Work and pensions secretary Peter Hain outlines plans to get people off benefits and into employment

Work and pensions secretary Peter Hain has outlined changes to the way the government will try to get people from welfare benefits into employment.

Hain said that private firms and voluntary organisations would be offered the chance to win incentive-based contracts to find people sustainable work.

Bigger, longer-term contracts totalling £1bn per year will be fought for as the government bids to ramp up skill levels and achieve full employment.

Hain said: “In the future, the bulk of payments to contractors must be based on sustainable job outcomes. This will give a real incentive to help people into jobs that provide the greatest career prospects and [give people] the greatest chance to lift themselves and their children out of poverty.”

The government said it would increase competition for contracts by encouraging new service providers into the market. Hain insisted there was a big role for high-quality, high-performing smaller providers.

There will be bonuses for good performance by private firms, and the threat of contract termination if performance is poor.

The CBI, which has been campaigning for a greater role for the private sector, welcomed today’s announcement.

Neil Bentley, director of public services at the employers’ group, said: “It is vital this programme is effective and we welcome the secretary of state’s recognition of the massive contribution specialist independent providers can make.”

However, he added: “The Department for Work and Pensions’ procurement skills are key to the success of this programme, and, as the department recognises, must be improved.”

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