnership delivery. The joint working that we will see between private, public and third sector delivery partners across Scotland will be a real strength of our new approach.

This is not simply business as usual. We are taking a partnership approach in Scotland that will see more than half of provision delivered by supported businesses and by third sector and public sector bodies. Although fair start Scotland has been designed nationally, all services will be delivered locally through new consortia and will feature a range of specialist providers to ensure that people receive the right type of support for them. We are taking a different approach from the United Kingdom Government by funding the services appropriately. We are committing an additional £20 million each year from our budget, over and above the significantly reduced funding that is being provided by the UK Government.

Today, I am laying out who will deliver our fair start Scotland programme through the contracts that have been awarded but, much more critically, we must remember that delivery of the programme is about providing support to people who need it. Our vision for fair start Scotland is clear and we are using devolved powers to deliver a distinct and different approach to employment support in Scotland. Our approach is significantly different from what has previously been seen in UK Government programmes. We are putting people at the centre of the services and treating them with dignity. Fair start Scotland will have respect and fairness at its core, supporting people to achieve their full potential.

We are listening to the views of people who rely on these services and we will continue to do so. We are better reflecting the reality of Scotland’s geography, regional economies and population spread by having nine contract areas rather than simply lumping the whole of Scotland together as one contract package area, as has been the case under the UK Government. We are also delivering differently by ensuring that providers have committed to a wider fair work, workforce and community benefits agenda as part of their bids, including by paying the living wage and avoiding the use of zero-hours contracts.

Also, crucially, as this Parliament has endorsed by overwhelming majority, fair start Scotland will be voluntary. It will work with unemployed people to encourage them to take the opportunity of support towards work and will not threaten them with sanctions from the Department for Work and Pensions. That is in keeping with our desire, running through all of our new employability and social security powers, to treat people with dignity and respect.

Our employment programmes are not about supporting organisations, sectors or institutions; they are above all about supporting people: people who deserve to be supported through a person-centred and tailored approach that meets their needs, who deserve to be supported to achieve their full potential, who deserve to be supported to enter work and to retain a job, and who deserve to be treated with dignity, respect and fairness and to get on in life.

Just as is the case with all of this Government’s endeavours, people will be at the core of our approach to taking forward fair start Scotland.

Thank you, minister. We now move to questions.

I thank the minister for early sight of his statement. I welcome much of it, as I welcomed the devolution of employability programmes in the Smith commission, but I am puzzled by one thing. David Semple of the Public and Commercial Services Union explained to the Social Security Committee last week his union’s absolute opposition to the involvement of the private sector in all devolved aspects of social security, including employability services. He said:

“our opposition is not ... ideologicial; it is based on performance. None of the privatised employability contracts have had the same delivery outcomes as previous state-run programmes.”—[Official Report, Social Security Committee, 28 September 2017; c 5.]

The minister knows that I do not agree with that, but I thought that Scottish ministers did. After all, Jeane Freeman has explained to loud applause in the chamber that devolved disability living allowance and personal independence payments will not be administered by the private sector. So why has Jamie Hepburn signed contracts not only with the private sector but, I note, with one of the very companies that delivered the work programme in Scotland, which is a programme that the minister has previously condemned? Is that not a case of the Scottish National Party saying one thing and doing quite another?

Let me begin by apologising for puzzling Professor Tomkins. That was certainly not my intention, though puzzled he seems to be. It is symptomatic of the Conservative Party’s approach to these matters. I appreciate that Professor Tomkins is the social security spokesperson for the Conservatives in this place, but we are treating employment support rather differently. We are not treating it as part and parcel of the social security system. Clearly, there has to be interaction between those two systems, but we are treating our employment service as an opportunity to support people to get them into work and not to tie them into a manipulative and unfair social security system that sanctions them at every turn.

