EMPLOYMENT AGENCIES (Hansard, 20 June 1974)

§ Miss Betty Boothroyd (West Bromwich, West)

This debate is really about the business of putting round pegs into round holes, and the cost to the taxpayer of doing so. The subject of matching the skills of a large proportion of this country's work force to suitable and satisfactory employment is very wide and far ranging and should concern all of us as taxpayers. Matching skills and jobs requires a considerable degree of expertise, which I should have thought the best resources of the Department of Employment, as a non-profit-making body and the Government agency, would not find very difficult to master.

The purpose of the debate is to draw attention to the private agency sector and to the lucrative business which has developed over the years when industry, commerce and Government buy back the skills and talents of people who have been trained originally at the expense of the taxpayer. When all is said and done, it is the taxpayer who provides the necessary resources for schools, polytechnics 839 and colleges of education and, in doing so, provides for the training of students to a level and a degree which enables them then to earn a living.

I should like to make three main points. The first is to show some of the costs involved in this education and training. The second is to show the revenue obtained by the private employment agencies in matching these skills to jobs. The third is to suggest some ways in which the non-profit-making sector—the Department of Employment—might become more competitive as an employment agency.

I want to give the House a few figures. The latest official figures available are for 1972. Those figures show that at a polytechnic it costs £995 per year to educate a student, and at a college of education it costs £612. No one would deny that because of inflation those costs have increased. I have attempted to take the matter a stage further and to work out the cost of training a shorthand typist at a college which is known to me. Based on 10 students per class, for a 36-week course the hourly cost is 53p per student, and this makes a charge on the taxpayer of £667 per student. That is excluding capital costs. The training of a hotel receptionist over a like period is £642, again excluding capital costs. A two-year commercial course works out at 51p per hour and, again excluding capital costs, at £1,284 per student.

Few of us would deny that this sort of investment is worth while. I am sure that it is, though it is at the point of having completed training and when this investment has gone into education that the private agencies seem to step into the picture.

Let us look at the Civil Service, in which 4½ per cent. of the secretaries are engaged on a temporary basis through private agencies. In London alone, 9 per cent. are recruited in that way. Only this week I have been told—it was unsolicited information—that two secretaries working in a London Government office have been employed on a temporary basis for five years.

My limited research does not enable me to work out the cost of training draughtsmen. I am interested here in the subject of training draughtsmen, too. I 840 suggest, though, that the modest sum of £1,000 per annum, on the basis of the figures that I have already given, is about the required amount. In answer to a Question of mine recently, my hon. Friend the Minister of State, Civil Service Department said that although the number of agency-recruited draughtsmen has been falling over the years, 22½ per cent. of all draughtsmen employed by the Civil Service are still recruited through private agencies. Here again is a Government Department buying back with public funds the skills and talents originally developed by public money.

I cannot begin to estimate the staff nationally recruited through agencies, but it must be a sizeable number. The latest figures I have seen were for 1971, when 80 per cent. of all staff were employed through private agencies, leaving only 20 per cent. to the public sector. I hope that my hon. Friend can give some up-to-date figures of the percentage of the labour market that is controlled through the Department of Employment.

I do not want to weary the House at this time of night with many figures, but I want to underline the element of profit made by agencies from fees, especially when the public sector buys back the skills and talents of those who have originally been trained at the taxpayer's expense. I question whether this is a good and proper use of public money.

I am not foolish enough to suggest that the whole of agencies' profits is obtained solely from the public sector. But when an agency such as Brook Street Bureau recorded pre-tax profits last year of just under £2 million, and when Alfred Marks last year recorded pre-tax profits of almost £1 million, it must be seen that there is a sizeable proportion of personnel trained at the taxpayer's expense controlled by private agencies.

It is not my intention tonight to discuss the conditions of the medical profession. particularly the nursing profession, but in 1968 1,500 nurses and midwives were recruited through private agencies, and the figure today is more than 4,000—many of those people trained at public cost. I question whether it is a good and proper use of public money for the National Health Service hospitals to buy back the services of people whom they have probably originally trained.

