get britainworking

Get Britain Working

Conservative proposals to tackle unemployment

and reform welfare

Get Britain Working 1

Contents

1. Executive Summary 4

2. The Unemployment and Welfare Challenge 10

3. The Current Welfare to Work System 18

4. The Work Programme 29

5. Youth Action for Work 36

6. Work for Yourself 47

7. Work Together 52

8. Work Clubs 54

9. Funding Get Britain Working 57

2

List of Charts and Tables

Chart 1: DWP spend on unemployment benefits since 1997 (£mns)

Chart 2: All jobs (FT and PT) by industry, 1997 and 2009

Chart 3: Comparative rise in unemployment rates during past recessions – indexed fromrecessions starts

Chart 4: Government projections for JSA claimants

Chart 5: Regional unemployment rates

Chart 6: Comparative local unemployment rates

Chart 7: Comparison of JSA claimants and Jobcentre Plus vacancies by occupational group

Table 1: Employment numbers by occupation

Table 2: Numbers moving onto Pathways and into paid work

Table 3: Get Britain Working costings and funding sources 2010/11 – 2012/13

Annex A: List of employment programmes and pilots run by DWP as of August 2009


1. Executive Summary

Labour’s jobs crisis

Britain is in the grip of a jobs crisis. This year has seen the highest increase in unemployment on

record, with over 2,000 people a day losing their job. The recession is hitting every industry in every

part of the country, with people finding themselves out of work and struggling to make ends meet:

• over five million people claim out of work benefits;

• in 3.3 million households (17% of all households), no adult works;

• Britain has a higher proportion of children growing up in workless households than any other

European country;

• there are 947,000 unemployed young people aged between 16 and 24;

• this year, the Government expects to spend £36 billion on out of work benefits – a 20% rise on last

year; and

• £1 for every £3 raised in tax is spent on social security and debt interest.

We cannot go on like this. We cannot afford for people to be left behind. Ensuring we emerge from recession

with a work-ready and skilled population is essential if we want our economy to remain competitive.

The Jobs Crisis – like Labour’s Debt Crisis – cannot be solved by one policy or one programme alone. It

requires a change in economic policy and a shift in culture to unleash investment and entrepreneurial

activity. This agenda will be advanced right across the economic policy spectrum: through radical

welfare and education reform; through deregulation and de-bureaucratisation; through a new and

entrepreneurial approach to infrastructure, universities, science, skills, training, apprenticeships – all the

things that a modern economy requires for success. The introduction of this integrated approach – Get

Britain Working – will be an immediate priority following the next election.

Even before the recession Britain was already struggling with mass levels of hidden worklessness.

Almost five million people were claiming some form of out of work benefit and the bill for this level of

welfare dependency totals £346 billion for the last twelve years. Some of these people, like those with

severe disabilities and those who do invaluable work as carers, will not be able to work, but many others

could work and more importantly want to work. The Labour Government has left these people behind,

offering them the bare minimum of support and sentencing them to a life on benefits.

Conservatives believe that we have both a moral and an economic duty to change this situation. The

public finances are in a critical condition and the size of the benefits bill is just not tenable. But morally,

we cannot leave people to languish on benefits with no opportunities and no chance of changing their

own lives for the better. We have made it clear that those who can work should work, and we are

committed to giving them the tools and skills to do so.

4

Our plans for welfare reform will radically transform the support people receive to get into work. No

longer will anyone be left to a lifetime on benefits. Everyone who is able to will be expected to prepare

to return to work, and in return we will offer them the support they need to do so. But during the

recession we need to do even more. So as well as putting together an underlying programme of welfare

to work provision, we will introduce a series of emergency measures to offer people immediate support

through the crisis period. Our particular focus will be on young people who are at risk of being

permanently affected by a period of unemployment, but there will be increased support from day one

for all those who need it.

What are we offering?

Get Britain Working is built around four linked changes:

• a new integrated welfare-to-work initiative, The Work Programme, and four supplementary

programmes:

– Work for Yourself, offering business mentors and loans to would-be entrepreneurs,

– Work Together, a programme to connect people to volunteering opportunities in their area,

– Work Clubs, places where people can receive mentoring, skills training and help to find

local job opportunities, and

– Youth Action for Work, which over two years provides 200,000 additional apprenticeships,

100,000 additional FE college places, 100,000 ‘work pairings’, and over 40,000 additional

young apprenticeships;

• a new generation of technical schools;

• a new national ambition to turn Britain into Europe’s leading high tech exporting nation; and

• 10,000 new university places.

Conservative Work Programme v Labour New Deal

A programme for all claimants not piecemeal improvisation

Massive simplification of welfare to work not 20+ programmes

Long-term support not short-term fixes

Aligned incentives for providers not confused rules

Genuine upskilling for young people not ‘make-work’

Re-ignition of enterprise and self-help not more bureaucracy


The Work Programme

The keystone of our new policy is The Work Programme, a single integrated welfare to work

programme which will cover those transferring from Incapacity Benefits to Employment and Support

Allowance as a result of work tests, the long term unemployed, lone parents and the recently

unemployed. This fully funded programme will replace Labour’s failing New Deals, the Flexible New

Deal and Pathways to Work. It will offer support to the vast majority of the people currently on

Incapacity Benefit that have been abandoned by this government.

Through The Work Programme, we will offer people targeted, personalised help sooner – straight away

for those with serious barriers to work and at six months for those under 25.

Providers will be paid by results, driving up quality and encouraging innovation. The principle behind

payment by results is simple: if you don’t place someone in a sustainable job, you don’t earn your fee.

And a sustainable job under The Work Programme means being in work for a year or even longer, unlike

the Flexible New Deal which rewards providers when someone has been in work for just 26 weeks. This

programme is about transforming people’s lives, not finding a quick fix.

We’ll extend the period of engagement that providers have with claimants, so they can work with them

over the medium to long term, delivering better results for those individuals. In a difficult jobs market,

it also means that providers have a better chance of placing someone in a job and earning their fee.

Under the Flexible New Deal when an individual has been with a provider for a year and still not found a

job they return to Jobcentre Plus and begin the whole process again. This makes the Flexible New Deal

a flawed scheme, particularly during a period when vacancies may be scarce.

Crucially, we’ll have a differential payment system, whereby providers will earn more for helping those

who need the most support. This will discourage them from ignoring the hardest to help and only

working with the easier cases. Labour’s programmes offer the same fee for every claimant, a system

which fails to recognise that people are essentially different and require vastly different levels of

support. There is no incentive for providers to help those furthest from the labour market.

The Work Programme will be flexible and robust enough to withstand every phase of the economic cycle.

This is not just a recessionary measure. It will form the basis of our support during this crisis period and

beyond. However, in response to the recession and the unemployment crisis we are also offering a

number of emergency programmes to offer immediate help and to complement The Work Programme.

The money from the New Deal will continue to go into our new Work Programme, but will enable us to

support many more people because we are being much more aggressive in terms of payment by results. In

addition, we will abolish Train to Gain and other failing Labour schemes. And we will reduce payments for

those who should not be receiving Incapacity Benefits, which will deal with the extra up-front cost. Details of

the extra costs and the sources from which they will be funded are provided in chapter nine of this document.

6

Youth Action for Work is specifically focused on the cohort most at risk from long term damage

through a period of unemployment – the young. All those aged 18-24 who have been claiming JSA for

six months will be referred to a Work Programme provider with a responsibility to help that young

person into work. They may decide that the best option for that individual is to offer them training and

job support within their own organisation, or they may wish to make use of the suite of options which

our Youth Action for Work programme will make available to them.

• Work Pairings - young people will be assigned to sole traders for six months of meaningful work

experience and mentoring. The sole traders will pass through to the young people a wage equal to

the benefits that would otherwise be paid, together with £1 an hour of additional pay. Work Pairings

will be aimed at young people who are demotivated by classroom based learning but do not yet

have the skills to secure an apprenticeship or permanent job.

• Apprenticeships – we will provide 100,000 additional apprenticeships and pre-apprenticeships

each year by offering SMEs incentives to take on apprentices and by simplifying the system. We will

ensure that all apprenticeships are work focused and will make it easier for companies, especially

SMEs, to run apprenticeship programmes. We will also introduce a programme of pre-

apprenticeships for those who do not have the basic skills required to access a full apprenticeship.

• FE College places – we will help FE colleges to provide 50,000 additional training places per year

for young people who have been on JSA for six months or more. By freeing up FE colleges from the

bureaucracy of the LSC we will give them greater power to work with local partners to provide the

courses that will be of most benefit to students. We will also encourage FE colleges to work

together with Work Programme providers to offer the courses that are most appropriate.

• Vocational education for 14-16 year olds – we will expand the government’s Young

Apprenticeship (YA) scheme, which offers vocational training for 14-16 year olds, from the current

10,000 to over 30,000. We will also simplify the system to make it easier and more attractive for

schools to offer the YAs.

We recognise that young people are not the only group being affected by the unemployment crisis and

we are determined to make sure that no one gets left behind. But as well as offering emergency support

we also need to transform the British economy and bring about a real focus on enterprise and

innovation. One aspect of this will be the Work for Yourself programme to help move people into self-

employment. We will support business start-ups, including new franchised businesses. We will build a

network of business mentors and offer substantial loans to would-be entrepreneurs. Mentors will be

rewarded on the success of the businesses they support, ensuring there is a real incentive to offer

support and to finance only projects with genuine potential. We will work with specialist organisations

that already have a proven track record in this area, like the Prince’s Trust and the Bright Ideas Trust, to

offer the best support.

As well as focusing on business and enterprise we also recognise that the best hope for getting through

this crisis comes from the British people themselves. By harnessing the resilience and spirit of many of

our communities we can turn our resources towards pulling together through the crisis. To facilitate


this we will establish Work Together, an initiative that connects people with volunteering opportunities

in their area. Meaningful activity has many benefits for those who are looking for work and many

voluntary organisations would welcome volunteers from all backgrounds to help them during this very

difficult period. We are launching www.GetBritainWorking.com which contains over one million

volunteering opportunities across the UK.

We will also build on the success of job clubs – many of which are being led by Conservative candidates

– in creating more opportunities and support within local communities. We will establish a network of

Work Clubs, places where people can gather to share experiences and offer support. These will be

similar to job clubs, but will also provide an opportunity for people to offer and receive mentoring, skills

training and to find local opportunities. We envisage that many of these Work Clubs will be set up by

existing community groups, thereby capitalising on local knowledge and resources, but we will offer

some modest funding to enable them to grow their offering.

A new generation of Technical Schools

In addition to these programmes we plan to change radically the way we train future generations so we

can build a more competitive, entrepreneurial environment. We will support the creation of a new

generation of Technical Schools. The new Technical Schools will have academy status and be open to

all students from 14. They will be sponsored by leading businesses and universities, working with the

trust set up by Lord Baker. These high quality, high tech academies will raise the status of technical

qualifications, boost Britain’s science and engineering base, and provide real choice for parents and

young people.

Europe’s leading high tech exporter

To complement this support for enterprise, Sir James Dyson, one of the world’s leading entrepreneurs

and industrialists, will head a Conservative Party taskforce looking at how we can make Britain the

leading high tech exporter in Europe. This taskforce will set out a clear vision for boosting high tech in

Britain. It will look at how we can harness the fantastic resources of our world-class university science

and engineering departments, and at how we can generate a major expansion of high tech product

development.

10,000 more university places

Demographic pressures and high youth unemployment mean that thousands of young people with good

exam results risk missing out on going to university because of an acute shortage of places. A

Conservative Government will address this problem by creating an extra 10,000 university places. We

will fund the cost for this by giving graduates an incentive to repay their student loan debts to the

taxpayer ahead of schedule.

8

How is our programme different from Labour’s?

Get Britain Working offers a completely different approach to Labour’s piecemeal and disjointed

policies. Instead of multiple schemes, we offer one major programme of support for the unemployed

which brings together welfare, enterprise, training, skills and education, helping to transform the

economy and promote competitiveness.

The Work Programme is a radical departure. We will provide a simple, integrated programme for all out

of work benefit claimants. Those who need the most help will be referred more quickly than under

Labour’s schemes – straightaway for the hardest to help and at six months for all 18-24 year olds.

The Work Programme providers will be paid almost entirely by results, ensuring that we get value for money.

And our system of differential payments means that providers will be incentivised to help those furthest

from the labour market, not ignore them in favour of easier to place candidates. By lengthening the period

of engagement between providers and individuals we will make it more likely that providers will be able to

help people back into work. Our whole programme is designed to achieve meaningful, long term, high

quality results. We want to transform welfare to work provision in this country to benefit everyone.

In contrast, the Flexible New Deal (FND) is only a timid step towards the reforms we really need. There is no

differential payment system – providers receive the same fee for all categories of claimant regardless of work

history or barriers to work. This encourages them to focus on the easiest cases. Under FND, a sustainable job

means being in work for 26 weeks. We don’t believe this is long enough and will instead reward providers for

getting people into work and helping them stay for at least a year. Most critically individuals in the FND regime

are not referred to specialist providers until they have been claiming JSA for 12 months. We believe that,

particularly for young people, this is too long and so we are committed to offering them better support sooner.

Youth Action for Work will offer real opportunities for young people while also offering a service to

business. We recognise that businesses of all sizes are suffering during this recession and so instead of

making it more difficult for them to take on apprentices or offer training places, we want to cut out some

of the bureaucracy. Supporting business and the unemployed should be complementary objectives.

Unlike Labour’s Young Person’s Guarantee, ours is an integrated approach with inbuilt flexibility and

personalisation. Our work and training places are meaningful and high quality. Because Youth Action for

Work will be part of the Work Programme, the providers will have an incentive to offer each young

person the form of training that is most likely to get them into a job. Channelling young people away

from provider-led support into short term placements or community task forces is a short term fix. Our

programme offers a long term solution.

Coming out of the recession with a skilled and motivated workforce will be essential if Britain is to

remain competitive. Get Britain Working is a real plan to capitalise on this opportunity to train young

people and solve the problem of underlying worklessness.


