Allister Hayman,
Regeneration & Renewal,
12 October 2009
Private and third sector jobs brokers delivering the Government's flagship back-to-work programme have been put on notice that a Conservative government would scrap or renegotiate their contracts.
Launching the Conservative Party's welfare reform programme at the Tory conference in Manchester last week, shadow work secretary Theresa May confirmed that any Tory government would renegotiate all Flexible New Deal (FND) phase one contracts to reflect its welfare reforms and scrap any phase two contracts.
The first phase of Labour's FND programme, which supports those out of work for 12 months, was launched last week, while preferred bidders for the second phase of the programme are expected to be announced this autumn with contracts signed in the spring.
But May said these contracts would not stand under a Conservative government.
Under the Conservative plans, the current range of employment programmes would be rolled into a single integrated "Work Programme" to be delivered by private and third sector brokers. This would provide personalised and flexible support for the jobless irrespective of the benefit they were on. So out-of-work lone parents, young unemployed people and older long-term unemployed people would all be placed on the same Work Programme with support tailored to individual needs.
Senior welfare-to-work figures told Regeneration & Renewal that the Tory plan was hugely ambitious and, while the strategic direction was good, some questioned whether private sector brokers would be prepared to invest in such a large-scale plan that placed more onerous conditions on them. Brokers point out that contractors would only be paid 20 per cent of the cost of getting someone into a job upfront, with the rest paid only once a claimant has been in work for a full year.
In contrast, the current FND contracts pay 40 per cent of the cost upfront, with the remainder paid, if the participant is still in the job, at 13 and 26 weeks. Many say this is challenging enough in the recession. "If the greater part of the payment comes only after a year of employment I can't see many companies taking on that risk," one senior figure said.
Another senior figure said there was "real frustration" in the industry that the FND had now been "thrown into disarray". The source said: "It really does look like these contracts are going to be something of a moveable feast and that makes things very difficult for us."
But speaking to Regeneration & Renewal, May denied that the plans had put the FND into "disarray". She said: "We are having serious discussion with brokers about this programme and the process will be done through negotiation."
May said that the Tories would fund the programme using benefit savings resulting from brokers moving people back into work.
She said the party's plans would cost £600 million more than the Government's planned spending on welfare programmes and that this money would be found by shifting an estimated 500,000 claimants off incapacity benefit.
However, she acknowledged that more reliable data on benefit savings would be needed to show whether or not they were covering the cost of the brokers.
May said the Tories would also speed up the Government's current plans to assess the health of all incapacity benefit claimants, with those deemed "fit for work" moved onto jobseeker's allowance, which would entail a £25 a week cut to their benefit.
Under the Tory plans, programmes such as Pathways to Work, the New Deal for Lone Parents, Train to Gain, Employment Zones and City Strategies would be scrapped and rolled into the Work Programme.
Current plans to refer young unemployed people to the FND after 12 months would be revised so that all 18- to 24-year-olds would be referred from Jobcentre Plus to a work programme broker after six months, May said. Other unemployed adults would still be referred after 12 months.
But May said that the Tory plan would involve a system of "differential payments" so that those deemed most in need of support, such as those coming off incapacity benefit and onto jobseeker's allowance, would be referred immediately to jobs brokers, who would be paid an extra fee for getting these "tougher cases" into work. This, May said, would address the problems caused by "creaming" and "parking", where brokers focus on the easiest to help at the expense of those most in need of support.
Ian Mulheirn, director of think-tank the Social Market Foundation, praised the general direction of the plan, which largely mirrors SMF recommendations. However, he warned that the plan to profile claimants based on their employability may prove problematic.
The Work Programme: the main points
- 18- to 24-year-olds would be referred to a jobs broker after six months of unemployment.
- Most other jobless adults will be referred after a year, although "profiling" will be used to identify those in greatest need of support and they will be referred immediately.
- Brokers will be paid by their results in getting the jobless into jobs that last a full year.
- A Work for Yourself stream will focus on helping would-be entrepreneurs to create firms, with loans and mentoring.
- A Work Together stream would aim to link jobless people with volunteering opportunities to help boost their skills and experience.
- 18- to 24-year-olds to also be put in a Youth Action for Work stream with: - 50,000 Work Pairing places with young people assigned to a work experience position;
- an extra 10,000 apprenticeships or pre-apprenticeships, with small firms offered upfront payments to take on apprentices;
- 50,000 extra further education places for young people who are out of work for more than six months;
- an expansion of the Government's Young Apprenticeship scheme, which offers vocational education for 14- to 16-year-olds, from 10,000 to 30,000 places a year.