In response to the point that Professor Tomkins has made—rather mean-spiritedly, I have to say—about me saying one thing and doing another, I remind him that in “Creating a Fairer Scotland: Employability Support: A Discussion Paper“, which we published on 6 July 2015, we set out that

“Scotland has developed a strong ‘mixed economy’ of employability provision with important contributions made by the private, public and third sectors”,

and, in our consultation response, which was published on 22 March 2016, we said:

“We will work with suppliers to consider what support we can provide to encourage consortia approaches that reflect the existing ‘mixed economy’ in employability services in Scotland of private provision, and local authority and third sector delivery.”

In a debate that we had in the Parliament on employment services on 5 October 2016—I remember that Professor Tomkins was here for that, but he clearly was not listening—I said:

“I intend to take that opportunity to deliver employment support services ... building on our strengths in both the public and private sectors and in local authority, third sector and specialist delivery”.—[Official Report, 5 October 2016; c 30.]

I reiterated that point at our employability summit on 23 November 2016.

In print, in public and in Parliament, I have said that employment services would be delivered across a range of suppliers. That is exactly what we are delivering. The third sector and the supported business sector are a critical element of it as well, and when we take into account all the contracts that we have awarded across the public sector, the third sector and supported businesses, those constitute the majority of the contracts that we have awarded.

I thank the minister for the advance copy of his statement, and I welcome the progress that has been made in developing fair start Scotland. Like the Scottish Government, Labour is committed to a person-centred, tailored, voluntary approach that is based on meeting individuals’ needs.

I have three questions for the minister. First—and this is very specific—can he tell us what percentage of contract value has been awarded to the private sector and what percentage is going solely to the third sector, so that we can establish whether the approach meets the Government’s ambition to have a mixed market of support?

Secondly, will the minister explain why he copied the Tory Government’s approach to the work programme by having a payment-by-results system? The concern is, of course, that providers will focus on early wins and people who are closest to the labour market, leaving those with significant barriers without sufficient support.

Finally, many people will welcome five-year funding, but let me sound a note of caution. What opportunities will there be to refocus the contracts if they do not perform as required?

On the precise percentage of contract value going to the private sector, I will be happy to follow up in writing, but I can tell Jackie Baillie that there is a roughly equal division between the third sector and the private sector and that, when we factor in the public sector and supported businesses, there is a clear majority for the other sectors.

On Ms Baillie’s final point, about opportunities to be flexible, I think that I made clear to the Economy, Jobs and Fair Work Committee that flexibility is important. Ms Baillie will understand that, in the awarding of contracts, there is only so much that we can do. However, there is the possibility to be flexible as circumstances change, for example by looking at the criteria for referral to a programme. That is important, and it speaks to our longer-term agenda of better aligning our various offerings on employability and employment support.

I utterly refute the member’s suggestion that we are copying the Tory model and I will run through the range of ways in which our approach is different from what has gone before and what we expect to happen with the UK Government’s work and health programme. Jackie Baillie said that she shares our ambition to have a voluntary service; our service will be voluntary, which was not the case with the previous programme and will not be the case with work and health. On consistency of service, we have laid out very clearly a minimum expectation of providers; that was not the case with UK Government programmes in the past and is not expected to be the case with the work and health programme—

What about payment by results?

Ms Baillie should not worry. I will come on to payment by outcome. However, it is important that I say on the record why the suggestion that we are replicating the UK Government’s approach is utter nonsense, so let me finish.

With the work and health programme, we see that the UK Government will take the same approach, in that providers will set their own standards, and we see that there will be a reduction in the amount of time for which clients are supported. Under our model, there will be up to two and a half years of support.

We are embedding in our approach an individual placement and support service for people with severe and enduring mental ill health; I recall Bill Scott—

This is a list—

It is indeed a list, so—

In that case, that is probably enough of a list, minister. Can we move on?

If you do not mind, Presiding Officer, I will just finish—

Briefly, please.

Payment by outcome is indeed part of our model. That is important. However, we are embedding an up-front fee in the model—we heard the call in that regard. Clearly, as with any employment programme, we want the programme to get people into work, so it is important that we set an expectation that it will do so.

