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Foundation Councils – Tackling Worklessness

CllrBarrow2010-1277811062 Cllr Colin Barrow, the leader of Westminster City Council, on how Foundation Councils could help defeat the dependency culture

Over the last two days I set out the concept of Foundation Councils and the sort of general powers and freedoms that such authorities should have. I now want to detail a number of specific proposals and areas where Foundation Councils could play an increased role in tackling major issues including those that are at the top of the government’s to do list.

The problem

Employment and skills services are commissioned by over 20 public agencies including the Council, DWP, HMRC, and the NHS resulting in a complex bureaucracy of multiple management teams and back office functions that unnecessarily increase cost and create confusion for residents.

Councils have a marginal role in designing and commissioning services to address unemployment with no input on the commissioning of major programmes such as Flexible New Deal and Pathways. The problem is compounded by a benefits structure which is too complicated, subject to high levels of fraud, and ineffective in achieving the objective of supporting residents into work. The costs are high: 20,000 people claim out of work benefits in Westminster or some £300m each year, equivalent to £13,500 for every job-seeker. So despite proximity to the most dynamic UK regional economy, centralised management of current welfare to work programmes appears to fail Westminster residents.

The solution

The Government has set a clear path to reform with the simplification of tax and benefits, greater incentives to work, and the challenge to long-term causes of poverty. The Government has also signalled a commitment to payment by results, with the prospect of fewer, more highly capitalised, prime contractors.

We propose therefore there is a clear role for Foundation Councils to play here, and would look to undertake the following roles:

  • A single service specification agreed between the local authority and the Government which harnesses the expertise of the private market with the specialist support of a consortium of social enterprises and smaller providers.
  • A single commissioning purse covering skills, employment support and self-employment programmes.
  • Personalised support delivered by a consortium of providers from day one of the claim by a job-seeker.
  • Slimming-down of Jobcentre Plus to provide a universally accessible one-stop assessment and referral service for job-seekers.
  • Greater flexibility for benefit payments, consolidating housing benefit, council tax benefit, working tax credit and child tax credit into a single benefit.
  • A locally-set benefit which could improve local outcomes and reduce fraud.
  • Levers to encourage corporate social responsibility and small businesses to support mentoring, work-experience, apprenticeships and jobs. Westminster has already started conversations with corporate organisations about their emerging responsibilities in creating a civic society and this would be a major strand of this. While consolidating management of existing benefit programmes will incur-high up-front costs, reform would significantly reduce costs in the long-term. For example, Housing Benefit alone costs £13M+ p.a. in Westminster to administer.
  • Total spend on discretionary employment support programmes would be cut
    (currently c. £10M p.a.) and consolidated with the total JCP spend of c£10M p.a.
  • Offsetting the costs of re-letting contracts and setting up new systems associated with the above with the longer term savings associated with reduced benefits payments and the costs to criminal justice system and the NHS.

Accountability and delivery

A joint commissioning board made up of local authority staff and DWP would oversee mainstream and discretionary spend on employment and skills programmes. The board would devise a specification for a single work programme which would be signed off by the London Skills & Employment Board / DWP Minister. Prime contractors that have been invited to deliver the Government’s Work Programme will be expected to work with the City Council in co-commissioning specialist employment, training and self-employment support from a consortia of social enterprises and colleges already working with the city council in this area.

Enhancing current powers

Local authorities do not currently have any commissioning powers in relation to DWP or HMRC programmes. Foundation Councils should be given powers that allow the management of services and potentially the setting of benefits to be devolved from DWP and HMRC to the local level.

Defining better outcomes

With a single service framework, we believe a localised model could deliver efficiencies of over £32M each year in Westminster alone across budgets for benefits, skills and employment programmes.

The local service delivery model would:

  • Provide strong local leadership and strategic direction;
  • Reduce unnecessary costs associated with programme delivery; (£7m)
  • Reduce transaction costs through joined up benefit administration; (£25M)
  • Reduce benefit fraud and errors in payments ;
  • Reduce unnecessary Government interactions with residents;
  • Increase numbers of residents into work with shorter periods of unemployment;
  • Provide businesses with a skilled and work-ready labour market.


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