841 How do we reverse this position, so that it is the Department of Employment that has the greater control over the labour force when it comes to matching skills to jobs? First, many employment exchanges no longer have the image of the bare room, smelling of stale smoke, and that atmosphere of "wait-aroundness" which I knew in my younger days. Many have changed to attractive premises, where the job hunter has a considerable degree of self-selection and is dealt with in private as an individual with a need for a job that brings satisfaction, as an individual with a human problem. In my constituency of West Bromwich the "job shop", which I believe is the new term, is most attractive. It is a pleasanter place than it was years ago. Let us go still further in improving the Department's local offices in the form of job shops, so that they attract more job-hunters. More resources need to be made available to do that.

Second, would not it be possible to arrange an agency within the Department related to the employment of those in the medical profession, particularly nurses, midwives and radiographers, so that within the Department there is a special department that looks after the medical profession?

Third, would it not be possible for individual National Health Service hospitals to have their own employment bank for temporary staff? I mean temporary staff in the real meaning of the word "temporary"—staff that could be called upon at the convenience of the National Health Service hospitals and themselves.

Fourth, could not a temporary employment bank be used by the Civil Service, particularly in London and some of the larger cities? Surely the number of personnel required on a temporary basis is large enough for the Department to consider that possibility.

Finally, I do not want to restrict employers from shopping around for staff if they want to do so but, at the same time, I suggest that employers might be encouraged to let the employment exchanges know when they have a vacancy and when they need that vacancy filled. With the continuing improvement of the Department's local facilities more recruits would come direct from schools and from training establishments, and the choice 842 for those wishing to change their jobs would be wider, so that the fee-paying system to private agencies would have difficulty, I hope, in surviving. It would be a fairer deal for the employer, for the job hunter and certainly for the taxpayer, who has for too long bought back the skills and talents developed at his expense.

§ The Under-Secretary of State for Employment (Mr. John Fraser)

I am grateful to my hon. Friend the Member for West Bromwich, West (Miss Boothroyd) for giving me a chance to say something about the matters that she has raised. I shall start by talking about employment agencies. I do not have the answers to her questions about various labour markets, but I shall ensure that they are conveyed to her. I shall give attention to what she says regarding medical agency staff and I promise that I shall convey her remarks to the Department of Health and Social Security about the employment of nurses where there are special local arrangements.

There has been a great deal of discussion about the way in which employment agencies have extended their activities in recent years. I am not unaware of the many criticisms that have been made, apart from the ones that my hon. Friend has raised tonight. My right hon. Friend the Secretary of State for Employment keeps these matters under constant review.

These are not the easiest of times for introducing legislation to effect changes in this sphere. On today's performance it will be difficult to do so in any sphere. We have a ready-made instrument for dealing with many of the abuses which it is alleged employment agencies commit—namely, the Employment Agencies Act. Furthermore, proposals for regulations to control the activities of agencies will be circulated this week. I shall be pleased to ensure that my hon. Friend receives a copy and I shall look forward to her considered views at some convenient time. It is our hope not only that the regulations, when they are laid before the House, will set the standard of conduct to which it is appropriate that both permanent placement agencies and temporary hire businesses should aspire, but that by introducing stringent regulations we shall be able to damp 843 down the explosion in their numbers which has become apparent in recent years.

Reference is often made to the inflationary impact of temporary hire agencies, and particularly to the pressure for increases in income from permanent staff who are called upon to work alongside temporary staff. I am afraid that one of the reasons for the mushrooming of agencies is the inevitable spin-off of a statutory incomes policy. It affords a loophole for employees who cannot obtain increases in salary and for employers who are not allowed to increase the salaries of their permanent staff.

I have said many times before, but I say it again, that we intend to lay an order ending statutory pay controls by July of this year. My hon. Friend will be aware that we have already set in train a review of nurses' pay. That has been the subject of the same kind of problems—to which my hon. Friend has referred—as exist with the private secretarial temporary hire arrangements.

Apart from the regulatory powers over agencies—I cannot say much more about agencies because we are about to publish the regulations, and I would welcome my hon. Friend's views on the draft regulations—as my hon. Friend rightly says, we also have a responsibility for our own comprehensive employment service. I want to ensure that our service is not merely, in the words of my hon. Friend during Question Time the other day, "more attractive", but the most attractive.

