Purnell's people

Regeneration & Renewal, 5 September 2008

It has been an intractable problem: how to get that stubborn cadre of long-term workless off benefits and into jobs. Labour's stated goal of full employment "in our time", has meant that the problem has, for successive work secretaries, taken on a holy grail-like quality. Since coming to power a decade ago, Labour has tinkered with the benefits system, and introduced the New Deal and Pathways to Work programmes - all designed to make being on benefits a more active, and less passive affair. But so far nothing has been quite as drastic as the reforms launched by the latest work secretary, arch-moderniser James Purnell, in July's welfare reform green paper.

The Purnell agenda is an almost total acceptance of the proposals made by Tony Blair's welfare tsar David Freud in 2007. Reportedly resisted by then-chancellor Gordon Brown, it called for the private and voluntary sectors to play a far greater role in helping the long-term unemployed find jobs. Having examined Australian, Scandinavian and US models, Freud recommended that the long-term unemployed be referred to private and third sector jobs providers who are paid by their results. Freud argued that, by providing more hands-on, personalised support, innovative providers could slash the number of the long-term workless. Companies would be paid with the savings accrued by reducing the number of benefit claimants.

Since becoming work secretary in January, Purnell has enthusiastically embraced the Freud report. As a precursor to his green paper, Purnell launched a commissioning strategy in February that outlined how the new system would work. Under the plans, the Department for Work and Pensions (DWP), work training agency the Learning and Skills Council (LSC), local authorities, regional development agencies, city-regional bodies and other public sector organisations, would commission private and third sector agencies to get the long-term unemployed into jobs. A set of "prime contractors" - essentially large management companies - would bid for regional or sub-regional contracts from the DWP, and then contract delivery down to smaller, more specialist organisations. Purnell said the UK had been mired in a "sterile debate" about whether public or private bodies were best placed to get the long-term workless into jobs. "The truth is that both public and private must play an important part," he said.

Political consensus

The Tories praised Purnell's plans, which largely mirror their own, and pledged to support them in Parliament. But if the political debate has died, concerns on the ground remain very much alive. Kate Welch, chief executive of the Acumen Community Enterprise Development Trust - an award-winning social enterprise tackling worklessness in North-East England (see box) - is concerned that, as the Government moves towards awarding bigger and longer contracts, the providers will move ever further away from the communities and individuals who they are trying to support. "The worry is that (prime contractors) will be very large organisations, which will not know much about the problems in the communities they are meant to be serving," she says.

Like many other third sector practitioners, Welch is worried about how voluntary and community organisations will fit into the new framework. After all, these critics say, it is the smaller community-based organisations which are most adept at liaising with the hardest-to-reach groups, who are the main targets of reform.

But third sector organisations are smaller and more geographically bound than large, private firms, Welch says, which puts them at a disadvantage in bidding for larger contracts, which may cover wider physical areas. For example, Acumen has a turnover of around £3.5 million and can handle contracts of up to £1 million, she says, but not the larger bundled-up contracts, which are likely to be for around £8 million. "So we will be left with very small contracts, which can be worth up to £200,000, but are usually much smaller."

Moreover, for many third sector bodies, the aim is to provide people with the skills to do jobs that they want to do, rather than getting them into work as quickly as possible. It is unclear how such work will be recognised in a payment-by-results system. The DWP has established a task force to explore how the third sector can best be brought into the process, but Welch is sceptical. "From the start, it's been flawed because there's very little representation from organisations that actually have employability contracts with the DWP," she says.

Paul Hardman, head of city strategy at Greater Manchester economic development agency Manchester Enterprises, agrees there is still much work to be done. "There is universal agreement that the third sector should be an integral part of the welfare-to-work supply chain, but we need to better work out how to make that happen," he says.

Hardman has been leading Greater Manchester's employment and skills strategy and says the key to a successful commissioning process is to form a clear picture of the overall strategy, which all partners can then follow. "You have to be absolutely clear what the priorities are at sub-regional and local levels," he says. It is town halls, he says, that will often be able to supply the smaller, more flexible contracts that are attractive to the third sector. But Hardman warns that third sector organisations must take more responsibility for demonstrating their value by presenting clear evidence of their impact. "Public bodies need to see real evidence that third sector bodies are helping individuals and communities into work," he says. "It can't just be taken on face value."

Gillian Hewitson, chief executive of Newcastle Futures - a not-for-profit company comprised of a partnership between Newcastle City Council, Jobcentre Plus, the LSC, the local primary care trust and others - agrees that town halls must be key partners in developing third sector involvement. However, she worries that many councils lack the necessary experience or expertise. Newcastle Futures was formed to develop the employability agenda and was promoted in Purnell's green paper as a model for the future, but Hewitson says the Government's reforms are still in their infancy.

Hewitson says the key for town halls and public bodies will be to ensure that local contracts are flexible and allow organisations to change and innovate. "Unless they can do that, providers won't be able to deliver," she warns. "You can't underestimate how hard it can be to reach some of these workless people. They are living outside mainstream services and to engage them and get them onboard can be very, very difficult. You need to be able to innovate. That's what it must be about."

- Kate Welch will speak at Regeneration and Renewal's Tackling Worklessness conference in Sheffield on 17 September. Other speakers will include employment minister Stephen Timms. For more information, visit www.worklessnessconference.org

ON THE GROUND: ACUMEN DEVELOPMENT TRUST

Acumen has established a reputation as a leading provider of employability skills to long-term workless people in deprived areas of England's North-East.

The social enterprise, with an annual turnover of £3.5 million and more than 80 staff, was established by Kate Welch OBE (far right, above) five years ago. It runs a range of programmes designed to guide people into work and instill a sense of self-worth through training and education.

Welch has attracted praise from third sector minister Ed Miliband and is now in demand throughout England to provide advice to other organisations aiming to tackle worklessness in areas beset by post-industrial malaise.

Since 2003, Acumen has attracted 3,500 people into its learning programmes, channelled 5,000 into jobs, guided 630 into self-employment, as well as starting and supporting eight social enterprises.

Welch says Acumen's success has been based on a concerted effort to engage with communities at a grass-roots level. "People don't walk into jobcentres, but when we went out to them they talked to us," she says.

Acumen worked to design programmes that can build up people's basic skills and confidence so that they could move towards work. Acumen has been hailed as a forerunner of the Government's brave new world of part-privatised welfare-to-work schemes, taking contracts from the Department for Work and Pensions, the Learning and Skills Council, regional development agencies, councils and regeneration agencies. It is ironic, then, that Welch is one of the more vocal critics of government plans, claiming that smaller organisations such as Acumen would be unsuited to win large contracts.

The key to a bright future for smaller organisations is, she says, to diversify. "You can't put all your eggs in one basket and expect to get by," she says. "If we relied on DWP contracts alone, we'd soon be in serious difficulty. You have to do more than that."