I remind members of my role as parliamentary liaison officer to the Cabinet Secretary for Economy, Jobs and Fair Work.

Will the minister say how the Government will align its programme with existing health and social care support? What impact does he expect it to have on other public services?

As I said, integration and alignment of services is critical for this Administration. There will be an opportunity, through the range of providers that we have put in place, to begin work in that regard.

We have already announced a £2.5 million pot of funding for integration and alignment, through which 15 projects, in 13 local authority areas, will better support people with mental health conditions, learning disabilities or housing needs and people who have come out of the justice system.

I recognise inherently the need to support people in all aspects of their life and in their journey towards employment. That is not as simple as focusing purely on employment skills; issues will arise in a person’s life, which is why the integration and alignment agenda is so important to us and why we will take that opportunity through this programme.

I emphasise that the first three questions have taken eight and a half minutes. There are nine more questioners, and I would like to get through them.

The total value of the contracts announced today is £96 million. Will the minister explain what contractual and other assurances are in place to avoid a repeat of the cost and budget overruns that we have seen in many of this Government’s programmes?

I am delighted that Dean Lockhart has got on to the territory of the cost of this service. We have leveraged in additional revenue of £20 million per year from the rest of our budget to make up for the significant cuts that his party’s Government sent to our Administration through the devolution of this service.

The assurances that Dean Lockhart seeks are of course set out as contractual provisions. We will monitor the contracts very carefully indeed, and if any committee of the Parliament ever wants to ask me about any issues, I will happily respond to the committee or raise the matter in the chamber. We have announced the contracts today and the detail of those contracts will be available in the Scottish Parliament information centre, to which I am sure Mr Lockhart will run immediately after this statement finishes.

The Scottish Government is a Scottish living wage employer. In answer to a question of mine, the minister wrote:

“Devolved employment services will support the Scottish Government’s fair work ambitions, in particular by supporting individuals into sustained work which offers a route out of poverty.”—[Written Answers, 14 March 2017; S5W-07108.]

Will fair start Scotland support the Scottish living wage and provide a route out of poverty by paying providers only when they place someone in employment that pays at least the Scottish living wage?

Alison Johnstone is correct to point out the Government’s ambitions for the living wage. Through the award of the contracts, we have taken the opportunity to ensure that providers pay the living wage to those who work for them.

On the agenda of getting people into employment, we will work closely with organisations and encourage them to take every step that they can to ensure that those who end up in employment are remunerated adequately. Our aspiration is for everyone in this country to be paid the real living wage, and our approach to this agenda is no different in that respect from our approach to any other.

I thank the minister for early sight of his statement. In a number of the contract areas, many of the successful bidders and consortium members are organisations that deliver the current service. How will the Scottish Government guarantee that the services that people get will change for the better as a result of the process?

It occurs to me that some of the problems with predecessor programmes occurred when Mr Cole-Hamilton’s party was in government. The fundamental point is that any organisation works to a policy that was set by the Administration that procured the service. I have laid out clearly the fact that our model is very different from the model that went before it, when the service was in the UK Government’s hands, not least in that people will not be compelled to take part—the service will be voluntary. I believe that we will get more out of people in that way.

I assure Mr Cole-Hamilton that there will be a significantly different approach under the contracts, just as there has been during this transitional year. One of my great joys has been in going out to see people who have benefited from the programme that we put in place this year. They have informed me that that programme is drastically different from and far superior to the programmes that they went through when this area was in the hands of the Department for Work and Pensions.

I seek further clarity and information on a matter that has been touched on briefly. What opportunities are there for collaboration with the third sector, in the short term and in the future, in delivering the fair start Scotland support service?

As I have set out, the third sector is an important player in the contracts that I have announced today. In the immediate term, the third sector will be getting on with delivering the contracts. As for other opportunities, I mentioned in my statement the need for continuous improvement. I am looking to establish a group that is similar to the advisory group, which had third sector involvement through the third sector employability forum. I want the third sector to be involved in the new group.

