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Ed Holmes: The Work Programme is working – but for the hardest to help unemployed, we need to look elsewhere

Ed Holmes is the Senior Research Fellow for Economics and Social Policy at the think-tank Policy Exchange.

Screen shot 2013-06-23 at 16.28.54On Thursday, the Government will release new information about the success of its flagship welfare-to-work policy for the long-term unemployed: the Work Programme. It will be hoping for much better headlines than the first round of statistics released last November, which suggested that the programme was not only not working but actually ‘worse than doing nothing’.

This was partly built on a misreading of the statistics – all those enrolled in the programme even for a single day who could not possibly have obtained and kept a job for six months were seen as ‘failures’- and partly on the fact that the deliberately stretching targets the programme was set in 2010 have not been adjusted for what has been a slower economic recovery than then thought. While still too early to judge the success of the whole programme, it is very likely that Thursday’s announcement will show improvement – and, most likely, a considerable one.

There are, however, two related problems on the horizon. The first is that the providers who are ‘paid-by-results’ to get claimants into sustained employment and keep them there may simply not have sufficiently large financial incentives to get the hardest-to-help unemployed back to work. Quite understandably, busy managers and personal advisers have to give greater priority to those claimants on their books most likely to help them meet their own targets, and give less priority to those they simply do not have the time or resources for.

While this is effective in delivering the best outcome for the highest number of claimants, ultimately it means the Work Programme may not be able to provide effective support for the most vulnerable. This threatens the mutual contract between the state and the individual - with the individual expected to do all they can to get back to work, and the state expected to provide appropriate support that individuals need to realise that goal.

The second problem is that, even under the rosiest estimates of performance, only around half the more than three million claimants who will enrol in the programme are expected to be helped into sustainable work. The rest will be returned to Jobcentre Plus, where previous experience of such schemes suggests they will be left with little or no support. In an ideal world, we would target financial incentives more effectively so that this does not happen.

In our previous reports, Policy Exchange have suggested that the best way to do this would be to provide such support from the start of an unemployment claim - rather than waiting for up to a year in Jobcentre Plus, based around each claimant's barriers to work rather than the main benefit they are claiming. But this approach will take time to implement. The question thus arises: what can be done in the short-term within limited budgets to ensure that we are doing all we can to assist the very hardest to help unemployed back to work?

Policy Exchange’s new report, out today, tries to provide some answers. For the very hardest to help claimants, identified either at the Jobcentre, through referral from the Work Programme or after leaving it, we believe a new form of employment support, Route2Work, should be built. Since these claimants are very unlikely to enter employment unassisted, and will thus would continue to claim benefits, it is possible to calculate how much they would cost the taxpayer in the absence of additional support (unlike the majority of claimants who may have entered work in any case).

By transferring this money to Route2Work – along with the liability for any benefits the claimant receives from the new Universal Credit system – we can give upfront funding to providers without additional cost to the taxpayer. This will ensure that charities, social enterprises and other smaller providers are not ‘squeezed out’ of provision, and provide a financially viable way for them to provide wrap-around support for the most vulnerable claimants - often a critical part of their mission. We also examine how to leverage in additional funds from European, local and central government schemes to finance additional incentives for intermediate outcomes which move a claimant closer towards the labour market, or tackle specific barriers.

The Work Programme is an excellent scheme, and a big step forward from previous programmes where providers were rewarded simply for having ‘bums on seats’ or getting people into work for only a short time. It is suitable for the great majority of the unemployed. But for those few claimants furthest from the labour market, it makes sense to see what alternatives can be found.


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