I am determined that our employment service should be second to none. It must command the co-operation—and I stress the word "co-operation"—of employers and workers. By workers, I mean those temporarily unemployed and those in employment. It must aspire to match available jobs and applicants over a wide range of skill and ability going way beyond those occupations which employment officers have been substantially concerned or associated with in the past. It is and will be an indispensable component in servicing growth and economic success by ensuring that industry's ability to succeed and expand is not hampered by shortages of skilled and available labour. Even with unemployment levels which we 844 do not regard as tolerable, there is frequently a shortage of labour, either of the right skill and experience or in the right place.

The employment service is an essential instrument of manpower policy. We intend that it should be far more than a placing agency but should be able to provide the key to opportunities previously denied to or not sought by men and women alike. We set ourselves the task of achieving and of claiming, in the interests of employers and workers, a far larger share of vacancies that arise.

By separating unemployment benefit work—which will remain with the Department—from the employment service, we shall try to remove from the service the "dole image". We want to get away from the old exchanges' association with the despair and poverty of the prewar legions of unemployed who, of necessity, looked to the exchanges hopefully for work and, in its absence, resigned themselves to collecting the basic means of survival. I hope, therefore, that it will be helpful if I describe the ways in which we are achieving and intend to go on achieving the aims that I have described.

The intention to modernise the employment service was first set out in a consultative document issued in the last days of the last Labour Government as the culmination of a long period of research study and consultation, both within the Department of Employment and elsewhere. Our successors set out in their plans, which followed the consultative document, the aim, which I thoroughly endorse, to help people choose, train for and get the right jobs; and employers to get the right people as soon as possible. In November 1972, the Conservative Government announced their decision to set up a Manpower Services Commission outside the Civil Service, to be responsible for the work of the Employment Services Agency and the Training Services Agency. These self-managing agencies were themselves recently established to take over the employment and training services of the Department of Employment. The necessary legislation was enacted in the Employment and Training Act 1973.

845 The Manpower Services Commission, under an independent chairman and with membership appointed after consultation with the CBI, the TUC and other bodies representing local government and education, will be responsible for the development of manpower policies and the work of the State employment and training services. It will bring flexibility into operation and management, but, more importantly, it will directly associate the employers and work people who use the services with the determination of policy.

Under the leadership of the Chief Executive, Mr. Ken Cooper, the Employment Services Agency is pressing ahead with the modernisation plan. A completely new management structure is being established in 18 employment service areas throughout the country, each under the management of a senior office. Direct chains of command are being set up, operating through district managers to the jobcentres and employment offices in the front line. New systems of performance measurement are being introduced, and everyone in the organisation is accountable for the resources he uses and for the job he does. All the emphasis is on decentralisation, so that initiative and enterprise can flourish to the benefit of people using the service.

Good progress is being made with the programme to set up new style jobcentres to replace the old employment exchanges, some of which were, admittedly, on the dreary side, but hon. Members will appreciate that formidable difficulties must be overcome. In the year ending 31st March 1974, 36 new jobcentres were opened; it is hoped to open about 100 in 1974–75 and to replace the existing employment exchange network completely by the end of the decade. The new jobcentres are well sited and attractively furnished in a contemporary open-plan layout. A three-tier service will be offered to job seekers. First is the "self-service" job information and details of vacancies; secondly, advice in depth by specially trained employment advisers; and, thirdly, specialist counselling through the Occupational Guidance Service. The particular needs of disabled persons and the socially disadvantaged are under examination and we are looking closely at the rôle of our industrial rehabilitation units and at the facilities they provide. We have upgraded a high proportion of employment 846 work from clerical to executive level, and the new style training of employment advisers is well advanced.

In the short time that I have been a Minister I have visited a number of job-centres. I am extremely impressed by this form of public enterprise and I was pleased to hear my hon. Friend's remarks about the centre in her constituency. They do a credit to public enterprise. We are greatly encouraged by the initial success of jobcentres which have been opened so far. During the first four months of this year registrations in them increased by 31 per cent., vacancies notified by 42 per cent., and placings by 57 per cent. We are going out—if I may use a commercial term in this context—for a big share of the market.

