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Employability and Skills: Taking forward our National Conversation

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4 What could the future look like?

Chapter Summary

  • This Chapter sets out what a future Scottish Government and Scottish Parliament could do under further devolution or independence.
  • Examples considered include what could be done to help people seeking employment support and people facing redundancy

The options

4.1. The National Conversation is the opportunity to think about the sort of society Scotland can and should be and about whether the Scottish or UK Parliament is best placed to make the right decisions for Scotland's future.

4.2. The previous chapter looked at the Commission on Scottish Devolution recommendations which amount to retention of the devolution scheme defined by the Scotland Act 1998, with the possibility of further devolution of some responsibilities, ("status quo"). This chapter discusses the other constitutional frameworks set out in Choosing Scotland's Future:

  • Redesigning devolution by adopting a specific range of extensions to the current responsibilities of the Scottish Parliament and Scottish Government, possibly involving fiscal autonomy, short of progress to full independence ("devolution max");
  • Giving Scotland the full flexibility and range of responsibilities of similar, independent countries ("independence").

Devolution Max

4.3. As Choosing Scotland's Future set out, for employment support including benefits and tax credits to be devolved most effectively, Scotland would have to be fully responsible for the financial implications of its decisions in this area. Any devolution of responsibility for elements of social security should be accompanied by further fiscal autonomy, rather than relying on existing resources to meet additional costs.

What more could a Scottish Government and Scottish Parliament do under further devolution?

Use further devolved responsibilities for employment support (obtained with the agreement of the UK Government) to further to help people achieve their potential through employment and to deliver increase sustainable economic growth.

What are the implications of change?

Some improvement in the Scottish Government's ability to improve employability and employment support: key levers such as benefits, tax credits and employment support could now be devolved;

Of course the two Governments could agree to have harmonised policies in particular areas, including within social security, and all changes would be subject to agreement with the UK Government;

However Scotland would need further fiscal autonomy if benefits, tax credits and employment support are to be devolved effectively and it would be constrained for as long as the United Kingdom remains sovereign and is able to legislate even in devolved areas.

4.4. Under this option, greater responsibility for benefits, tax credits and types of employment support could be devolved to the Scottish Parliament and the Scottish Government. The extent to which responsibilities are devolved will depend on a negotiated settlement with the UK Government.

4.5. Under this option, all relevant policy responsibilities could be within the responsibility of the Scottish Government and the Scottish Parliament. It would be for the Scottish Government and the Scottish Parliament to make decisions in the best interests of the people of Scotland, considering all the circumstances in Scotland.

Independence

What more could a Scottish Government and Scottish Parliament do under independence?

An assured constitutional structure would allow a Scottish Government to provide a employment support system in Scotland that is fully integrated with wider social and economic policies.

Independence would see Scotland with the same responsibility for fiscal, economic and all other policies as other, similar countries.

What are the implications of change?

A great improvement in the Scottish Government's ability to improve employment support and reduce unemployment;

A Scottish Government and Scottish Parliament able to make decisions on all aspects of employability and skills which better reflect the interests of Scotland and take full account of differences between Scotland and the rest of the United Kingdom;

The two Governments could still agree to have harmonised policies in particular areas should they wish.

4.6. With independence Scotland would have the constitutional structure to help people achieve their potential through employment and to deliver increased sustainable economic growth. Proposals under all other options would still be subject to agreement with the UK Government.

4.7. Examples of what more could be possible under this option are set out below. These examples may also be relevant to further devolution depending on what is devolved.

People seeking employment support

4.8. Independence or devolving the functions of Jobcentre Plus (and the associated contracting arrangements) to Scotland could ensure a more efficient delivery of services to clients. Devolution of Jobcentre Plus to Scotland was one of the recommendations made by the Council of Economic Advisors after considering "Addressing Economic Inactivity in Scotland".