2. The Unemployment and Welfare Challenge

Over the past decade, Britain’s economy was left vulnerable to a major economic shock. When the credit

crunch hit, we had the biggest debt-fuelled boom and the worst budget deficit of any large country. And

we have experienced the deepest recession since the war.1

Britain now faces a jobs crisis. This year we have seen the highest increase in unemployment on record.2 This

increase in unemployment is compounded by an already high benefit-dependency ratio. Despite Government

claims of record employment3, we went into the recession with enormous numbers of people on out of work

benefits.4 Even during the pre-recession boom years, we spent more on working age benefits than we raised

in council tax.5 Repeatedly the Government proclaimed unemployment was at an all time low; but, in reality,

welfare dependency has remained high. In addition to the 1.5 million people6 claiming Jobseeker’s

Allowance and the other unemployed people who are counted within the official unemployment rate of

7.9%7, 2.6 million8 people rely on Incapacity Benefit and 736,000 lone parents receive Income Support.9

An incoming government therefore faces two imperatives. The first is to ensure that we do not allow

those made unemployed because of the recession to become long-term unemployed. The second is to

tackle Britain’s long-standing structural unemployment and the welfare dependency culture.

Structural Unemployment

Our structural unemployment is unaffordable for taxpayers. We have spent £346 billion10 since 1997 on

benefits to support people of working age who are out of work. This year the DWP projects it will spend

£36 billion on these same benefits, a 20% rise on last year.11 As a result, at a time when we face the

highest budget deficit in our peacetime history, £1 for every £3 raised in tax is spent on social security

and interest payments.12

Chart 1: DWP spend on unemployment benefits since 1997 (£mns)

Source: DWP, Benefit Expenditure Tables, medium term forecast, Spring 2009

10

But the cost is not only monetary. There is also a terrible human cost. Before the recession began,

almost five million people13 (12%14 of the working age population) claimed out of work benefits. Some of

those claiming such benefits could not work because of disability or caring responsibilities. Others used

benefits for their original purpose, as a short term safety net between jobs. But, in too many cases,

people relied on benefits as a way of life.

The result is 3.3 million households (17% of the total) where no adult works.15 Almost two million

children live in households that depend entirely on benefits16. Britain has a higher proportion of children

growing up in workless households than in any other European country.17 One of the reasons for this is

the culture of welfare dependency that drives intergenerational worklessness.

What makes this culture of worklessness and structural unemployment particularly unfortunate is the

fact that, during the last 12 years, the economy created a net additional 2.6 million jobs18 – roughly

equal to the number of people on Incapacity Benefit. But these jobs were not filled by British citizens on

out-of-work benefits.

Chart 2: All FT and PT jobs by industry

Source: ONS, workforce jobs by industry, August 2009

Rather than tackle welfare reform during the boom times, Labour instead relied on migrant labour to

feed Britain’s labour shortage. The last twelve years represent a tragic missed opportunity to reform our

welfare system. The limited reforms Labour did introduce focused on those closest to the labour market,

by-passing those on Incapacity Benefit: over 800,000 people have been claiming Incapacity Benefit

during the entirety of Labour’s twelve years in office.19 The human and social effects of this neglect are

revealed by the fact that people who have been on Incapacity Benefit for two years or more are more

likely to die or retire than get a job.20

Eradicating welfare dependency will take significantly longer and be significantly more difficult in

today’s economic conditions than it would have been just a few years ago. Action must be taken to help

back into work those who have been stuck in the benefits trap.


Cycling through the system

Also hidden behind the recession unemployment statistics is another structural problem – the perpetual

jobseeker. Before the recession started, of the 800,000 people claiming Jobseeker’s Allowance,21 two

thirds claimed the benefit before. Of those repeat claimants, one in three had made five or more claims

in the past.22 Some of those returning to Jobseeker’s Allowance do so only briefly, spending short

periods on benefits between jobs. But, for many others, Jobseeker’s Allowance is becoming a way of life:

one in five of all new Jobseeker’s Allowance claimants have claimed the benefit within the last four

weeks; one in three made a previous claim within the last three months.23 More than 250,000

Jobseeker’s Allowance claimants have spent over three-quarters of the last two years claiming benefits.24

The Jobseeker’s Allowance system currently allows people to cycle in and out of benefits. Jobseekers can

avoid the escalating conditionality requirements expected of longer term claimants by signing off the

system, just to make a brand new claim a few weeks later. Despite rules supposedly making it very

difficult to claim Jobseeker’s Allowance for longer than 18 months, there are still 7,00025 people who

have claimed it for more than five years and 31,00026 who have claimed it for between two and five

years. One of the reasons some individuals are allowed to claim Jobseeker’s Allowance for such a long

period is because the Government simply does not know what to do with them. Around 8,000 people

have been made exempt from the New Deal on the grounds they are potentially violent, have a serious

drink or drug addiction or other health issue.27

With an incoming Conservative government, this situation will end. The payment of unemployment

benefit by the state is an entitlement which is earned, not owed. In return for proper support and

intervention for those who require it, the taxpayer should expect people to follow through on their side

of the bargain. Under Conservative proposals, people will no longer be allowed to cycle through the

system. Their continued entitlement to benefits will be contingent on their efforts to find work. Once

the recession has ended, it is our intention that anyone who has been through the new system without

finding work and has claimed the Jobseeker’s Allowance for longer than two of the previous three years

will be required to join a mandatory long-term community work scheme as a condition of continuing to

receive benefit support.28 There will also be sanctions if people turn down reasonable job offers.

Recession-related unemployment

Now the country faces not just a chronic structural unemployment problem but also a surge in

unemployment thanks to the deepest and longest recession since the war.29 The UK officially entered

recession in April 200830. Since then, unemployment has risen sharply. The number of Jobseeker’s

Allowance claimants has almost doubled in one year to 1.58 million31

The rise in unemployment since the beginning of this recession has outstripped that in the last three

recessions, as Chart 3 illustrates. According to government forecasters, unemployment will continue to rise.32

12

Chart 3: Comparative rise in unemployment rates during UK recessions - indexed from recession start

Source: ONS, Labour Market Statistics, September 2009. Annual change in unemployment rate indexed

from start of each recession.

In past recessions, unemployment has continued to rise after the start of the economic recovery.33 The

Government predict that this will happen again, and that unemployment will not reach pre-recession

levels for at least a decade – with two million people projected to claim Jobseeker’s Allowance in 2016

and 1.8 million still projected to be claiming Jobseeker’s Allowance as late as 2020.34

Chart 4: Government Projections for JSA Claimants (000s)

Source: DWP, Jobcentre Plus Workload Projections, April 2009

As in the past, geographical areas – towns and cities – with higher than average unemployment rates

before the recession, have experienced a higher than average growth in unemployment since the

recession. As chart 6 illustrates, the ten areas most affected by this recession are all areas of high

unemployment35.

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2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21


Chart 5: Regional Unemployment Rates

Source: ONS, Labour Market Statistics, July 2009

Chart 6: Comparative Local Unemployment Rates

Source: ONS, Local Labour Market Statistics, August 2009

It may seem counter-intuitive that when a recession hits, it is the areas where there are fewer jobs (and

therefore lower employment rates) that experience a disproportionate number of job losses. The

explanation lies in the structure of their local economies and workforces. Areas of higher than average

unemployment are often also home to a population with lower skills than the national average. This

reflects the fact that skilled industries have been lost and partially replaced with low skilled service

jobs. The loss of skilled jobs available locally has deterred people from investing in their skills. As a

result, entry-level service jobs became the only viable employment option for many in these

communities (and for those entering these communities). This in turn creates a vicious circle in which

businesses employing relatively skilled labour virtually disappear from the area. It is this economic

fragility inherent in areas of high unemployment that leads to faster than average increases in

unemployment during recessions.

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WolverhamptonHartlepool

ManchesterLambethNewham

Walsall National Avg

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Unemployment rate Apr - Jun 2008

Growth in rate June 2009

14

However, although the impact of the recession on poor areas has been disproportionate, it has been

significant across the rest of the country. Different factors have driven up unemployment in different

regions. As would be expected given the origins of the recession, the number of managers and senior

officials losing their jobs has more than doubled in the last year36; and one third of these jobs have been

lost in London and the South East following the collapse in City financial services37. And, as the effects of

the financial collapse rippled across the economy, we have also seen large numbers of lawyers,

engineers, management consultants and other finance-related professionals losing their jobs in other

parts of the country.38

Nonetheless, as Table 1 illustrates, the bulk of jobs lost have been in the low-skilled, low-waged

occupations where recent job growth had been the greatest – catering, retail, call centres and

construction. As the credit crunch took effect, people lucky enough to have any spare cash diverted it to

pay off debts and mortgages, and retail took a hit as a direct result. The freezing of commercial lending

plunged construction projects big and small into limbo and tens of thousands of construction workers

lost their jobs.

Table 1 – Employment Numbers by Occupation39

Occupation July 2008 July 2009 % of All % changeJobs Lost

1: Managers and Senior Officials 32,855 79,815 5 143

2: Professional Occupations 25,365 58,075 4 129

3 : Associate Professional and Technical Occupations 52,890 105,225 7 99

4 : Administrative and Secretarial Occupations 93,085 168,400 11 81

5 : Skilled Trades Occupations 97,600 207,370 13 112

6 : Personal Service Occupations 44,400 75,200 5 69

7 : Sales and Customer Service occupations 141,570 242,900 15 72

8 : Process, Plant and Machine Operatives 92,995 180,665 12 94

9 : Elementary Occupations 285,110 444,975 28 56

Total Unemployed 867,825 1,567,890 100%

Source: ONS, JSA claims by usual occupation change from July 2008 to July 2009

Current figures suggest that there are more unemployed people with low skills than there are available

low-skilled jobs. The ratio of Jobseeker’s Allowance claimants who worked in elementary occupations to

suitable low-skilled vacancies is roughly 12 to 1.40 So we have both an unemployment crisis and a skill

shortage. The failure of our education system over the past decade has made the unemployment crisis

more intractable.


Chart 7: Comparison of job seekers and vacancies by occupation

Source: ONS, Labour Market Statistics, September 2009: DWP, Jobcentre Plus Vacancies. September2009, figures relate to August 2009

As a result, an incoming government must also tackle the skill mismatch. Significant and sustained

improvements in people and skills training must be made now if people are to regain financial

independence once the recovery begins in earnest.

Youth UnemploymentYoung people have been hit particularly hard by this recession. There are 947,00041 unemployed young

people between the ages of 16 to 24, of whom about 500,000 claim JSA.42 Thirty eight per cent of all

unemployed claimants are young people.43 Almost a fifth of economically active 18 to 24 year olds and a

third of 16 to 17 year olds are unemployed.44 Sadly, the scale and extent of youth unemployment

reflects not just the recession but deeper structural problems with education and training in Britain

today; even before the recession began 700,000 young people were unemployed45 and almost one fifth

of young people aged 16-24 were not in education, training or employment. The associated productivity

loss to the economy was estimated at £10 million a day and the associated future earnings ‘wage scar’

on unemployed young people was between 8% to 15%.46

During and after periods of recession, many companies impose recruitment freezes. In May 2009, the

Chartered Institute of Personnel and Development47 found that almost half of all employers were not

planning to recruit any school leavers or graduates this summer. And this is happening at a time when,

through a coincidence of demography, 805,000 young people will turn 18, the largest number since

1990.48 These two factors – the larger than usual cohort of 18 year olds and the freezing of recruitment

– increase the risk that youth unemployment will exceed one million. According to research undertaken

by the Prince’s Trust, one in five teenagers receiving their GCSE results this past summer could be in

receipt of JSA by the time they are 2149.

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16

Faced with months or years of unemployment, there is the risk that many young people will fail to

acquire work habits and their skills base will erode; unless we take action, the young unemployed of

today are on course to become the long-term unemployed of tomorrow. We need a radical new plan to

prevent this from happening.

We believe the answer is sustained and structured improvement in the education and skills development

of young people. We do not believe that subsidised temporary ‘make-work’ jobs – which Labour is

providing through the Future Jobs Fund – can conceivably address the failure of the education system to

prepare a generation of young people for the future.


3. The Current Welfare to Work System

“We will face up to the new issues that confront us. We will be the party of welfare reform. Inconsultation and partnership with the people, we will design a modern welfare state based onrights and duties going together, fit for the modern world.”

Labour Party Manifesto, 1997

Over the last twelve years, there has been endless rhetoric from Labour on welfare reform. During their

time in office, the Labour government have published numerous green papers and white papers

outlining changes and reforms to the welfare to work system; they have launched 22 different

employment programmes at a national level and trialled 15 alternative programmes through pilots50.

Spending has also been huge. Since 1999, the Government has spent £2.2 billion51 to create over 800

Jobcentre Plus offices following the co-location of the Benefits Agency with the Employment Service and

an estimated £5.7 billion52 on the New Deal employment programmes. This is in addition to the £346

billion that has been spent on benefit payments to those out of work.53

And yet, we went into recession with nearly five million people on out of work benefits54; we have the

highest level of youth unemployment in Europe55; and we have a record level of economic inactivity.56

It is the responsibility of an incoming government to tackle welfare reform using experience from here

and abroad. This chapter recaps the changes to welfare policy over the recent past, explains where an

incoming Conservative government will make changes, and outlines why we believe a wholesale and

radical reform of the existing welfare infrastructure is essential.

Background

Passive labour market policies gained ascendancy in the 1960s and continued through the 1970s. The

introduction of Restart interviews and a stricter availability test in 1986 marked the beginning of the

move towards active labour market programmes in Britain. In 1997, Labour were elected on a platform

of welfare reform. Frank Field was asked to “think the unthinkable”.57 But radical reform was blocked by

the then Chancellor, Gordon Brown. Instead, the top-down JSA regime and New Deal programmes were

the two means by which Labour delivered a heavily interventionist approach through the new Jobcentre

Plus offices.

