Welfare-to-work system needs radical overhaul, warns think-tank

The coalition Government’s flagship scheme to get people back into work will not succeed unless more is done to reform the UK’s welfare-to-work system, the Institute for Public Policy Research (IPPR) has warned.

Under the proposed “Work Programme“, contracts worth up to a total of £3 billion are to be awarded to private and voluntary sector providers, which will offer “job search” support to anyone who has been unemployed for 12 months or more.

The success of the scheme depends on the availability of jobs, but long-term unemployment is set to reach 875,000 by the end of 2011, according to new IPPR projections, with vacancies unlikely to increase to more than 550,000 by then.

In a new report, “Now it’s personal: the new landscape of welfare-to-work“, the think-tank argues that to most effectively tackle job shortages, detailed local knowledge and intelligence is needed, but warns that the UK has one of the most highly centralised welfare-to-work systems in the world.

The report calls for a “radically devolved, localised welfare-to-work system” which will allow local areas greater discretion over commissioning services and improving integration with other policy areas such as economic development, transport and housing.

The IPPR says that the Department of Work and Pensions welfare-to-work budget should be fully devolved to groups of local authorities led by Local Enterprise Partnerships through block grants. As a first step, from 2013, these partnerships should be given joint responsibility to co-commission welfare to work, it says.

To stimulate sustainable jobs placements, the report proposes that:

  • Welfare-to-work providers target small businesses in emerging sectors to help them expand or invest in workforce training to create jobs and boost productivity.
  • Existing funding for schemes such as ‘Train to Gain’ should be re-directed to support this targeting.
  • Employers should pay a larger share of the costs of vocational and technical skills training.

Nick Pearce, director of the IPPR, said: “Our analysis shows that the Government’s “Work Programme” could struggle, not because it is ill-conceived, but because there simply aren’t enough jobs out there.

“It was hard enough to get the long-term unemployed into work during the boom years, now because of the downturn there are far fewer vacancies so it’s going to be harder still. A strategy for growth which creates jobs is part of the answer. But our ideas show the best possible welfare-to-work service can also play an important role. What is needed is a much more local, flexible system which can offer a highly personal service to people who’ve been out of work for a long time.”

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