4.9. The Scottish Government is currently working with DWP to improve the integration of Jobcentre Plus services (reserved) and those provided by Skills Development Scotland (devolved). This includes better alignment of careers advice and training provision which should lead to increased participation in the labour market. The UK government in working on this integration project and has recognised the difficulties presented by the existing structures.

Box 5: Case Study - People seeking employment support

Current position

Jobcentre Plus is responsible for administering all working age benefits across the UK. It also provides job search services, advertises vacancies and administers national programmes like the Flexible New Deal, Pathways to Work and the Youth Guarantee.

Currently, depending on the stage of their benefit claim, when someone enters a Jobcentre for employment support, one of two things happen:

  • they may volunteer for, or be mandated to, one of the UK government's own employment programmes, such as Flexible New Deal; or
  • they may be referred to programmes funded by the Scottish Government. This includes adult literacy and numeracy courses, careers advice (through local branches of Skills Development Scotland) and employment-related training (through Training for Work, the Scottish Government's vocational training programme for unemployed adults).

Under the current procedures, it isn't always possible to bring together the two options to offer an integrated package of support specific to the needs of the individual.

Implications of independence

If employment support (including the functions of Jobcentre Plus) were the responsibility of the Scottish Government, it would become part of a package of measures designed to meet the needs of unemployed people across Scotland. The result would be a more streamlined, responsive and far-reaching service, leading to better outcomes for both clients and employers. Unemployed people could potentially be offered support in a much more integrated and effective fashion than at present. In addition, a one stop careers, training and employment service could reduce the frustrating delays and complications which sometimes arise from existing arrangements.


People facing redundancy

4.10. Independence or devolution of the functions of Jobcentre Plus could ensure a more efficient delivery of services to clients facing redundancy as set out in the example below. PACE (Partnership Action for Continuing Employment) is the Scottish Government's national strategic framework that facilitates a consistent approach for responding to redundancy situations. The delivery of PACE is co-ordinated at a national level by Skills Development Scotland with input from a range of partners including Jobcentre Plus. PACE aims to offer employers and individuals a simple access to support at a stressful and worrying time. The aim of this approach is to minimise job losses and to support people back into employment or training as quickly as possible.

Box 6: Case Study - People facing redundancy

Current Position

PACE is a partnership of key delivery bodies - both devolved and reserved - which mobilise their resources locally in response to redundancy situations. The key local and national agencies are Skills Development Scotland, Scottish Enterprise, Jobcentre Plus and Local Authorities. Local PACE partnerships vary in their membership but most draw representation from HM Revenue and Customs, the STUC and its affiliated trade unions, Citizens Advice Bureaux, local training providers, and colleges and universities.

Implications of independence

Jobcentre Plus is responsible for the funding and operation of its contribution to PACE. If Jobcentre Plus activities and contracting were to be the responsibility of the Scottish Government it would result in a more co-ordinated and effective use of resources, with the Scottish Government responsible for all central government resource and for directing its use in supporting those facing redundancy.


Lone parents on low incomes and their children

4.11. Under the UK Welfare Reform Bill, lone parents whose youngest child is 5 will be expected to attend a skills health check. When their youngest child is 5 or 6 they will be expected to undertake relevant skills training. The recent Gregg Review takes this further by identifying a Progression to Work group which will require lone parents whose youngest child is aged over 3 to undertake some sort of work related activity, although they will not be required to look for work until the youngest child is aged 7 or over.

4.12. Many lone parents already enter employment but are unable to sustain it, either due to family pressures (often because the job is not sufficiently flexible to allow childcare responsibilities), or because of the nature of the employment which is often part-time and short term. There can also be barriers in terms of cash flow difficulties while people wait for their first pay cheque and additional costs of working (such as work clothes or travel costs).

4.13. For many, work is a route out of poverty and many lone parents would like to work. The Scottish Government is concerned that more lone parents may be forced into low paid, low skilled jobs which have no hope of lifting them or their families permanently out of poverty.