A range of specialist provision has been laid out in the successful contracts and a range of third sector bodies will act as subcontractors. Should contractors require further specialist provision, I am sure that they will prevail on the third sector for that, too.

The minister mentioned that the contracts will be subject to rigorous performance management. Will he go into more detail on the measurement regime? Will he outline how the contracts will be evaluated and how that information will be reported back to Parliament?

As I just said, we will have a group in place to ensure that there is continuous improvement. My officials will rigorously assess the contracts that we have put in place to see how effective they are in reaching the 38,000 people who we want to be supported through the contracts. We are looking closely to ensure that we reach that ambition.

As Parliament would expect, we will regularly publish statistics and make them available for the consumption of members and the wider public to see how we are doing. I am sure that I will return to answer questions on the topic in the future.

Will the minister expand a bit further on the rationale for the nine contract areas and what impact he expects them to have?

We saw and heard a clear concern that the manner in which the previous contracts had been procured did not reflect the geography of Scotland. The previous contracts were too large, which precluded a number of organisations from bidding.

We have worked with a range of people and organisations, including local government, that are involved in delivering a range of employability interventions. For example, the Scottish local authorities economic development group had a preference for eight contract areas. We looked at its proposition, which we thought was more or less right, but we considered that nine contract areas would better reflect what is required, given the need to deliver to local circumstances.

We are looking at the contracts closely. When the contracts come to their end, depending on the direction that we want to take, we will look closely at how effective our approach has been.

The minister suggested that detailed outcomes data will be publicly available from all providers to ensure the effectiveness of each regional contract. At what stages will the data be provided?

I cannot say today what those stages will be. I made clear my commitment that we will publish that information regularly and make it readily available. As soon as it is confirmed when we will make the information available, we will let every member of the Scottish Parliament know. If Mr Halcro Johnston—or anyone else—has further questions about that, I will be happy to respond.

Will the minister say something about those who are receiving employment support and who might be a bit concerned about how the transition will work?

That question is important, because we do not want anyone to be concerned. Let me be clear to Mr Mason, the rest of the members in the chamber and, indeed, the wider public, that those who are benefiting from support will continue to receive support from the providers that we have put in place to cover the transitional period until the end of this financial year, following which our new contracts will be in place. That will ensure clear and consistent provision so, in that sense, no one needs to worry.

Can the minister offer insight into how adequate provision was made for local specialised services to participate meaningfully in the procurement process in their own right?

That issue was critical for me in allowing a wider range of suppliers. There has been significant engagement over a long period—it started several years ago—to get to the position that we are in. We have engaged through a number of public events and through the Scottish Government’s website to make people aware of the opportunity to participate in the procurement process. Through that engagement, the third sector employability forum expressed concern about the length of time that we had allowed for people to tender. Having heard that concern, we extended the period in which people could tender for the service.

I have been responsive to that concern. We did all that we could to ensure that specialist providers in local areas could take part in the procurement process. That is partly why we put in place nine contract package areas. My clear view is that, if we were under the work and health programme, which is administered by the DWP, it is very likely that Scotland would now be one contract package area. That would have given local organisations virtually no chance whatever of being able to tender.

Will the minister confirm that those with a greater need, who have not been supported by the previous DWP approach, will be at the forefront of fair start Scotland?

I can confirm that. We are operating a model whereby three levels of intensivity of support will be available, depending on what the individual requires. I made the point that up to 30 months of support will be provided. That includes 18 months of pre-work support and up to 12 months of in-work support, which is a significant advance on what was in place before and on what we expect in the work and health programme.

I am alive to the concern that those who need support most must have it, and that is what we are putting in place in our programme.

I thank the minister and members.

The next item of business will be a debate on motion S5M-07946, in the name of Gordon Lindhurst, on the gender pay gap.