At the very time the JSA regime and New Deals were rolled out, the UK embarked on one of the longest

periods of uninterrupted debt-fuelled economic growth in recent history. Labour market shortages became

acute as 2.6 million new jobs were created.58 But, despite the creation of a complex and confusing and

often contradictory set of initiatives and labour market programmes (such as the New Deal for Musicians)

to try and drive down the claimant count, up to 80% of the new jobs were filled by migrant workers.59

18

It gradually became increasingly clear that the prescriptive central government approach driving the New

Deal was producing diminishing results. By 2008 fewer than one in four people leaving the New Deal 25

plus went into a job.60 With funding linked to processes rather than outcomes, those with multiple

barriers to work were recycled through the system, as the easiest to help were cherry-picked. As a result,

264,000 people61 have been through the New Deal more than three times and 18,500 people62 have

been through it five times or more. After 12 years, the government has identified a group of about

250,00063 individuals whom none of the New Deal programmes, despite multiple attempts, could get

into work. These claimants cycle back and forth between brief periods of work, JSA and the New Deal

programmes. Many in this group had low skills and multiple barriers that prevented them from being

hired by employers, even during a period of tight labour market conditions. Their complex problems

could not be tackled through an employment programme that segmented people on the basis of age

and benefit alone and then mandated interventions on that basis, regardless of individual needs.

Multiple evaluations have concluded that the number of people who have entered the world of work

thanks to the JSA regime and New Deals, as opposed to those who would have found work anyway, is

very low.64 Whilst this may reflect the fact that, as an economy grows and employers find it more difficult

to compete for staff without increasing wages, employers become more willing to invest in individuals

further away from the labour market it also reflects the inadequacy of the New Deal programmes which

Labour’s own former Welfare Reform Minister, Frank Field, has described as “derisory”.65

In 2004, the Government declared its ambition to increase the UK’s employment rate from a static 75%

to 80%.66 To achieve this, over the following years the Government turned its attention to those on

‘inactive benefits’ – Income Support and Incapacity Benefit. New conditions were placed on both groups;

a new programme – Pathways to Work – was introduced for new Incapacity Benefit claimants; and the

Government announced its plans to require lone parents with older children to seek work. But, radical

reform was blocked by the then Chancellor. In 2006 the Government commissioned David Freud to

report on welfare reform. This report represented “a starting point for a long term process of

transforming the Welfare to Work system”. But again in 2007 the reforms were cold-shouldered by

Gordon Brown as Prime Minister. Eventually, under pressure from Conservatives, the Government

performed a U-turn and accepted that a programme was required for those on Incapacity Benefit and

that it should be designed around outcome-based funding. But the initiative was confined to a modest

set of pilots, delayed until 2011.

Following Freud’s report, the Government has now introduced the Flexible New Deal, under which

private and voluntary providers are contracted to work with the limited number of long-term

unemployed. Unfortunately, however, the Government’s failure to tackle welfare reform when the

economy was booming has meant that the intentions of the Flexible New Deal have not been fulfilled.

Instead, rushed measures have been taken to adapt a programme designed to help approximately

250,000 long-term unemployed people with multiple barriers, so that it can at least pretend to deal with

one million cyclically unemployed people.


The New Deal for Young People Blueprint

The New Deal for Young People was launched in 1998 and formed the blueprint for the New Deal

employment programmes that followed. All young people who had been unemployed for six months

were required to participate in the New Deal (though this approach was subsequently dropped in favour

of a system in which unemployed young people have to wait 12 months before receiving any structured

support).There were two main aspects to the blueprint: a case-loading system where claimants were

required to meet with their New Deal Personal Advisor fortnightly; and a set of prescribed ‘Gateways’ or

job search activities that all New Deal customers had to carry out at different times. During the first four

months, claimants were given intensive job search assistance and short basic skills courses. At month

five, claimants were required to choose between a six month spell of subsidised employment, full-time

education or training for 12 months, work in the voluntary sector for 6 months or work in the

Environment Taskforce.

The majority of New Deal elements were administered in-house by Jobcentre Plus staff except for the

training courses, which Jobcentre Plus contracted out to employment training providers.

The first element of the New Deals - the role of Personal Advisors in public employment service support

– has also been used in other countries, including the Netherlands, Denmark, Germany, Australia and

New Zealand. Studies have found that other employment advice providers have focused more exclusively

on employment advice than Jobcentre Plus67. In addition, the cost per successful outcome achieved by

Jobcentre Plus Personal Advisors (getting an unemployed person into a job) compared poorly with

private sector New Deal providers and Personal Advisors in other countries.68 Questions should therefore

have been raised early on about whether the role of advisor was suitable for Jobcentre Plus staff or

whether it should be carried out by private-sector or third sector providers – but such questions were

not asked.69

The second element of the New Deal blueprint – heavily and centrally prescribed and inflexible

interventions – has been even less effective. Evaluations of the New Deal for Young People pilots show

that there was significant deadweight: many New Deal for Young People participants who found work

would have done so without the programme. Moreover, a significant number of young people returned

quickly to unemployment. Last year, less than one in three New Deal participants went into employment,

whilst over half of all New Deal 25 Plus participants went back onto benefits immediately.70

According to the National Institute of Economic and Social Research, of those leaving unemployment

following the New Deal for Young People, between 50% and 80% would have done so anyway without the

programme.71 This is consistent with estimates of deadweight for the New Deal for Lone Parents which

range from 60% to 80%.72

20

The Growth of New Deals

Despite these severe shortcomings, the New Deal blueprint was then replicated for different claimant

populations. This was predicated on the view that unemployed peoples’ behaviour could be clustered by

benefit type and that all lone parents, for instance, behaved similarly and required the same

interventions. As a result, numerous further programmes were introduced:

• New Deal 25 Plus: Mandatory programme for all JSA claimants at 18 months. Introduced in 1998.

• New Deal for Lone Parents: Voluntary programme for lone parents on Income Support. Introduced in

1998.

• New Deal for Partners: Voluntary programme for partners and spouses of JSA/Incapacity Benefit and

IS claimants. Introduced in 1999.

• New Deal for Musicians: Voluntary programme for unemployed musicians. Introduced in 1999.

• New Deal 50 Plus: Voluntary programme for JSA claimants over the age of 50. Introduced in 2000.

• New Deal for Disabled People: Voluntary programme for Incapacity Benefit and IS claimants.

Introduced in 2001.

• New Deal for Skills: Voluntary programme for unemployed people with literacy problems. Introduced

in 2005.

All of the programmes were run by Jobcentre Plus and followed a set of centrally prescribed

interventions that could only be varied marginally according to the participant. Performance of the

differing New Deals varied significantly. However, across all the programmes, there was poor

performance despite the increasing buoyancy of the labour market over the period. For example, the

average job entry rates for the New Deal for Young People and New Deal 25 Plus was 40%.73

The comparative job outcomes rates seem particularly low when three factors are taken into

consideration. First, the economy grew during the period.74 Second, there were large deadweight costs,

that is individuals who would have found work regardless of the New Deal programme. Third, the New

Deal programmes were segmented by customer group, at greater cost, to provide greater and

specialised support and therefore maximise job outcomes. The result of these low job outcome rates

has been a cost per job outcome which is unsustainable going forward.

Employment Zones

From 2000, the Government tested an alternative employment programme delivery model in some of

Britain’s most deprived areas – Employment Zones. The Employment Zone model trialled an alternative

approach to welfare to work provision that included greater use of the private and voluntary sector and a

limited introduction of payments by results. Employment Zone providers were paid £300 for the first 4

weeks; at 26 weeks, providers were paid an amount equal to the average unemployment benefit

payment for 21 weeks which the provider then passed onto the claimant. All other payments under the

contract were outcome-based and the outcome was defined as a 13-week job outcome.


Despite the fact Employment Zones were based in the most deprived areas, they were found to

outperform the New Deals. Research estimates that Employment Zones delivered between 8%75-14%76

more job outcomes than comparative Jobcentre Plus areas and 32%77 more job outcomes when

compared to the long-term unemployed. Most significantly, evaluations indicate that Employment Zone

participants were less likely to return to unemployment.78

There is consensus that the total flexibility given to Employment Zone providers led to a number of

innovations in delivery which in turn drove the higher performance. For instance, the physical design

and location of Employment Zone facilities were markedly different and a number of specialist advisory

roles were created, such as in-work advisors, outreach advisors and recruitment consultants as well as

clinical psychologists.79

Despite the improved outcomes from Employment Zones, they operated only in a very limited number of

areas accounting for only seven percent of employment programme participants under Labour.80 In

2004, the Government announced its intention to launch ‘Building on the New Deal’, a series of pilots to

introduce the lessons learnt from Employment Zones into the New Deal programmes. However, despite

the fanfare these pilots never happened.81

Flexible New Deal

In December 2007, following the report by David Freud, the Government announced the creation of the

Flexible New Deal. The Flexible New Deal was to replace New Deal 25 Plus, New Deal for Young People,

New Deal for Musicians and New Deal 50 Plus. Participation on the Flexible New Deal was intended to be

mandatory for all JSA claimants over 12 months.

It was agreed that the Flexible New Deal would be introduced in two phases. During the autumn of

2008, the DWP ran the tendering process to award the FND contracts phase one which were to replace

the New Deals in half the country. The DWP allocated a fixed pot of funding for each geographical area

and asked FND providers to bid on a unit cost basis; by committing to a high job outcome rate, bidders

lowered their unit cost per job outcome. This raises obvious questions about the quality of provision.

We have consistently raised concerns about the Flexible New Deal model, arguing that it continues to

abandon people on Incapacity Benefit. There are currently no mandatory back to work programmes for

the 2.6 million existing claimants on Incapacity Benefit. Flexible New Deal was the Government’s

opportunity to extend help to all these people; but they did not take the opportunity.

Second, under the Flexible New Deal young people are not given any structured support for 12 months.

This is double the length of time they had to wait for support under the original New Deal.

22

Third, the current structure of the Flexible New Deal runs the risk of encouraging providers to park

clients since the service fee and outcome payment does not vary by claimant; a claimant who is work-

ready when he or she arrives earns a provider the same fee as a claimant who requires hours of training

and coaching. Providers, particularly in a context of tight resources, are therefore likely to identify work-

ready claimants and prioritise their time and resources on them, to the detriment of those who would be

more expensive to help. Differential pricing would address this issue – but the Government have missed

that opportunity too.

Fourth, 26 weeks in work should not count as a sustainable job outcome. Under the Flexible New Deal,

providers will receive 70% of their fee once a person has been in work for just 13 weeks. A high-

performing employment programme should help people for longer.

As well as these underlying problems, the Government’s response to the recession has been to change

the phase on Flexible New Deal contracts to pay more for process and less for results than was originally

envisaged. Flexible New Deal providers will now receive not the originally intended 20%, but rather 40%

of their payment up front; so the Government is shouldering more of the risk with no guarantee of

achieving better outcomes. This pricing change made what was an already flawed programme

significantly worse.

Also, under the Flexible New Deal, the provider has only one year to place a claimant into work. Until

vacancies start to reappear in the economy, it is likely to be more difficult to get people into work within

this timescale. The danger is that providers will spend little on claimants, knowing it will be very difficult

to place people into jobs within one year. This would provide poor results for claimants and the

taxpayer. Extending the period by which providers can earn an outcome payment to more than one year

would prevent such behaviour; but that opportunity, too, was missed.

Finally, the Flexible New Deal was never designed to handle the volumes of claimants that are now

anticipated. Rather than addressing this issue head-on, the Government have tried to reduce the

numbers of people who move onto the Flexible New Deal by diverting them into other activities, such as

those in the Young Person’s Guarantee. While this will keep numbers down in the short-term, it will not

provide people with the support and investment they require in the medium-term.

In short, the Flexible New Deal contracts, as structure, will not deliver the best possible outcomes either

for benefit claimants or for the taxpayer.

Support for Lone Parents

Legislation was passed in November 200882 to change the rules for the 736,00083 lone parents claiming

income support. By November 2010, after a series of gradual changes, parents whose youngest child is

over seven will be expected to work rather than being entitled to income support.


There has been little evidence of the Government providing support that lone parents need to overcome

barriers and return to work. In May 1999, an average of 7,950 lone parents left income support

following a return to work. By February 2009, the number had fallen to under 6,00084. Progress towards

the Government’s target of getting another 300,000 lone parents into work has stalled.85

Support for People on Incapacity Benefit

Whilst a significant amount of Government attention and money has been spent on the unemployed over

the last decade, little attention has been spent on the 2.6 million Incapacity Benefit claimants.

Many people who claim Incapacity Benefit are too sick or disabled to work and a Conservative

government will protect those in this position. However, many people who claim Incapacity Benefit

would like to return to work.86 And, for a country with a National Health Service free at the point of use,

we have a disproportionate percentage of adults not working on health grounds. Some have recovered

from episodes of depression, anxiety or other illnesses; others have learned to manage their health

condition and the sad fact is many should never have been signed onto Incapacity Benefit in the first

place. We cannot afford to waste the talent of the 7% of the working age population out of work for

health reasons and we can no longer afford to pay billions of pounds of Incapacity Benefits each year to

people who could be at work.87

In 2001 the Government launched the New Deal for Disabled People. Under this voluntary programme,

existing Incapacity Benefit claimants were referred to a ‘Job Broker’ who would assess skills, identify

suitable job opportunities and work with the individual throughout the job application and interview

process. However, take-up of the programme has remained very low with only 1.5% of all Incapacity

Benefit claimants choosing to enrol on the programme each year.88 For the majority of Labour’s tenure,

this has been the only programme that targeted existing Incapacity Benefit claimants, despite the fact

there were significant labour shortages across many job-appropriate industries.

Further attempts were made with the introduction of seven Pathways to Work pilots in 2003/04 that

targeted support on new claimants of Incapacity Benefit entry. From 2004 onwards the Pathways model

was rolled out across the rest of the country. 40% of the Pathways areas are run in-house by Jobcentre

Plus and 60% are run by providers on the Government’s behalf.

Under the Pathways model, new Incapacity Benefit claimants are required to attend a Work Focused Interview

with a Personal Advisor. If deemed appropriate, the Personal Advisor refers the individual onto four further

Work Focused Interviews; entry onto the New Deal for Disabled People (as outlined above) or onto a Condition

Management Programme89. Advisors can also access a return to work credit which pays Pathways participants

£40 a week for a year if their gross annual earnings are no more than £15,000; and an additional £300 of

discretionary cash spend which the Personal Adviser can use to support purchases or activities that increase

the chances of finding work. However, the Pathways programme is flawed because there are no measures

24

within the programme to help people improve their skills. Disabled people and people with long-term health

conditions are twice as likely to have no qualifications as the rest of the population, and only 59% of the

disabled population is qualified to level two, compared with 76% for the rest of the population90. Another

problem is that, like the New Deals, the Pathwasys programme is highly prescriptive and does not give

sufficient flexibility to providers to work with claimants. Providers complain that it has therefore been difficult

to develop a working relationship with local health care providers – often essential for clients in this group.