4.14. Under independence, a Scottish Government would have responsibility for all factors affecting employability - and so could choose how best to help lone parents obtain and sustain employment according to their needs and aspirations. How this would be achieved would of course be for the Scottish Government and Scottish Parliament of the time to decide.

Young people needing More Choices and More Chances

4.15. Regulations determining whether a young person can receive benefits are the responsibility of the UK Parliament. However the majority of services that a young person will access are devolved (for example education, careers guidance, social work) and accessing some of these services will be a condition of the young person receiving their benefit. There have been examples where the benefits system across the UK has been altered in response to policy decisions for education or training for young people in England in ways which do not relate well to the Scottish equivalents.

4.16. Under independence a Scottish Government would have responsibility for all policies affecting young people and so could choose how best to provide a coherent and responsive approach to supporting the most vulnerable young people. How this was done would obviously be for the Scottish Government and Scottish Parliament of the time.

4.17. Jobcentre Plus's focus is on clients aged 18 and over. There are a small number of young people aged 16 and 17 who are eligible for benefits, usually because they are independent of their parents at that age. The current system does not adequately support this group of very vulnerable young people.

4.18. The UK welfare system is not the system of welfare that exists in every country. Differences exist in the balance of responsibilities between the individual and the state; for example between incentives to work and sanctions if work is not sought; and support to parents choosing to work. The systems in place in each country have arisen incrementally from past political decisions to suit the specific social and economic situation in each country. An independent Scotland could explore other systems to learn from their strengths and weaknesses (see Annex E). Clearly this would be a managed process which would be initially focus on ensuring support is seamlessly maintained at the point of independence.

The future

4.19. This report has set out how further devolution could and independence would allow the Scottish Parliament and the Scottish Government to take decisions which better reflect the interests of Scotland and any differences in views between Scotland and the rest of the United Kingdom.

4.20. Any decisions, whether that is on employability support or on another area, would be for future Governments, would take place over a period of time and would involve careful consideration, negotiation and consultation.

4.21. The implications for the Scottish Government's ability to tackle unemployment under the different frameworks are summarised below:

Implications for the Scottish Government's ability to tackle poverty

Status Quo

No material increase in ability to provide more effective support for unemployed people in Scotland: key levers such as benefits, tax credits and employment support remain reserved This is where the Commission on Scottish Devolution recommendations sit.

Further devolution

Some increased ability to provide more effective support for unemployed people in Scotland: key levers such as benefits, tax credits and employment support could be devolved, depending on the negotiated settlement with the UK Government.

Independence

Step change in the ability to provide employment support for unemployed people in Scotland with no constraints imposed by a wider employability support system run from outside Scotland.

4.22. The Scottish Government believes that independence is the only option which will enable Scotland to meet its full potential, giving this country the same range of responsibilities as other successful independent countries in Europe and across the world.

4.23. Independence will mean that all decisions would be scrutinised by the Scottish Parliament. This would allow for different policy choices. The Scottish Parliament would have full responsibility for how best to spend national resources, and could decide, for example, to focus more spending on supporting the unemployed into employment rather than on nuclear weapons or identity cards.

4.24. The most recent Government Expenditure and Revenue Scotland ( GERS) demonstrates that Scottish public finances ran current budget surpluses in each of the three years to 2007/08 worth a cumulative £2.3 billion when an illustrative geographical share of North Sea revenue is included. In comparison, the United Kingdom ran a current budget deficit in each of these years which was cumulatively worth £24 billion. Scotland's overall fiscal balance in 2007/08, which is the estimated current budget balance plus net capital investment, was a deficit of £3.8 billion (2.7% of Gross Domestic Product), similar to those for other OECD countries.

4.25. It is now up to the people of Scotland to decide on the sort of country we should have and on the support we should offer unemployed people to help them into employment, with a decision taken in the proposed referendum in 2010. This paper will inform detailed debate of the options for a future Scottish employment support system. A further White Paper (to be published on 30 November 2009) will set out the Government's view on this and other areas.