Fair Start Scotland: economic evaluation

Executive summary

In April 2018, the Scottish Government launched Fair Start Scotland, its first fully devolved employability support service. Fair Start Scotland not only offers employability support but also a range of other services to assist people to find and keep a job based on their needs and circumstances. The service's aim is to reach out to those farther from the labour market, including those with protected characteristics, such as disabled people and minority ethnic people, as well as other groups like lone parents and those living on the highest levels of deprivation (as measured by the Scotland Index of Multiple Deprivation).

Alma Economics was commissioned by the Scottish Government to provide an independent economic evaluation of the delivery and outcomes of Fair Start Scotland. Evidence from the evaluation will help improve the economic effectiveness and efficiency of employability services to ensure that taxpayers receive the best value for money. There are three broad objectives for this economic evaluation. The first is to understand the value for money of the service by comparing costs and benefits. The second objective is to understand the value for money of the service by employing wider measures such as unit costs. The third and final objective is to understand the wider social impact of the service, including wellbeing and inclusive growth.

In order to meet the aims and objectives, this economic evaluation makes use of the latest Department for Work and Pensions (DWP) Social Cost Benefit Analysis (SCBA) model. The purpose of this model is to quantify the wider social impact of employment programmes in the UK. The model was developed to assess the cost effectiveness of labour market policies in fiscal terms, while also considering wider effects on the economy and society in general.

The results of the cost-benefit analysis estimates that the impact of Fair Start Scotland is a net positive from the perspective of society, public finance, and participants. For every £1 spent on the service, the estimated benefits are £3.60 from society's perspective, £1.60 from a public finance perspective, and £2.60 from the perspective of participants. This takes into account not just the financial benefits of the service, but also a measure of improved wellbeing for those who moved into employment and the benefits from redistribution in favour of those with the lowest incomes. Therefore, the service performed well in achieving value for money. For the various perspectives examined, the benefits of the service exceed the costs to government.

Figure 1 shows the breakdown of the costs and benefits of Fair Start Scotland from the perspective of society.

Fair Start Scotland performed better than expected when compared to the business case. This is mainly a result of much lower costs than expected, as the estimated benefits are remarkably similar to that of the business case. There are two main reasons for the lower-than-expected level of costs, both of which are related to the way incentive payments to providers are structured.

Firstly, providers are paid once participants achieve a certain time period within a job (13, 26, and 52 weeks). Fewer participants reached these milestones in out-turn than was expected in the business case. However, evidence from follow-up surveys three years after participation indicate that many of the participants who did not stay long in their initial jobs were able to eventually find sustainable employment. This means that improved job outcomes are being achieved over the medium-term but without triggering payment to providers.

Secondly, Fair Start Scotland ended up attracting more people who have fewer barriers to labour market entry than expected (more Core participants than Advanced or Intense), who subsequently were able to find jobs at a higher rate. Since providers are paid at a lesser rate for people with lower barriers to labour market entry, the actual costs are lower than expected. This implies a tension between improved value for money and meeting the Fair Start Scotland objectives around wider social impact and inclusive growth.

Similarly, looking at the performance of Fair Start Scotland across different geographical locations, it is clear that the differences are driven by the composition of participants' groups. Areas with higher concentration of Core participants achieved higher value for money than those with more Advanced or Intense participants. However, from an inclusive growth standpoint, the areas with lower value for money are better able to capture the groups with more barriers to work, as targeted by Fair Start Scotland.

Conducting direct comparisons between Fair Start Scotland and other employment programmes is difficult given differences in design, target groups, scope of operation and evaluation methodologies. Therefore, conclusions need to be drawn carefully. Overall, Fair Start Scotland performs well in comparison with other programmes, achieving relatively similar results across key performance metrics. In terms of value for money, while the costs compared to the benefits were slightly higher for Fair Start Scotland than for other programmes, this can be attributed to its voluntary nature, the type of participant it aims to help, and its narrower scope and timescale in comparison to UK-wide programmes.

In terms of performance, Fair Start Scotland has a very strict definition of job outcomes compared to other programmes. As a result, while Fair Start Scotland may not have achieved as many job outcomes as other programmes, the jobs achieved are more stable. Finally, in terms of reach, it is very difficult to make conclusive claims given the differences in target population. However, evidence suggests that Fair Start Scotland reached a larger share of unemployed people than other programmes.

Findings from the evaluation reports of Fair Start Scotland based on survey data indicate that the service had an overall positive impact on the wellbeing of its participants, both in terms of improved labour market outcomes as well as with regards to their experience of the service as a whole.^[1] Participants report wanting to return to work to a great extent and feeling that Fair Start Scotland motivated them to do so. They also report improved self-efficacy in terms of searching, finding, and applying for jobs. Generally, participants rated their experience of Fair Start Scotland positively and felt that the service operated in line with its principles and values of providing a personalised service that treated people with dignity and respect and put wellbeing at the forefront of its aims.

There are some differences in the experience of the service, based on certain characteristics. For example, participants from ethnic minorities were less likely to know that the service was voluntary. The service is less able to target women compared to men, with men comprising two-thirds of participants. More generally across most wellbeing and labour market outcome measures, those who have been unemployed for a long time, those with limiting health conditions, and those with no formal qualification are likely to have fewer positive outcomes and perceptions.

Overall, Fair Start Scotland performed well in achieving value for money and a significant overall net benefit to society. It helped many participants move into sustainable jobs and did so while treating them with dignity and respect. However, there are areas where further improvements could be made; Fair Start Scotland could explore doing more to achieve its aim of helping people who face very high barriers to labour market entry. Specifically, the programme could try to find ways to reach out to and help more people with disabilities, health conditions, and long-term unemployment achieve sustainable job outcomes. It is important to note that Fair Start Scotland continues to deliver services and to monitor its performance, particularly with regard to engaging with and achieving outcomes for harder-to-reach groups and individuals.