A 2007 study by the National Audit Office found that the Pathways programme had cost £304 million91

over the years since 2003 and that, in this time it had cumulatively placed only 67,000 people (or 2.6%

of all Incapacity Benefit claimants) back into work; this equates to a job entry rate of 15% for the

programme at a cost of £4,500 per initial job entry.92

Table 2: Numbers moving into Pathways and into paid work through to January 200793

All Claimants New Claimants Existing Claimants

Pathways entrants 455,780 427,290 28,480

Subsequent job entry 67,410 59,760 7,660

Job outcome rate 15% 14% 29%

Source: Institute for Fiscal Studies, 2008

It became clear that radical change was required if the Incapacity Benefit trap was to be tackled

seriously. In January 2006 the Government published A New Deal for Welfare, a Green Paper which set

out the introduction of the Employment and Support Allowance, the successor to Incapacity Benefit. The

changes were codified in the Welfare Reform Act which gained assent in May 2007 and the new benefit

was introduced in October 2008. Under these reforms, new claimants undergo a medical assessment –

the Work Capability Assessment (WCA) - during the first 13 weeks of their claim to determine whether

and to what extent their illness or disability affects their ability to work. Claimants are then streamed

onto different benefit categories (and associated payments) according to the outcome of their

assessment. People who are deemed to have no capability for work are paid a ‘Support Component’ of

£30.8594 in addition to the Basic Allowance of £64.30. People who are deemed to have limited capability

for work-related activity receive a ‘Work Related Activity Component’ payment of £25.20 in addition to

the Basic Allowance.

While tackling new claimants, Labour refused originally to commit to moving existing Incapacity Benefit

claimants onto the new Employment and Support Allowance. However under pressure from

Conservatives, the Government announced in the 2008 Budget that it would reassess all 2.6 million

existing Incapacity Benefit claimants through the Work Capability Assessment over a period of three

years. Early results from the tougher Work Capability Assessment pilots indicate a much higher than

expected proportion of new ESA applicants who have been judged able to work and have had their

claims rejected.95


The real tragedy is that despite all of the Government’s welfare reform rhetoric over the last ten years, the

largest population of benefit claimants, both in terms of numbers of people and cost, has been essentially

ignored. As a result, at the very time the Government could have helped hundreds of thousands of Incapacity

Benefit claimants back into work – during the period of tight labour market conditions – it did very little. The

number of Incapacity Benefit claimants rose to a record high96, despite the range and availability of jobs.

And despite Labour’s claims to be getting to grips with welfare reform once and for all, it is still currently

failing to provide proper welfare to work programmes for the 2.6 million people on Incapacity Benefit.

Labour’s Response to the Unemployment Crisis

Britain entered recession in April 2008. Following pressure from Conservatives, from January 2009, the

Government announced a series of measures for the unemployed with particular emphasis on the

young. These included a government subsidy for employers hiring unemployed people called the

‘Golden Hello’97, the Young Person’s Guarantee98 and the Future Job Fund99. These measures cost £1.7

billion.100 An extra £3 billion was awarded in the Pre-Budget Report 2008 and Budget 2009 to reverse

jobs cuts in Jobcentre Plus and to increase Flexible New Deal volumes.

But the approach to the jobs crisis has thus far been unintegrated and piecemeal, with no clear strategy

for tackling the problems we face. Each of the crisis programmes suffers from sever structural flaws.

And the programmes almost entirely end in March 2011, despite the fact that unemployment is

predicted to remain significantly above pre recession levels for some years to come.

The Young Person’s Guarantee

The Young Person’s Guarantee is intended to offer a job, work-focused training or meaningful activity to

all 18-24 year olds before they reach the 10 month stage of their Jobseeker’s Allowance claim and this is

means to be fulfilled via:

1. a subsidised six month job placement through the Future Jobs Fund; or

2. support to take an existing job in a key employment sector; or

3. a work-focused training place for a maximum of 6 months; or

4. a place on a Community Task Force.

However, the Government has already tested this approach before through the New Deal for Young

People, a programme that only managed to place one in five young people into work. 101 It is as if we

have wound the clock back twelve years. The original offer of support under the New Deal for Young

People was:

a. a subsidized six month job placement; or

b. training; or

c. volunteering; or

d. a place on the environment task force.

26

The key difference between the Young Person’s Guarantee and the New Deal for Young People is that

support will be offered four months later under the Young Person’s Guarantee.

While some young people may benefit from these options, the New Deal has taught us that a

prescriptive approach to tackling unemployment ultimately fails. Diverting all young people onto full

time activity – in order to artificially lower the unemployment figures - may actually prevent some young

people from actively looking for and moving into work.

Future Jobs Fund

100,000 six month work placements for young people are to be funded through the £1 billion Future

Jobs Fund102 and an additional 50,000 places are to be made available to all unemployed people in

unemployment ‘hot-spots’.103 The jobs are to be offered in three separate tranches over a period of 18

months. Employers are to be given a £6,500 subsidy by the Government to cover the cost of each six

month work placement and the DWP determines centrally which employers can offer subsidised work

placements through a bidding process.

The first round of bidding was completed in August 2009. Almost all of the successful bids were made

by local councils.104 This raised concerns that council jobs were being displaced since most councils

were in the process of shedding jobs at the time the bids were made.105 Questions have also been raised

about the quality of the Future Jobs Fund jobs themselves and whether any could turn into permanent

positions in the future. DWP’s bid criteria for the first round of Future Jobs Fund jobs did not include any

indication of whether the job could become permanent if the candidate excelled106.

Support to take an existing job in a key employment sector

The Government has committed to helping up to 100,000 young people access existing jobs in key

employment sectors. 50,000 of these jobs are to be in the Government’s Care First programme under

which employers will receive a £1,500 subsidy to take on new social care workers. The other 50,000

jobs are expected to be in key growth sectors such as hospitality. Employers are to be eligible for a

£2,000 subsidy for employing a young person who has been on Jobseeker’s Allowance.

Work Focused Training Course

The Government has reserved a budget of £122 million107 over 2009-11 to support young people in

work-focused and pre-employment training.

As the maximum period a young person can attend training under the Young Person’s Guarantee is six

months, longer term training which provides significant new skills or a qualification is disqualified

automatically. This is a significant short-coming of the Young Person’s Guarantee and a missed opportunity.

Young people, particularly those with low skills, should be encouraged and supported to invest in hard skills

and qualifications while jobs are thin on the ground. The Further Education college system and Apprenticeship

structure are well placed to work with young people to address skills deficits but Further Education courses or

Apprenticeships of over six months are carelessly debarred by the Government’s scheme.


Community Taskforce

When the Young Person’s Guarantee becomes mandatory in 2010, young people who cannot secure a

Future Jobs Fund job, or who choose not to undertake work-focused training will be required to

participate on the Community Taskforce for 13 weeks. So far, the Government has been unable or

unwilling to provide any detail on what activity these taskforces will entail.

Those who return to Jobseeker’s Allowance after completing a Young Person’s Guarantee placement will

be directed to the Flexible New Deal programme. With most Future Jobs Fund placements unlikely to

lead to permanent work, it is likely that many young people will find themselves unemployed again once

their placement finishes. This would mirror the experience of the New Deal for Young People.

In short, the Young Person’s Guarantee does not offer long-term investment or solutions for young

people, despite its hefty price tag. None of the four elements of the Young Person’s Guarantee will help

young people to overcome the educational and skills deficits which hinder so many. Such short term

make-work programmes and offers of meaningless guarantees are no substitute for sustained

investment and a commitment to young people. In this period of economic uncertainty we need to equip

young people with the skills and training they require to turn their lives around – and the Young

Person’s Guarantee does not offer the prospect of that happening.

28

4. The Work Programme

Introduction

The Conservative approach to welfare reform set out in this document is more radical and more

comprehensive than the half-hearted measures that have been belatedly adopted by the current Labour

Government. We will introduce a single, fully-funded integrated programme of welfare to work which will

cover more people, intervene earlier and be more focused on results – getting people into work and

helping them to stay there.

A Conservative government will introduce The Work Programme built on the key principles of our

approach to welfare reform announced in our 2008 Green Paper. This will be the central programme,

designed to help both the cyclically and structurally unemployed.

An incoming government will face two great jobs challenges. First, we must take action to address the

number of people on out of work benefits, three million of whom have not worked for long periods of

time – either by virtue of claiming Incapacity Benefit or as a result of long spells on Jobseeker’s

Allowance.108 We must provide structured long-term support to help hundreds of thousands of people in

the condition to make the transition from welfare dependency into sustainable jobs.

Second, we must provide hope and a future in employment for the 800,000 people have who have

joined Jobseeker’s Allowance since the beginning of the recession109 and for others who become

unemployed. To ensure that such people are able to fill the jobs created as the economy comes out of

recession, we must provide effective support and access to genuine training and skills development.

Through The Work Programme, we are committed to giving people access to structured employment

support much earlier in the cycle. We believe that young people, in particular, should be provided

dedicated case managers and mentors through The Work Programme from six months into their claim.

By intervening earlier, a spell of unemployment can be prevented from turning into a period of

protracted unemployment. Those with poor attachment to the labour market and former Incapacity

Benefit claimants will be transferred to The Work Programme on a rapid basis.

The Work Programme Principles

The Work Programme is a radical departure from Labour’s approach to employment programmes and its

core principles are different:

One Employment Programme

We will replace Labour’s numerous unemployment programmes with one flagship programme – The

Work Programme. First, we believe that specialist employment support providers are better than


Whitehall-based civil servants to identify employment barriers and to segment groups of unemployed

people. The system today centrally streams people according to which benefit they claim – different

employment programmes have been created for different benefit types.

We do not believe that people are defined by the type of benefit they receive but by the employment barriers

they face. For this reason, we believe all people should have access to one employment programme.

Second, we believe that many individuals – particularly those who have claimed Incapacity Benefit for

many years – will require specialist support. The Work Programme providers will be given incentives to

work with voluntary and specialist organisations to address particular employment barriers as they arise

in the population of participants. This flexibility is not possible in centrally designed and prescribed

employment programmes; nor is it easily achieved when there are multiple employment programmes.

Third, it is costly to run multiple employment programmes. The Flexible New Deal goes some way to

tackling this since it replaces the New Deal for Young People and New Deal 25 Plus. However, there are

still multiple employment programmes and support mechanisms that are contracted for separately,

despite the fact they all deliver broadly similar support. We believe that it would be better value for

taxpayer if the majority of programmes were rolled into one.

Therefore, under Conservative proposals all unemployed people of working age claiming benefits will be

referred to The Work Programme. The entry points will be staged, reflecting the likelihood of claimants

finding work under their own steam. Those who have not worked for many years (such as former

Incapacity Benefit recipients) will move onto the programme rapidly - young people aged 16-24 will be

referred after six months, and those who have established solid work experience could be transferred

up to 12 months after their first claim. The types of claimant include:

• people who have lost their job during the recession;

• the long-term unemployed or people who cycle through the welfare to work system repeatedly

without securing employment;

• people who have migrated off Incapacity Benefit onto Jobseeker’s Allowance following a Work Capability

Assessment in cases where they have been found to be fully able to work. For many, this will be the first

exposure to an employment programme following many years outside of the workforce; and

• people who have migrated off Incapacity Benefit onto the ‘Employment’ component of the

Employment and Support Allowance following a Work Capability Assessment where they have been

found to be able to undertake some work-related activities. Again, for many, this will be the first

exposure to an employment programme after many years outside of the workforce.

Differential payments

As The Work Programme will cover all unemployed people, payments to providers must reflect the fact

that some people will be relatively easy to help while others will require significant investment. An

individual who has become unemployed as a result of the recession is likely to require less help than an

individual who has claimed Incapacity Benefit for several years.

30

The amount paid by the taxpayer to Work Programme providers to help an unemployed person into a

job will therefore vary depending on a range of factors such as how long an individual has been out of

the labour market, their health, and their skills. Factors like these have often been found to be reliable

indicators of the relative difficulty and cost of restoring an individual into the world of work. As the

system develops, differential pricing is likely to become increasingly sophisticated.

Outcome-based contracts

The level of investment in people who have been unemployed for a long time – and who are likely to

remain unemployed unless the Government offers them targeted support – should be assessed against

the medium-term cost to the taxpayer. By investing in the long-term unemployed now, the taxpayer will

save money in the medium-term and society will benefit immediately. We believe that the current

Government’s refusal to invest significantly in the long-term unemployed and those on Incapacity Benefit

has been irresponsible and short-sighted. By insisting on payment by results, the necessary investment

can be provided without an unaffordable upfront cost to the taxpayer.

The Conservatives have long argued for the establishment of outcome-based contracts. This is why we

believe that private and third sector providers should only be paid when they have delivered. Under

circumstances of fiscal crisis, we cannot afford to waste a single penny – and, through payment by

results, we can ensure that no public money is wasted – the provider takes the risk the taxpayer pays

only as the taxpayer saves.

We are therefore determined to restore the correct balance between upfront financing for providers and

rewards for positive results.

We have also considered the question of what constitutes a positive outcome. We believe that the

answer is sustained employment for a period well beyond the current 26 weeks. Individuals need not

stay with the same employer throughout the retention period, but must remain in employment.

Traditionally employment support has come to an end once an individual moves into work. However, many

people require extended support as they made their way into the world of work. This is particularly the

case for individuals who have health conditions to manage. Linking outcome payments to longer retention

periods will ensure Work Programme providers provide participants with post-employment support. The

provision of post-employment support will help prevent the cycle of people moving into work, facing a set

of problems they do not know how to negotiate, quitting work and returning onto benefits.

Accordingly, once on The Work Programme, unemployed people will remain the responsibility of

providers for an extended period, both in and out of work. This means we will eliminate the revolving

door between providers and Jobcentre Plus. The providers will be rewarded for sustained participation

by their clients in the world of work, for periods which in some cases may extend as long as three years.

Short breaks as clients change or upgrade jobs, or undergo training, will be absorbed within the

proposed structure.


