Policy u-turn as Work and Pensions minister Peter Hain scales back plans to involve private sector in back-to-work schemes

Government funding to encourage private sector companies to develop back-to-work schemes is only likely to rise by 25%, despite the recommendations of the Freud Review, Peter Hain has revealed.

The new work and pensions secretary said that widespread private sector involvement in getting people off benefits was “not my preferred option”.

This directly contradicts his predecessor John Hutton’s backing of the government-commissioned Freud Review.

Former journalist investment banker David Freud said in March that radical reform was needed to reduce unemployment. He called for a private market worth billions of pounds per year.

But Hain told the Financial Times yesterday that the £800m spent on payments to companies that have got people off benefits would only rise to about £1bn.

Asked if that was a long way short of Freud’s proposals, Hain added: “Yes, but Freud is not secretary of state.

“I have said it is not my preferred option, but people can persuade me too if they want too, if they are able to,” he added.

Hain said he wanted to maximise the role of the local authorities in getting people back to work.

Hutton said in March: “We must make use of all the experience and expertise which exists in the private and voluntary sector to complement the role of the public sector in delivering welfare.

“These groups can make a real difference in supporting the most disadvantaged into work and helping them stay in a job over the long term, rather than coming straight back on to benefit.”

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