The Occupational Guidance Service has now developed to a stage where nation-wide coverage is provided through a network of 45 units in the main centres of population. It is staffed by 170 carefully selected officers with experience of employment work who have been given intensive training in guidance techniques, together with instruction in the study of occupations, under the supervision of the Department's occupational psychologists. These trained occupational guidance officers are supported by a referral service to consultant psychologists where they feel the need for a second opinion. This continuing contact with professional consultants and the allocation of time for regular and systematic job studies provides for a continuing development of their individual competence.

At the present the service is dealing with more than 46,000 cases each year. Among these are people who have yet to enter employment or who have made a false start to their career; people returning to the employment field after a break; and those who, whether of necessity or their own volition, wish to consider a change in their type of work or career.

The restyled Professional and Executive Recruitment Service was launched 15 months ago and has already made a considerable impact on the recruitment market dealing with higher level appointments. This unique nation-wide computer-assisted selection service has gained a reputation for speed of operation and the quality of candidates it produces. Considerable importance is attached to 847 these two key features, which are regarded as essential to encourage repeated and increasing use of the PER service by employers. Each employer's need is handled individually by a trained recruitment consultant, who is able to advise a client, on the basis of his knowledge of the supply and demand position, how the assignment should be handled to provide the best result. In addition to identifying the best available candidates from the PER service's records, arrangements are being made to an increasing extent for the appointment to be advertised simultaneously in the national, provincial or specialist Press in order to provide the employer with a wider choice from which to make his final selection.

Arising out of the Employment and Training Act 1973, the Employment Services Agency has assumed responsibility for providing an effective employment service for young people—16 and 17 year olds—who choose to seek its help. The service seeks to co-operate with the careers service of the local education authorities to ensure that young people have the opportunity of using the service most suited to their needs.

I turn to the new and advanced working methods now being employed. We are introducing new methods and equipment into our offices. In London there is a computer-based job bank, whereby offices in the Greater London area report outstanding vacancies to the computer which provides a vacancy list print-out by the following morning. In London, too, plans are going ahead on the CAPITAL project for on-line computer-aided matching of vacancies and job seekers. In major conurbations other than London facsimile reproduction equipment has been installed which allows instantaneous circulation of vacancy details of registrant particulars throughout the network of local offices. In each region employment information centres have been established to exchange job information and to facilitate the placing of the mobile registrant. The improved employment transfer scheme provides financial assistance for workers moving to employment in another part of the country and our information service covers employment, housing, education and amenities generally in the area of the prospective job.

848 Our new technique of providing vacancy information by "self-service" has been most successful and has appealed particularly to women. "Self-service" for those needing information only allows more time for expert help by the employment adviser for those who need it.

A comprehensive professional marketing programme has been prepared to improve the standing of the service and to increase our labour market penetration. It is our aim to provide services which are more responsive to the needs of employers and work people where they want them and in the way they want them. For example, the specialist service in the hotel and catering industry has been enlarged and improved and special efforts have been made to meet the labour requirements of North Sea oil employers.

A series of experiments to test the possibility of developing local labour market intelligence has recently been evaluated and it has been decided to extend the scheme gradually to all areas where the local labour market is active enough to warrant it. The system is designed to improve the collection and interpretation of labour market statistics and information so as to give a clearer indication of future manpower needs locally.

The current research programme covers projects to assess the use made of our service by employers and workers and what they feel about it, and also the areas where a more effective contribution is needed. There are plans for longer-term research into the characteristics of major labour markets.

I understand that my hon. Friend is particularly concerned that more should be done to encourage employers to notify vacancies to our office. We take this point. Compulsory notification of vacancies has been considered from time to time, but experience here and in other countries shows that it is more likely to result in bureaucratic procedures and abortive paper work than an improved service. We are confident that the more effective service we shall be offering employers will persuade them in their own interests to let us know about their vacancies. We appreciate that they may wish to advertise in the newspaper but nothing is lost if they notify us at the same time. In the launching of job-centres our marketing campaign is aimed 849 particularly at local employers and an increase in the number of vacancy notifications is a prominent feature of our annual national targets.

It is difficult in a short speech to cover adequately all the various aspects of the work of the employment service, and the intense activities now under way. I hope, however, that what I have said will give some idea of the progress we are making towards achieving our aim and of the priority which we in the Department 850 attach to the public employment service of which we can already be proud and of which in the future, with the plans that I have outlined, we shall be even prouder. It will be not just a competitor but a leader of agencies of this kind.