The DEL:AME Switch

One of the anomalies of the Government’s public expenditure management system is the division of

public expenditure into DEL – Departmental Expenditure Limit – and AME – Annually Managed

Expenditure. DEL covers the funding that is spent by government departments through multi-year

Spending Review Agreements. In the context of DWP, DEL includes all funds spent on employment

programmes and the running of Jobcentre Plus. AME consists of large, volatile and demand-led spending

which cannot be subject to multi-year spending limits; in DWP’s case this includes out of work benefit

payments of £35 billion in 2009/10.110

While DEL expenditure is controlled tightly by HM Treasury and departments are held to account for

spending within agreed limits, there is no active management of AME.

There is at present no linkage between DEL and AME expenditure. The Government does not consider

the cost of effective employment support (DEL spend) against the fiscal gain of a year-long move into

employment (AME savings). Instead, per capita DEL limits are set and managed in isolation. So the

amount of money that can be spent on programmes for getting people into work is limited and takes no

account of the money the Government could save by getting someone off benefit and into work.

This is short-sighted, since the total AME cost of a long-term unemployed individual is significant. David

Freud calculated in his report that the gross annual saving to the DWP of moving an average recipient off

Incapacity Benefit into work is £5,900. With wider exchequer gains (offsetting direct and indirect taxes

paid with additional tax credits) this figure rises to £9,000. The equivalent figures for Jobseeker’s

Allowance are £4,100 and £8,100 respectively.

We believe it makes more sense to share AME savings for a fixed period of time than to pay out AME

through benefits indefinitely. Our proposals will therefore introduce the DEL:AME switch where there is a

reliable counter-factual against which to measure savings. Groups for which this is suitable may include

the long-term unemployed, including former Incapacity Benefit recipients and those claimants who have

cycled back and forth from Jobseeker’s Allowance. By contracting out and paying by results, we can give

successful Work Programme providers greater rewards for taking a greater share of the risk, provide

structured employment support to all benefit claimants and not just those in Jobseeker’s Allowance, (as

is the case today) and make large long-term savings for the taxpayer.

We recognise that, given the mix of claimants and the current economic conditions, it may take Work

Programme providers a significant period of time to place people successfully into work. We also

recognise that Work Programme providers will require interim finance. We would expect such

investment to be financeable in normal conditions, particularly once providers have established a track

record. However, given the more difficult conditions the financial markets now face, we would be

prepared to work with providers to find a way to secure cash-flow funding. We are in addition prepared

to fund modest service payments to providers when they take on clients.

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Business-led Training Modules

We accept too, that in the current economic circumstances it is necessary to ensure that Work

Programme providers have access to a variety of options which, in addition to their own in-house

programmes, enable them to provide claimants with appropriate education and training.

Hence, we will support training programmes designed by business and experts to provide current sector

specific skills. Training that has been designed directly by major business and experts will ensure Work

Programme participants have the soft skills and basic industry skills that employers use as sifting

criteria. The business-led training programmes will also give participants an overview of jobs in given

sectors before they apply. The training content, materials, structure and delivery means will be designed

and determined by business and experts.

Three programmes will be set-up immediately, with more to follow.

Service Academy

We will launch a Service Academy programme to provide pre-employment customer service skills

courses with the active co-operation of sector skills councils and of service sector employers. The

courses will provide excellent grounding and rebuild the confidence of any long-term unemployed

person, so that he or she will be in a position to enter a service sector job.

We will take advantage of the parallel new programmes developed by Skillsmart Retail and

People1st to prepare people to work in the retail and hospitality sectors. The Service Academy will

foster a customer service mindset in participants through training and a two-week work placement

with companies across the two industries. Among the companies prepared to provide work

experience are Asda, Travelodge and Tesco.

The Service Academy will help claimants to build their motivation and confidence, understand

better what the interview process involves, tailor their CVs, understand how retail and hospitality

operations work and develop the skills they need to work in the retail environment.

IT Academy

Almost 10 million Britons lack basic IT skills.111 Many of these people are long-term unemployed.

In particular lack of IT literacy will be a significant barrier for long-term unemployed claimants who

have health issues and therefore can only do office-based work. In September 2009, Microsoft

announced its commitment to provide on-line IT training and support to help up to 500,000

unemployed people find work through a £50mn investment called Britain Works. Microsoft has

agreed to deliver part of this commitment through The Work Programme. The IT Academy will

provide basic IT skills proficiency at a minimum through to basic software developer capabilities

where appropriate.


Young Entrepreneur Academy

Many young people are interested in working for themselves are looking for help to get started.

Bright Ideas Trust has developed a series of training courses for young people that cover the

basics of self-employment and entrepreneurship – focusing on the essentials of how to prepare

financial projections, where to get help and how to develop a business plan. The courses provide

a strong overview of the basics of starting a business or working for yourself and are an effective

way to introduce young people to self-employment before they take the plunge. Bright Ideas Trust

has agreed to work with Work Programme providers to deliver their training programmes across

the country.

How The Work Programme will be introduced

As the contracts for all of the private sector-led employment and support programmes conclude, we will

replace them with The Work Programme. We will also phase-out all employment programmes led by

Jobcentre Plus and incorporate them into The Work Programme.

Clearly, the detailed timing of our introduction of The Work Programme will depend on the election

timetable and the position of Flexible New Deal contracting rounds. The first wave of the Flexible New

Deal is contracted and being rolled out across half the country from October 2009. Under current

timescales, the Government has indicated that the process of contracting for Flexible New Deal phase

two will be continuing in spring 2010.

An incoming Conservative government will replace the Flexible New Deal phase two with The Work

Programme. We will also seek to renegotiate the Flexible New Deal phase one contracts to incorporate

the principles outlined above.

Why The Work Programme is needed

We are proposing significant changes to the welfare to work system during a period when more people

than ever rely on the system. Some would argue that at a time like this we should abandon welfare

reform. But never has it been more necessary. We cannot afford to continue with a system that expects

little and invests little in the millions of people on Incapacity Benefit. We cannot afford to continue

rolling out an unemployment support programme – the Flexible New Deal – that we believe is flawed and

that was designed during a different economic era for a completely different client base. Now is the

time to invest in people if we are to prevent a whole new generation from becoming welfare dependent.

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We believe that work is the best route out of poverty and that transforming our welfare to work system

is a moral as well as a financial imperative. We cannot decently leave people trapped in a cycle of

worklessness, deprivation and family breakdown. Any government has a duty to offer people who are

caught in that trap the best help possible to transform their own lives.

But we must go beyond the core Work Programme itself to support our radical welfare reform plans we

are creating a range of additional programmes to support claimants and those providers preparing them

for work. These are Youth Action for Work, Work for Yourself, Work Together and Work Clubs. They are

all integrated into The Work Programme, to form a single, coherent whole.


5. Youth Action for Work

Young people have been particularly badly affected during the current recession. 947,000 16-24 year

olds are now unemployed, the highest number since ONS records began. Youth unemployment now

accounts for 38% of total unemployment112.

The dire situation for young people in Britain is the compound of two separate crises; a structural

unemployment crisis and a cyclical unemployment crisis. The Government’s failure to make significant

inroads in the NEET population when the economy was buoyant leaves a large cohort of young people

who were already out of work even further from the job market and the education system during the

recession. Meanwhile, as other young people graduate from education, or leave insecure jobs during the

recession, many are finding no opportunities to work, despite being work-ready and work-focused. This

summer’s fiasco on university place funding, which left tens of thousands of A-Level students unable to

find a place at university,113 coupled with the Government’s ongoing failure to satisfy demand for

Apprenticeships, means that many of these young people are unable to find a way of further developing

their skills as an alternative to worklessness.

If a Conservative government is elected, it will inherit both of these crises, and will require solutions to

re-engage young people who have become disengaged from work or training, while also helping job-

ready young people to remain active and return to employment as quickly as possible.

With both of these groups, it is important to intervene early. It is vital that young people, who have

limited or no experience of work, are supported early to ensure they retain or develop working habits

and to maintain their self-esteem. Whatever their educational and social background, ten months

claiming Jobseeker’s Allowance with no activity, as the current Government allows to happen, could have

a negative effect on a young person’s skills, development and self-esteem that lasts for the rest of

their life.

We believe that once young people have been out of work for six months, they are in real need of help.

Only 25% of 18-24 year olds who leave Jobseeker’s Allowance between 6 to 12 months leave to a job114.

Far more of them simply stop claiming.

The type of help that young people need varies depending on their situation. By making Youth Action for

Work available to all young people who have claimed Jobseeker’s Allowance for over six months, we will

ensure that there are options available to help the work-ready find work, to help those with skills- gaps

to increase their skills and to re-engage those facing more complex barriers to work. In addition to the

job search and other support offered by Work Programme providers, Youth Action for Work will give

access to a range of training and work experience opportunities. These programmes are designed to

ensure that any young person, whatever their educational achievement or social circumstances, can join

a pathway to a qualification or a sustainable job.

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As young people approach six months on Jobseeker’s Allowance, they will be transferred to The Work

Programme. The provider will be responsible for ensuring that they are given the support appropriate to

them. The provider may guide the individual towards a sustainable job, towards a Youth Action for Work

support programme, or towards an alternative programme of their own design.

For skilled young people, who wish to prepare for a vocational career we will seek to create an additional

100,000 apprenticeships and other training places. We will do this by offering SMEs incentives to take

on apprentices, enabling employers to be paid upfront, and thus widening their options on purchasing

training places.

As part of these 100,000 places, we will offer pre-apprenticeships - a preparation route for young people

who want to do an apprenticeship, but who have not yet acquired the necessary skills.

We will also introduce the Work Pairing programme, which will create up to 100,000 places over two

years. This programme will team up teenagers with sole traders for extended one-to-one work

mentoring of six months. We will help to create an intermediary market to manage this, along the lines

of successful models already pioneered.

We will also create an extra 50,000 Further Education college places in each of two years, by allocating

our NEETs fund to increase Further Education college and other training places for this group. This will

enable Work Programme providers to provide effective help for young people who have become

disengaged from employment, education and training, or who are at risk of becoming disengaged, and

have left education with skills gaps.

To encourage young people to take up these places, we will change the rules which necessitate linking

courses to a paper qualification, and which therefore drive out innovative ways of re-engaging NEETs. We

will ensure specifically that Work Programme providers are recognised as being able to link young

people to Further Education colleges and to the voluntary and charity sector providers, which already

shows some success in re-engaging young people with education and training.

For young people who are work-ready, in addition to the intensive job search support provided by their

Work Programme provider, we will work with businesses and charities to open up more internship

opportunities to young people. Following pressure, the present Government have recently announced

that they will allow young people who are unemployed for six months or more to continue claiming

Jobseeker’s Allowance whilst participating in an internship. We welcome this move; however, current

rules state that in order to take up this offer, the internship must be arranged through Jobcentre Plus.

We will get rid of this unnecessary bureaucracy and allow young people who have taken the initiative to

arrange an internship privately to take advantage of this rule change as well.


We have already highlighted many of the symptoms of skills shortages in the UK before the current crisis in

our Green Paper on skills. The Youth Action for Work programmes will ensure that hundreds of thousands

more young people are better trained when the economy returns to growth and real jobs return. We must

also make sure that the lack of work-relevant training that has compromised this generation does not happen

again. Young Apprenticeships will plug some of the gaps in vocational education for 14-16 year olds that are

currently causing many young people to drop out of the system and become NEET. Young Apprenticeships

have proven themselves as solid, vocational qualifications which have a genuine positive effect on improving

motivation and work-readiness in young people at risk of dropping out of the classroom. We will expand this

under-utilised pathway for 14-16 year olds, providing a more natural route into apprenticeship.

Apprenticeships

For years, the Government have devalued the Apprenticeship as a qualification by widening the

definition to include courses that most people would not recognise as real Apprenticeships. This has

been done so that the Government can say that they are offering more Apprenticeship opportunities.

Despite this, the Government have repeatedly missed their main Apprenticeship targets. For example, in

2003, Gordon Brown promised that there would be 320,000 Apprenticeships by 2006115. Yet in 2006/07

there were only 239,000 Apprenticeships.116

In our skills Green Paper, we have already set out our approach to rebuilding the quality and brand of

Apprenticeships, which in turn will increase the take up of a valuable qualification that have been

misunderstood by the Government. We will shift the focus of Apprenticeships towards Level Three, as

opposed to Level Two qualifications.

To increase employer take up of apprentices, as we repair the damage done to the Apprenticeship brand

by the Government, we will enable businesses to be paid directly for training, ensure that programmes

that achieve high standards receive only light touch regulation, and make it more appealing for small

and medium-sized enterprises to take on apprentices

We will offer a major boost to the provision of real, workplace training by injecting £775 million of

support for pre-apprenticeship training and Apprentices of all ages. This extra support will be delivered

by refocusing the Train to Gain scheme on supporting people into Apprenticeships, creating 100,000

new additional training and apprenticeships places every year. In the immediate post-recession period

we will focus extra pre-apprenticeship funding particularly on those young people who have been on

Jobseeker’s Allowance for six months or more. As the economy recovers from recession we would

expect most of these funds to go directly to employer-based Apprenticeship schemes.

Our support for more workplace Apprenticeships will include a £2,000 bonus for each apprenticeship at

a small or medium-sized enterprise (SME). SMEs comprise by far the largest number of companies in the

UK, but they often have difficulty meeting the cost of taking on and training apprentices, so we will put

in place this extra support.

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Our plans will also include extra support to make it easier for small employers to come together and

form Group Training Associations – a way of pooling their resources and talent to create and run their

own apprenticeship schemes.

Pre-apprenticeships

In order to help many more people into rigorous Level three Apprenticeship courses, we will introduce a

new programme of ‘pre-apprenticeship training’ to bridge the gap between school and genuine

employer-based apprenticeships, available to 16-24 year olds. Pre-apprenticeship courses will be more

explicitly designed to lead directly into an apprenticeship than currently available courses. Participants

will be expected to be applying for apprenticeships from an early stage on their course. Training

providers will help participants to link to and apply for apprenticeships in their vocation.

Training will take place in a work-like setting, offered by FE colleges and other training providers.

