Skills Escalator Pilot and ESF proposal Thursday 23 April 2015

Rationale Increasing recognition of the day to day challenges faced by those in employment on low incomes and the need for support to enable these people to earn more and progress. A number of reports have highlighted: For the first time in 2012, more working households were living in poverty in the UK than non-working ones. Just over half of the 13 million people in poverty, surviving on less than 60 per cent of the national median income, were from working families At the end of 2013 the majority of Local Housing Allowance claims in the capital were from working households

Goal End or reduce dependence on benefits for ‘working poor’ Target Group Low skilled/low incomes Employed tenants in the privately rented sector and in receipt of housing benefit Employed as above and housed in Local Authority temporary accommodation 36,000+ such cases across West London Alliance boroughs (Feb 2014) Target group is known to the Local Authority through their housing benefit claim Issues such as skills, employment and progression are not part of the housing benefit claim Participants in receipt of housing benefit – we have used this as a proxy for low pay rather than means-testing every client Initial target group living in PRS due to initial funding – this was used because we were required to show cash savings – but for ESF this is not a required output so you could open it up more broadly e.g. people living in social housing as well

Current Customer Journey

Skills Escalator Model

New Customer Journey

Example Participant

Pilot project Running in Hounslow and Harrow from November 2014 73 clients seen in Hounslow 13 started training 24 clients seen in Harrow 12 started training 1 FTE adviser in each borough 1 project manager overseeing both projects

Client profiles - gender Hounslow Harrow Average 75% women, 25% men

Client profiles – family status Hounslow Harrow Hounslow 80% single income household Harrow 92% single income household

Client profiles - age Hounslow Harrow Hounslow 71% aged between 31 and 50 Harrow 75% aged between 31 and 50

Client profiles – highest qualification Hounslow Harrow Hounslow – 63% qualified to L2 or below 20% L4 and above Harrow – 42% L2 or below 33% L4 and above

Client profiles – length of employment Hounslow Harrow Hounslow 81% of people working for more than 5 years Only 2% working for under 1 year Harrow 50% working for more than 5 years No-one working for less than 1 year

Harrow learning so far Residents have been positive – requests diverse nail art, AAT, sage, legal assistant, sound engineer social media for self employed Age range exceeded expectations Challenges have been - understanding eligibility, producing evidence - course start times - costs – now give guide price of £450 - over all attracting the right people

Hounslow learning so far Well received by residents, demand currently exceeding adviser capacity High need for ESOL, ICT and other entry level skills Also challenges re establishing eligibility Flexibility / availability of training can be barrier Lower spend on training than Harrow Long-term project – outcomes will not happen quickly

Funding model Activity Cost Management / admin / overheads £54,300 Adviser(s) £42,000 Training £50,000 TOTAL £146,300 Basic funding model if delivering with no match funding (NB this includes half a project manager – model is based on 1 project manager overseeing the project in 2 boroughs. This relies on there being some existing infrastructure / a team / management support for the PM and the advisers. If they were working alone we would suggest that a full-time post may be needed.

Proposed ESF match Activity Borough funds ESF match Total Year 1 Management £27,000 £54,000 Adviser(s) £21,000 £42,000 Training £25,000 £50,000 Training non-matched TOTAL £98,000 £73,000 £171,000 Year 2 £28,000 £56,000 £22,000 £44,000 £26,000 £52,000 £102,000 £76,000 £178,000 Overall totals £200,000 £149,000 £349,000 We suggest that only 50% of the training budget is matched to retain some flexibility in what training costs you can cover. It looks likely that ESF will only allow spending on training up to Level 2, which will cover many of your clients’ needs but very unlikely to cover them all. In Harrow in particular they have supported clients with a wide range of other training above L3. A risk here is that if your clients mainly require training that you cannot fund through the ESF part of the training budget you could end up with an underspend and risk of clawback. You would need to keep very accurate records of which pot of training funding you used for which client.

Estimated outputs 1040 participants 60% women, 40% men 14% aged 50+ 70% BAME 45% lone parents 15% with a disability Based on what we know about our clients so far. This is based on delivery in 4 boroughs You may want to adjust this according to make up of your borough residents

250 people gain basic skills Estimated results 250 people gain basic skills 160 people gain L2 or below qualification (not incl basic skills) 107 women gain improved labour market status These are the ESF required outcomes from funded programmes The women gaining improved labour market status could include some of the participants using funding outside of the ESF match e.g. gaining L3 qualification – the qualification would not be an ESF outcome but if it leads to improved status then this could be an ESF outcome.

Monitoring What are we measuring? Salary Employer and role Qualification level Receipt of LHA / Council Tax support Sustained change