Training will emphasise work routines and will focus on job specific practical skills. Pre-apprenticeships

will fill gaps in the participants literary and numeracy skills that prevent them from going straight into

an apprenticeship, but these skills will be taught so as to be directly relevant to the vocation in which

the young person is seeking an Apprenticeship.

A House of Lords inquiry into Apprenticeships in 2007 concluded that one of the biggest barriers to

young people participating in apprenticeship training was the lack of basic skills. It concluded that

‘many school leavers in the UK have not acquired the minimum level of functional numeracy and literacy

and social skills necessary to benefit from apprenticeship training.’117 Ofsted told the inquiry that at a

conservative estimate 300,000 16-19 year olds118 were unable to access Apprenticeships due to a lack of

basic skills. By helping young people to meet a certain standard before they apply for an apprenticeship

we will also build business confidence in the Apprenticeship system.

Work Pairings

We will harness the skills of established sole traders by introducing Work Pairings across the country. As

with pre-apprenticeships, Work Pairings will be aimed at young people who do not yet have the

necessary skills and qualifications to embark on an apprenticeship, and who would benefit from an

extended period of mentorship and training before engaging in an apprenticeship or other job. Work

Pairings will provide a route into Further Education or into the regular labour market for those who are

at risk of becoming NEETs, or who already fall into the NEET category. The programme will be open to

16 to 19 year olds, particularly those who have yet to gain workplace experience.


There are three million sole traders in the UK, of whom many work in skilled trades occupations119. Many

conduct trades much in demand, but in short supply in current Apprenticeship programmes. Beyond

their trade skills, sole traders have an enterprising mindset, and the ability and discipline to run their

own business affairs. 120

Programme Design

Many sole traders are keen to pass on skills to younger people, but are dissuaded by the legal

requirements of working with young people; managing recruitment, insurance and training and concern

for their liability in the event of an injury to the young person.

We will commission voluntary, not for profit organisations and social enterprises to run Work Pairing

projects. We will link these Work Pairing programme co-ordinators to Work Programme providers to help

direct the most suitable participants to a Work Pairing. This will make it easier for sole traders, most of

whom do not have the capacity to take on extra administrative work, to take on a Work Pairing.

Each project will employ at least one dedicated coordinator, who will be expected to recruit traders and

young people from their community for Work Pairings. The coordinator will also be responsible for

administrative elements of running a Work Pairing.

Once a trader has been accepted onto a Work Pairing programme, the local provider will be responsible

for matching the trader to a young person. Potential participants will be interviewed by the provider, to

discover their interests, skills and personality, and will then be matched to traders, giving the participant

an older role model at an important time in their life.

We will provide a fund for each project that will help to cover additional costs, such as Employer Liability

Insurance, basic equipment, clothing and bursaries to allow young people to enrol in obtaining a

practical certificate or qualification related to their work.

Skills and qualifications

Participating in a Work Pairing programme will develop transferable workplace skills such as punctuality,

dressing appropriately, and professionalism as well as specific skills related to the trade in which they

conduct their Work Pairing.

40

Those who complete a six month Work Pairing will find routes open to them both in the workplace and

in further education. A Work Pairing will help to prepare a young person for a full Apprenticeship. Both

the young person and the trader would be supported if the trader wishes to continue working with the

young person on an apprenticeship programme. Depending on the Apprenticeship, graduates of the

Work Pairing may wish to complete some additional college training before starting.

Some traders will decide to directly employ the participant at the end of the Work Pairing. For those

trainees wishing to continue in the workplace, but where the trader and trainee choose not to continue

working together, the Work Pairing will provide a valuable first working reference for the trainee. The

Work Programme provider who referred the young person to a Work Pairing will continue to provide job

search support after the programme.

Working Rite – Case Study

Working Rite is a social enterprise that uses work-based mentoring in order to help teenagers

become ready for work and achieve maturity. Working Rite particularly targets young people in

deprived areas, who are at risk of falling into the NEET category.

Working Rite broker six month placements between tradesmen and tradeswomen and young

people. The placement is regarded as a real job, rather than a course.

Trainees get the opportunity to become part of a real workforce, being paid, and receiving real on-

site work experience, and doing real work. The skills learnt on a Working Rite placement prepare

young people for an apprenticeship or a job.

Working Rite’s support in co-ordinating placements means that tradesmen benefit from a hassle free

recruitment process, where bureaucratic issues and paperwork are taken out of their hands. Financial

costs are low, with the tradesman/woman expected to contribute chiefly through mentorship. Where

there are problems in a placement, Working Rite are able to provide back up support.

Between 2004-07 Working Rite achieved a 78% positive outcome rate. 50% of participants went on

to an apprenticeship and a further 28% to full employment or college.121

In 2009, Working Rite were recognised at the Centre for Social Justice 2009 Awards

‘Having developed a very effective yet easily replicable model to tackle the growing number of youngpeople who are Not in Employment, Education or Training (NEET), Working Rite is an excellentexample of the third sector’s capabilities: providing innovative solutions to problems that have longdefeated the State. I am delighted that we have been able to reward and recognise their work throughour Awards programme.’ Iain Duncan Smith, Chairman, Centre for Social Justice122


Further Education college places

As we stated in our Green Paper, Building Skills, Transforming Lives, it is Conservative policy to open up

the supply of training providers, free up Further Education colleges from the bureaucracy and limitations

imposed on them by the LSC and set up the Further Education Funding Council for England (FEFCE)

which will govern college funding allocations after 2010. The FEFCE will give greater power to Further

Education colleges to determine, in partnership with local employers, local authorities and welfare to

work providers, which courses will provide the greatest benefit to students and to the local community.

We will set in motion the delivery of the FEFCE as a priority after election in order to increase Further

Education college responsiveness to the local situation. One of the effects of this will be that Further

Education colleges will be able to react better to supporting the unemployed in their community

However, as the Further Education sector makes this transition, there will be an urgent demand on Further

Education colleges to provide training for young people out of work. We will help Further Education

colleges to provide an extra 50,000 places a year for two years to 18-24 year olds who have been on

Jobseeker’s Allowance for six months as part of the Youth Action for Work programme up to 2012.

During the immediate post-recession period, we will be much less dogmatic than Labour about college

training provision in order to re-engage young people with low educational achievement. We will loosen

requirements on whether a paper qualification must be the end result of a course that is aimed at

bringing NEETs back into education.

To get the most benefit from the Youth Action for Work programme it is essential that FE colleges and Work

Programme providers work together to ensure colleges are providing the most appropriate courses for

jobseekers in the community. For their part, Work Programme providers must ensure that young people

have adequate information to make informed decisions on Further Education training available to them.

After Youth Action for Work

The aim of Youth Action for Work is to make participants more qualified and better able to find work.

Many of those participating in Work Pairings or Apprenticeships will move naturally into full employment

at the end of their placement.

The young people concerned will be under the guidance of their welfare to work provider at all times when

they are on a Youth Action for Work programme so those who are unable to find full-time work or training

at the end of their Youth Action for Work placement will return to The Work Programme, with their welfare

to work provider assisting them to find a job. Work Programme providers will not receive a second process

payment, but will be eligible for the same outcome payments for Youth Action participants that they would

receive for supporting other Work Programme participants from Jobseeker’s Allowance to sustained work.

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In addition to our Youth Action for Work programme, we will also take other measures to safeguard

young people’s future education and employment prospects.

New University Places

This summer, thousands of young people with good exam results have missed out on going to

university because of an acute shortage of places. Demographic pressures and high youth

unemployment mean that further shortages are likely next year. A Conservative Government will address

this problem by funding an additional 10,000 university places.

These new university places would be paid for by introducing an early repayment bonus for graduates

paying off their debt to the taxpayer ahead of schedule. Based on international comparisons we estimate

that offering a ten per cent discount would increase early repayment by more than a third. This would

generate at least £100 million a year, providing funding for 10,000 new students.

Technical Schools

We will support the development of a new generation of Technical Schools for 14-19 year olds, through

the Trust set up by Lord Baker. The schools will be sponsored by universities and leading businesses,

which will help to raise the status of technical qualifications.

• A Technical School in the 12 largest urban areas in England. We will want to see very rapidly, a

technical school in each of the 12 largest urban areas in England – London, Birmingham, Leeds,

Sheffield, Bradford, Manchester, Liverpool, Bristol, Coventry, Wigan, Leicester and Nottingham.

Thereafter, we hope to see technical schools spreading to every area of the country.

• Moving faster than the Government. Lord Baker’s Trust has already established the first Technical

School in Aston – opening 2012 – and has other projects lined up. Labour, though, are non-

committal about whether more will be approved. However, under the current academies

programme, the process of establishing new schools is labyrinthine. Our academies revolution will

radically simplify the process – easing restrictive planning and building laws, and taking away the

local authority veto on new projects.

• Supporting Lord Baker’s Trust. As part of our drive to see a wide range of new schools opened we

will support a range of organisations who want to incubate a particular new school model. These

organisations will receive a small amount of seed funding from the academies budget, appropriate

civil service support, and fast-tracking of new proposals.

• Funding. Technical Schools will be funded from within the £4 billion the Government has set aside

for new academies from November 2009 to 2013 (Partnership fro Schools, Press Release, 26

September 2008). At the moment much of this money is slated to be spent on rebuilding existing

schools that will be turned into Academies. We will move away from this assumption that all schools


reopened as Academies should be entirely rebuilt; the real benefit of Academy status is

independence from Government and the expertise brought to the table by sponsors. This will mean

that the available money can be focused on projects which require new infrastructure like Technical

Schools. We also anticipate that many Technical Schools projects will involve partnership with the FE

sector, so that existing infrastructure can be used, cutting costs. We will change the rules to allow

FE colleges to take students from age 14 so that they can develop on-site technical schools with the

support of local HE and businesses.

• Qualifications. Technical Schools will be free to offer a wide range of qualifications including:

Young Apprenticeships, BTECs and City and Guilds, as well as GCSEs and A-levels in core subjects.

They will also be able to offer students the Government’s new diplomas – however, we will remove

the requirement on local authorities that every children should be able to do every diploma. This

will allow all schools to offer only those diplomas that they believe are viable qualifications.

Kent County Council – Case Study

Over the past 8 years Kent County Council has transformed its secondary education provision.

More than 5,500 students aged 14-16 are following an exciting and innovative vocational

curriculum in 25 specialist centres across the county, funded and established by Kent County

Council’s 14-24 Innovation Unit. These flagship centres offer state of the art facilities in a work-

based learning environment. Kent County Council has put £14million from its own budget into

providing these centres.

Kent is also developing facilities away from the school site in converted industrial units on trading

estates. Two skills studios, in Thanet and Swale, offer hands-on training which inspires and

motivates students and prepares them for the world of work away from the classroom.

There are more than ten subject areas covering a range of industries, for example; motor vehicle

engineering, land-based and horticultural skills, construction and engineering skills and catering

and hospitality. Schools have worked with Jamie Oliver’s Fifteen Foundation, Peugeot and The

Royal Ballet School.

In addition the Kent Apprenticeship scheme “Kent Success” works in partnership with both the

public and private sectors and currently offers one thousand apprenticeship opportunities across

both sectors and is now a formal employment route of entry into Kent County Council.

Kent’s Skill Force programme provides places for 500 young people who are in danger of

disengagement, disaffection and possibly exclusion from school. It offers vocational qualifications

and life skills inside the classroom and out of doors to young people.

44

Its inspiring programmes are delivered by a dynamic education charity staffed by ex-armed forces

personnel. An evaluation conducted by the Institute of Education at University of London

concluded that Skill Force “provides a unique service to schools and is successful in meeting the

needs of many disaffected students, improving their motivation and social skills. It has reduced

exclusions, improved behaviour and attendance and provided students with a range of vocational

qualifications.”

Kent is working closely with local business and industry to ensure that its approach provides a

skilled workforce which meets the needs of local employers, industry and the wider national

economy.

This year 72% of Kent students achieved five A* to C grades at GCSE this year123, around 5% above

the national average and an improvement of 4.8% on last year. in the rest of the country the rise

was only 1.4%. Kent students’ performance at age 16 has improved year on year since 1995 and

has exceeded the national average for the past 12 years124. Kent’s approach has also reduced the

number of NEETS (Young people Not in Education, Employment or Training) by 11% against a rise

in the South East of 12.2%125.

Young Apprenticeships

A Conservative government will take pre-emptive action against future youth unemployment –

something Labour has failed to achieve.

In 2008, almost 350,000 young people126– more than 50% of school-leavers finished compulsory

schooling without achieving the Government’s benchmark of 5 A*-C GCSE and GCSE equivalents

including English and Maths. Almost 90,000127 did not achieve 5 equivalent passes, including English

and Maths, at any level.

There are many reasons for this, including the Government’s continued failure to support the best

teaching methods in primary schools. One crucial reason, though, is the lack of high-quality vocational

routes for 14 year olds who are more interested in practical learning than academic subjects. The

Government – recognizing this – have introduced a series of 14-19 “diplomas” that are supposed to

provide an alternative. However, these courses are not really vocational. Instead, they attempt to teach

practical subjects, like hairdressing, as pseudo-academic classroom courses. As the high demand for

post-16 apprenticeships shows, there is no substitute for practical learning in a workplace.


In 2004, the Government introduced a Young Apprenticeship programme for 14-16 year olds. Young

apprentices spend three days in school taking GCSEs in the core curriculum (English, Maths and Science)

and two days taking work-based vocational qualifications, just like an older apprentice. The Young

Apprenticeship must include at least 50 days structured work experience with an employer – a crucial

difference from the diploma. If the apprenticeship is successful, it should lead seamlessly into an

advanced (level 3) apprenticeship in the same sector (and subsequently to higher education level courses).

The Young Apprenticeship programme has proved very successful according to all evaluations – yet the

Government has barely expanded the number of available places since the pilot in 2004. 9,000 places were

made available for September 2009, covering just 1.4% of the cohort – or one place for every 73 pupils.

The Government’s failure to expand this successful programme is due partly to political prioritisation of

the diploma programme, on which the current Education Secretary has staked much of his reputation. Of

the 10,000 Young Apprenticeship places for this year, 2,000 are made available only on condition that

diploma qualifications, rather than GCSEs, are used alongside the work-based learning elements.128

There are also problems with cost and complexity. Schools cannot simply offer Young Apprenticeships

to their pupils – they must join a local partnership with other schools and training providers, which then

bids for some of the 9,000 places from the Learning and Skills Council (and local authorities from next

year when the LSC is abolished). Each place cost an extra £3,200 over two years on top of the standard

per pupil funding schools receive.

A Conservative government will expand and simplify the system so that all young people have access to

a genuinely work-based vocational course from the age of 14. To achieve this we will:

• fund 32,000 Young Apprenticeships a year at £3,200 each for the two year course. This will cost an

additional £70 million, which will be reallocated from money currently spent encouraging the take-

up of diplomas in schools;

• give schools the freedom to bid for and to receive funding directly so that they can commission

training from local providers and develop relations with local employers. Of course, they will still be

able to operate in consortia, and with their local authority if they prefer;

• allow schools to offer self-funded places if there is demand beyond 32,000 places. We envisage that

some secondary schools may consider this a good use of the pupil premium that they will receive

under a Conservative Government for pupils from more deprived backgrounds. Alternatively, local

business communities may want to invest in the skills of their future workforce by sponsoring

young apprenticeship places; and

• allow Further Education Colleges to offer Young Apprenticeships to 14 year olds direct. Colleges

would receive the average local per pupil funding for each place they provide; they would not

require additional funding since, unlike schools, they would not need to commission vocational

training provision. They would also receive a pupil premium if the applicant was eligible for one.

46

6. Work for Yourself

A Conservative government will revive Britain’s natural entrepreneurial spirit which has been dampened

by a decade of Labour incompetence and bureaucracy. Under our Work for Yourself programme, we will

help thousands of people who want move into employment by setting up their own business.

We believe that new business formation is a fundamental driver of economic recovery. Those who found

new companies will not just employ themselves but will often employ others within a short period of

time. Indeed some of the world’s greatest companies, such as Microsoft129 and Vodafone130, were

founded during recessionary periods.

The Conservative Work for Yourself programme will increase significantly the number of people helped

into self-employment, freelance creative work, small business creation or franchise management as a

route out of unemployment.

History of the enterprise route off Jobseeker’s Allowance

The key Conservative programme of the 1980s was the Enterprise Allowance Scheme, introduced in

1983, which paid £40 a week to those moving from the dole into founding their own company.

At its peak in the late 1980s more than 100,000 people were participating in the Enterprise Allowance

Scheme each year131. At that time, over 80%132 of those who entered the scheme were still in business at

the end of the year in which they began receiving support, and 65%133 of those who completed a full year

receiving EAS support were still in business two years later. Furthermore, for every 100 of these

“survivors”, 114 additional jobs were created134.

By contrast, Labour has progressively reduced the support it offers to those who want to start their own

businesses. The New Deal self-employment option has dwindled to support just 5,000 people a year135

and the Flexible New Deal contains no dedicated support for those wishing to become self-employed

despite the fact that the recent data shows self employment schemes still have the potential to play a

significant role in tackling unemployment. Of those participating in test trading under the New Deal,

where participants continue to receive JSA payments for 6 months, 61% move into sustained

employment, compared to 44% across the New Deal as a whole.

Another route into running a business is franchising. Someone purchasing the rights to operate a

franchise gets a tested business model, often with additional business planning support and access to

marketing and supply chains. This means that a franchise business is often able to scale up more rapidly

than other start-up businesses. The average franchise employs six full time and seven part time

employees.136


Franchises are often more resilient in challenging economic conditions that other businesses. This is

partly driven by the fact that their main source of capital tends to be local - from employees and

communities - rather than from banks or capital markets.

There are currently only 465,000 people employed by or running franchises in the UK137. This is

compared with over eight million franchise-employees in the US, suggesting that franchising remains

under-developed in the UK.138

Work for Yourself will support business start-ups, including new franchised businesses, without

expressing favoritism to particular industries. Just as the Enterprise Allowance Scheme was recently

praised in a report by The New Deal of the Mind for catalysing small business in the creative industry139,

so Work for Yourself will support the formation of the next generation of British businesses.

The Work for Yourself Programme

Work for Yourself will be rolled out as a high-profile national scheme. It will be distinct from other

aspects of the Work Programme and will include:

• training and practical advice for would-be entrepreneurs delivered by business experts with a track

record of success;

• business mentors who are given incentives to establish commercially viable businesses which stand

the test of time;

• government support in obtaining loan funding from the Small Firms Loan Guarantee Scheme for

each participant to provide an injection of working capital in order to get new businesses going;

• additional support to obtain capital to kick-start a new business, for people who want to operate a

franchise; and

• continued JSA payments for Work for Yourself participants for a six month period.

Work for Yourself will expand the market for business mentoring. There are successful models of

mentoring for young entrepreneurs in the charity and social enterprise sector, from groups like the

Prince’s Trust and Bright Ideas Trust. There are also examples of success amongst the dedicated private

providers of the small amount of self-employment support used in the New Deal. But we believe that

there is demand for far more business mentoring, and we believe it could be an attractive option for

those with many years of business experience, who want to pass on what they have learned and stay

connected with the world of entrepreneurship. We will boost the market, with rewards for business

mentors - whether individuals, private partnerships or social enterprises - who demonstrate a track

record of helping to set up sustainable businesses (and particularly businesses that take on additional

staff). The more successful the businesses the mentors help, the greater their reward will be. Business

mentors may be individuals with business experience, private partnerships or social enterprises

providing a mentor service engaging those with business experience.

48

To promote competition between mentors and to drive up standards, claimants will choose their own

mentor from an online database, based on clear indicators of the track records, success and failure rates

and personal history of mentors. This system will quickly weed out weak or ineffective mentors.

Some of the most critical decisions made by someone starting up a new business are taken before the

business begins trading. The first step for a Jobseeker’s Allowance claimant will be to discuss Work for

Yourself with Jobcentre Plus, or with their Welfare to Work provider, and decide that they want to enrol in

the programme. The first step for a business mentor will be working out, with the client, whether the

self-employment or entrepreneurship route is the most suitable route off Jobseeker’s Allowance for

them. For those entering trading, support will be particularly focused on the pre-launch phase of the

business. Business mentors will provide personalised assistance to claimants with preparing business

plans, providing advice and informal training, and help claimants apply for bank loans and other

Government business lending schemes. In addition, we will commission three to five day start-up

courses to help cohorts of participants develop their business ideas, and to provide participants with the

basic skills and knowledge (e.g. on tax requirements, alternative legal statuses for businesses etc,) that

they need before launching a business.

We will set a series of incremental goals that each business will need to have met over the first two to

three years after start-up in order for the mentor to be rewarded. Defining the correct way to reward

mentors on success will be a challenge. And we will engage in detailed consultation with small

businesses, entrepreneurs, venture capitalists and existing voluntary sector mentorship schemes to

define the balance of metrics for assessing success of mentorship.

We want the Work for Yourself programme to support both those who require a small amount of support

to become self-employed, and also those with ambitions to create independent businesses or franchises

that can go on to employ others. We believe that the £400140 grant available is insufficient for many sole

traders to begin work and will not create businesses that have the potential to go on to employ others.

At the point of start-up, Work for Yourself participants who qualify will be helped by their mentor and

through preferential receipt of support from the Small Loan Guarantee Fund to obtain a loan to cover

capital costs, business plan preparation and market research. In addition to support with bank loans and

government credit guarantees, we will explore other finance routes including microfinance.

Many of those choosing the franchising route will need access to a larger capital to purchase a franchise.

We are examining options to pump-prime the market for investment into franchisees starting up under

the Work for Yourself programme, and will develop an advanced plan for this before the election.

Work for Yourself participants will also be supported financially as they develop their business. Subject

to a means test, claimants will continue receiving Jobseeker’s Allowance for the first six months of

business operation.


Less bureaucratic regulation for business

In addition to supporting people in the first phase of setting up a new business, a Conservative

government will make it easier and cheaper for small businesses to grow, enabling them to hire more

people, faster.

Ever more complex regulations, stemming both from UK and EU legislation, coupled with rising taxes on

employers, are making it more difficult for businesses to grow, at the very time when Britain most needs

innovation and entrepreneurship.

A Conservative government will, as a priority, look for regulatory measures that can be eased to

promote employment. In particular, we are taking all steps possible to delay the implementation of the

European Agency Workers directive. The Agency Workers directive increases the cost of hiring temporary

workers. It is a dangerous measure, particularly as temporary work is a strong route into work for

groups who have historically been disadvantaged by the labour market

In addition, we will seek to ease the process of moving from self-employment to employing others,

which is currently over-complex and prevents many people who would otherwise do so from expanding

their business and taking on new staff. This will help the growth of many businesses starting under the

Work for Yourself programme, and the many other businesses that start in the UK each year.

A separate paper, setting out the details of Conservative proposals to lessen the bureaucratic load

imposed by regulation, will be published during our Party Conference.

High-tech exports

Sir James Dyson, one of the world’s leading industrial designers and entrepreneurs, will head a Conservative

Party taskforce looking at how we can make Britain the leading exporter of high-tech products in Europe.

This taskforce will set out a clear vision for boosting high-tech innovation in Britain, and will examine a wide

range of urgent policy questions, including the case for creating clusters of high-tech innovation around

our universities and options for new venture capital tax incentives for entrepreneurs.

High-tech innovation in the UK

Labour has failed to encourage private sector investment in new technologies. Although the UK has the

largest private equity market in Europe, at the moment, very little of the money is made available to

entrepreneurs: 30% of all private equity investments in the US go to early-stage companies141, compared

to just 4% in the UK.142

50

Green technology innovation is an excellent example of Labour’s failure. According to the government’s

own figures, the UK has less than a 5% share of the global market for green technology – less than Japan,

France, Germany, Spain or the US143.

This is a missed opportunity. In spite of the Government’s failures, the latest figures show that the UK is

the third largest high-tech exporter in the world. This is a testament to the underlying strengths of our

universities and surviving companies, many of which have led the world despite Labour’s policy failures.

A change in policy direction can lead to Britain becoming the leading exporter of high-tech products and

services in Europe.

Conservative Party taskforce led by Sir James Dyson

Sir James Dyson’s taskforce will set out recommendations on how to make Britain the leading exporter of

high-tech products in Europe. These recommendations will be presented to the Conservative Party before

the next General Election, and will help to shape our policy agenda for government.

The taskforce will examine a wide range of policy issues, including the questions set out below:

1. How do we ensure that Britain’s high quality research is turned into high- tech products and jobs in

the UK?

2. What are the key obstacles to high-tech innovation in the UK? How can we help to foster a culture of

esteem for high-tech engineering?

3. What is the best way to boost investment in high-tech innovation? Should a Conservative government

create a Future Fund that invests at arms length from government?

4. Alternatively, would it be more effective to use any available government funding to provide more

generous and stable long-term venture capital tax breaks for innovative and high-tech companies?

5. How can a more entrepreneurial and business-focused culture be fostered in the science and

engineering facilities of Britain’s universities? What structural changes are required in order to achieve

this?

6. How can we best encourage high-tech innovation in every region of the UK? For example, should a

Conservative government have a full-time minister to catalyse the growth of high-tech clusters around

Britain’s universities?

7. How can a Conservative government encourage more students to study science at A-level, and science

and engineering subjects at university?

8. How can a Conservative government better use its procurement budget and processes to incentivise

and support the development of innovative high-tech products?

9. Improving Britain’s infrastructure, such as high speed internet access and transport links, will clearly

be a crucial factor in improving the environment for high-tech innovation. How should this best be

achieved, given the urgent need to get the public finances back under control?

10. Given present fiscal constraints, what should we do to improve the quality of support provided by the

government to British companies looking to export high-tech products?


7. Work Together

The challenges Britain faces are immense. Labour’s debt crisis and Labour’s jobs crisis means that as

nation we will have to achieve more with less. However, given the scale of the problems we as a nation

face, an incoming government will not be able solve all of them alone.

We will coordinate a nationwide volunteering initiative to provide support in communities that have been

deeply affected by the economic downturn. This will expand the scope and range of volunteering

opportunities by pooling together all UK volunteering places through one website and also by

encouraging groups of volunteers and organisations to develop new projects. This initiative will be

open to everyone – the employed, unemployed, part-time workers, stay at home mothers, etc.

In addition, we believe that volunteering provides a valuable opportunity for people whilst they are

unemployed. Volunteering allows people to maintain a work and commitment pattern and interact

regularly. It can also help people to develop soft skills and new skills. To encourage more voluntary work,

we will drop the red tape that prevents individuals from volunteering whilst claiming benefits today.

We believe that Work Together is required immediately. Therefore, at our Party Conference we are

launching www.GetBritainWorking.com. The Get Britain Working website offers direct access to the

Zubed job search engine which contains over one million volunteering opportunities across the UK in

addition to 230,000 job vacancies.144

52

8. Work Clubs

As unemployment rises, people also need informal support to re-skill and search for a new job.

Throughout 2009, a number of Conservative MPs and candidates have been responding to David

Cameron’s call to create Job Clubs in their communities to support unemployed people. Generally they

meet weekly, and offer advice, CV support, or meetings with local employers. The clubs have been

praised by participants for the more individualised support and advice that they are able to give, which

complements the support offered by Jobcentre Plus.

Job Clubs are a voluntary, community based response to local unemployment. The key priority for a Job

Club is to provide access to a wide range of support to those looking to find work, bringing together

local businesses, statutory agencies, educational organisations and volunteering bodies. In addition

they offer a much needed friendly ear, emotional support and a place to go on a weekly basis to keep

motivated and meet others in the same predicament.

The Job Clubs are all different, some welcome 100 plus people on a weekly basis whilst others support

10 to 15 individuals. Some run workshops on communication skills and interview technique, others run

job fairs. Each Job Club is tailored to meet local needs. In December 2008 Hazel Blears admitted to

being surprised to find that only 10% of jobseekers found employment through Job Centre Plus, whilst

30% found jobs through family or friends.145 The local Job Clubs seek to exploit that statistic by

encouraging people to develop social networks.

Work Clubs will build on our Jobs Clubs initiative. We will provide support and funding if required to

expand the services provided by existing Jobs Clubs and offer opportunities to social enterprises, local

volunteers and social entrepreneurs to expand their own Job Club’ initiatives to support jobseekers, or

to create a new Work Club in those communities where they do not yet exist.

Work Clubs may follow the existing Jobs Club model, offering advice and job search help or providing

more regular support, using existing community space or space available at very low cost. We will

particularly encourage a focus on skills exchange, links to voluntary activities and supplementary job

search support and advice.

There are many existing community organisations that are already providing support to individuals in

local communities. Under Conservative proposals, we would provide up to £100k of supplementary

funding to charities in exchange for providing skills exchange and support network facilities. We will

also fund new charitable consortia which come together to provide Work Clubs.

To minimise bureaucracy and to maximise the speed at which Work Clubs can be established, we will

fund Work Clubs on a charter basis. That is, organisations that commit to delivering the Work Club

charter will be provided with basic funding and the Work Club branding. We will leave the design of

54

Work Programme support, how skills are delivered up to the individual Work Clubs as we believe that

local communities and local community organisations are better placed than central government to

design support measures for specific communities.

Work Clubs will be piloted in London by the Mayor’s office in late 2009 to early 2010. These will provide

local communities and organisations with an up and running demonstration model for how Work Clubs

can be designed and implemented.

Proposed Work Club Charter

An organisation can call itself a Work Club and be entitled to two years of financial support from

the Government if it commits itself to the following approach and practices:

1. Its central objective is to provide a skills exchange for members of its community. The skills

exchanged should be those which improve and transform the life opportunities of those being

taught.

2. Each Work Club will be independently established as a charity with at least four (unpaid)

trustees from the local community. Existing charities will be able to apply to establish a Work

Club as a ring-fenced activity.

3. The ethos of each Work Club should be based round voluntary activity, with most of the

energy necessary to sustain it provided by volunteers. There can be a maximum of only two

paid members of staff per centre, reporting to the trustees and responsible for a) ensuring

that the centre’s activities conform with the charter and that b) financial controls are

adequate.

4. Work Clubs should foster a supportive, self-sufficient, atmosphere, conducive to reinforcing

social networks across the whole community and to building the self-esteem and confidence

of all those who participate.

5. Operating procedures, devolution of responsibilities and hours of opening are all matters

determinable by each Work Club based on local conditions.

6. Each Work Club should be closely tied to, and work with, other community resources, such as

Further Education colleges. In particular it should ensure that volunteer teachers and mentors

receive the appropriate support and instruction to allow them to transfer their skills

effectively.


7. Work Clubs, which will often be based in temporarily available premises for a

peppercorn rent, commit to vacate such premises within a month of receiving a

request from the owner.

8. The trustees of each Work Club will decide how best to spend the funds in pursuit of

its role. It will be free to raise supplementary funds from other sources. Benefit

recipients can be provided with lunch and help with transport, where considered the

best use of funds.

9. All benefit recipients can attend Work Clubs on a voluntary basis. Individuals can be

referred by Jobcentre Plus and the providers of welfare to work services. Other

members of the community should be welcomed, albeit in their capacity as voluntary

teachers/mentors. Only costs directly connected with teaching/mentoring is

reimbursable to such volunteers.

10. Work Clubs can build around the core skills exchange those additional services the

trustees consider appropriate to local circumstances. These can include Job Clubs,

careers advice and general mentoring. Centres can also host services provided by

other charitable organisations, such as the Citizens Advice Bureau.

56

9. Funding Get Britain Working

The Government is currently spending around £1 billion on employment programmes for the long term

unemployed and new claimants of Employment and Support Allowance. Next year that will rise to over

£1.4 billion. Get Britain Working will be paid for by reallocating funding from Labour’s failing New Deals

and Pathways to Work, as well as other Government jobs and skills programmes. Over time Get Britain

Working will more than pay for itself through savings from welfare dependency. However, in the short

term, there will be an upfront cost of £600 million over three years. In order to fund this we have made

the tough choice to ensure that Incapacity Benefit claimants who have been re-assessed onto Jobseeker’s

Allowance transfer to the lower Jobseeker’s Allowance rate rather than staying on their previous level of

benefit. In Budget 2008, the Government have assumed no net savings from such a shift; we will make

such savings.

Table 3: Get Britain Working Costing and Funding Sources: 2010/11-2012/13

Conservative Programme Spend Total Funding 2010/11-2012/13 (£m)

Conservative funding for The Work Programme 3,630

Apprenticeships and pre-apprenticeships 2,340

Work Pairings 300

FE College Places 200

Young Apprenticeships 210

Service Academy 60

Work for Yourself 150

Work Together 10

Work Clubs 20

Total Conservative spend £ 6,920

Labour Programme Spend for Reallocation Total Funding 2010/11-2012/13 (£m)

Labour New Deal and Employment Programmes 3,420

Train to gain 2,540

DCSF funding for vocational courses 210

RDA budget 150

Total Labour spend £ 6,320

Net Conservative spend £ 600

Savings from migrating IB claimants to JSA £ 600+


Using the DEL:AME switch

At the heart of our approach in The Work Programme is a plan to negotiate arrangements with providers

to invest in the hardest to help people back into economic activity. Providers will be rewarded with

future benefit savings based on their clients sustaining work activity for an extended period. This

approach, described in chapter four of this document and dubbed the DEL:AME switch, was first

recommended in the Freud report in 2007 and subsequently adopted in our Green Paper on Welfare

Reform.

At the moment, Treasury accounting rules insist that the cost of welfare to work programmes is met out

of the Department for Work and Pensions Departmental Expenditure Limit (DEL). When those budgets

run out, those programmes end. In some circumstances this can lead to successful welfare to work

programmes ending early because they have run out of money despite the overall savings they would

make. This funding structure also limits the incentive for providers to improve their performance,

because if a contract is limited in its value in this way providers who get more people into work receive

lower payments per successful outcome than those who get fewer into work.

David Freud’s proposed solution to this problem was to remove the cap placed on welfare programmes

by allowing welfare to work programmes to be funded from the benefits saved if the providers are

successful in getting claimants back into work. However, benefit payments are made out of a separate

budget called Annually Managed Expenditure (AME), and Treasury rules mean that money saved from

these budgets cannot currently be transferred to pay welfare to work programme providers. Changing

Treasury rules to allow the so called DEL:AME switch will allow benefit savings in AME budgets to be

used as payment to successful welfare to work providers traditionally funded out of DEL budgets.

Once initial benefit savings have been paid to welfare to work providers, the savings associated with a

lower benefit bill continue for the Exchequer, alongside further benefits such as increased National

Insurance and Income Tax payments.

Labour plans to pilot the DEL:AME switch in 2011. However, the pilots will only cover 15% of existing

Incapacity Benefit claimants. The remaining claimants will receive a maximum of three ‘work focused

interviews’ to help them back into work, with those aged over 50 receiving just one interview. Labour’s

continuing refusal to implement the DEL:AME switch wholesale is the primary reason that they are

unable to properly tackle the Incapacity Benefit problem.

58

Annex A

All Employment Programmes and Pilots Run by DWP as of August 2009

Programmes Pilots

Flexible New Deal Skills Health Check Pilots

New Deal Work for your Benefit Pilots

New Deal for Musicians IAPT Pilots

New Deal Self Employed Expansion of Pathways to GPs surgeries pilots

Employment Zone Work Capability Assessment Pilots

Individual Assessment for Basic Skills Individual Budget Pilots

Programme Centres Access to Work

New Deal Disabled People Fit for Work Pilots

Pathways Social Housing and Worklessness Pilots

Workstep Help Partners of Benefit Claimants into work Pilots

Work Preparation Work Skills Trials

New Deal Lone Parents Single Conditionality Pilots

Deprived Areas Fund Right to Bid

City Strategies Invest to Save Pilots

Partners Outreach for Ethnic Minorities Personalised Employment Programme Pilots

Progress to Work

Link UP

Multi-area Agreements

European Social Fund Programmes

Work Choice

Community Taskforce

Future Jobs Fund


Footnotes

1 ONS, GDP data.2 ILO unemployment - 3 months to May 2009, the increase in ILO unemployment was 281,000, the

largest increase since records began.3 DWP Press Release, 18 March 20084 DWP Quarterly Statistical Summary, August 20095 DWP data for working age benefits in 2007/08 of £28.5bn (includes JSA, Incapacity Benefit, IS,

housing benefit, council tax benefit) against £24.9bn in council tax in 2008 Budget.6 ONS, Labour Market Statistics, September 20097 ONS, Labour Market Statistics, September 20098 DWP, Quarterly Statistical Summary, August 20099 DWP, Quarterly Statistical Summary, August 200910 Total Expenditure on Jobseeker’s Allowance, Income Support and Incapacity Benefit plus Housing

Benefit and Council Tax Benefit paid to recipients of those benefits, DWP Benefit Expenditure Tables,Medium Term Forecast, Spring 2009

11 Total Expenditure on Jobseeker’s Allowance, Income Support and Incapacity Benefit plus HousingBenefit and Council Tax Benefit paid to recipients of those benefits, DWP Benefit Expenditure Tables,Medium Term Forecast, Spring 2009

12 Budget 2009, Tables C9 and C613 DWP, Quarterly Statistical Summary, August 200914 DWP, Quarterly Statistical Summary, August 200915 ONS, Work and worklessness among households 2009, 26 August 200916 ONS, Work and worklessness among households 2009, 26 August 200917 Eurostat, Jobless households – children, 7 November 200818 ONS, 1997-200919 DWP, Work and Pensions Longitudinal Study Data, INCAPACITY BENEFIT/SDA Working Age Claimants,

February 2009; Hansard, 18 Jun 2008, Col. 974W20 DWP, A new deal for welfare: Empowering people to work, 200621 ONS, Time Series Data, Series BCJD, Total Claimant Count SA (UK). The claimant count stood at

821,400 in Quarter 2 2008.22 ONS, Economic and Labour Market Review, September 2009, Data Tables, 6.2223 ONS, Economic and Labour Market Review, September 2009, Data Tables, 6.2324 DWP, Speech by John Hutton to the Welfare to Work Convention 2007, 20 June 2007.25 Hansard,13 March 2008, Col.572W26 Hansard,13 March 2008, Col.572W27 Hansard,13 March 2008, Col.573W28 Work for Welfare, Real welfare reform to help make British poverty history, Conservative Policy Green

Paper No 329 ONS data, GDP data30 ONS data, GDP data31 The JSA claimant count was 821,400 in Quarter 2 2008 (ONS, time series data, total claimant count

SA (UK), August 2009). The claimant count in July 2009 stood at 1.58 million (ONS, Labour MarketStatistics, August 2009).

32 DWP, Jobcentre Plus Workload Projection, April 200933 Based on analysis of ONS, Labour Market Statistics34 DWP, Jobcentre Plus Workload Projections, April 2009, Deposited Papers, DEP 2009-169535 ONS, July 2009 data36 ONS, JSA claims by usual occupation change from August 2008 to August 200937 ONS, JSA claims by usual occupation change from August 2008 to August 200938 ONS, Workforce Jobs by Industry, July 200939 ONS, JSA claims by usual occupation change from August 2008 to August 2009Sou40 ONS, Labour Market Statistics, September 2009, JSA claimant count by sought occupation compared

to Jobcentre Plus live unfilled vacancies by occupation41 ONS, Labour Market Statistics, September 200942 ONS, Labour Market Statistics, September 200943 ONS, Labour Market Statistics, September 200944 ONS, Labour Market Statistics, September 200945 ONS, Time Series Data, Labour Market Status of Young People, data series, MGVF. There were

715,000 16-24 year olds unemployed in Q2 2008.

60

46 The cost of exclusion: counting the cost of youth disadvantage in the UK, Prince’s Trust, April 2007,47 Graduate and School Leavers set to sweat over job prospects in this summer’s tight labour market,

Chartered Institute of Personnel and Development, May 200948 ONS, population pyramid statistics49 The prospects of this year’s school leavers, Prince’s Trust and University of Sheffield, Summer 200950 See Annex A for full list51 The roll-out of the Jobcentre Plus Office network – National Audit Office, 22 February 200852 Helping people from workless households into work – National Audit Office, 19 July 2007 – Note,

figure is through to March 200753 DWP, Benefit Expenditure Tables, Medium Term Forecast, Spring 200954 DWP, Quarterly Statistical Summary, August 200955 Eurostat, 22 September 200956 ONS, Labour Market Statistics, September 200957 Frank Field: Still thinking the unthinkable, The Observer, 2 July 200658 ONS, Employment Figures by Sector 1997-200959 Foreign Workers in the UK - Statistics Commission Briefing Note (December 2007)60 DWP, Employment Programme Data, February 200961 Hansard, 25 April 2008, Column 2362W62 Hansard, 25 April 2008, Column 2362W63 DWP, Speech by John Hutton to the Welfare to Work Convention 2007, 20 June 200764 Select Committee on Education and Employment (Fifth Report)65 Frank Field, The Times, 20 February 200966 New Deal for All, DWP67 Benchmarking the Use of Personal Advisers in Jobcentre Plus, Christian Van Stolk, Jennifer Rubin,

Jonathan Grant, May 2006, Rand Europe68 Benchmarking the Use of Personal Advisers in Jobcentre Plus, Christian Van Stolk, Jennifer Rubin,

Jonathan Grant, May 2006, Rand Europe69 The National Audit Office commissioned an independent review of over 40 research reports

published between 2000-2006 and found that case-loading is associated with higher numbersleaving benefits: Delivering Effective Services Through Personal Advisers, National Audit Office,[Date]

70 DWP Employment programme data, February 200971 As reported to the Select Committee on Education and Employment (Fifth Report). NIESR results

originally published in New Deal for Young People: Implications for Public Finances and Employment,NIESR, 2000 and The New Deal for Young People: First Year Analysis of Implications for theMacroeconomy

72 Hales J, Evaluation of the NDLP: Early Lessons from Phase One Prototype, November 200073 NAO analysis of DWP data. Figures from start date through to 2007.74 ONS data, net change in employment numbers July 1997 to July 200975 Evaluation of Employment Zones: Report on a Cohort Survey of Long-Term Unemployed People in the

Zones and a Matched Set of Comparison Areas, Hales J, et al, National Centre for Social Research,2003

76 The Wider Labour Market Impact of Employment Zones, Hasluck C et al, DWP Report 175, 200377 The Wider Labour Market Impact of Employment Zones, Hasluck C et al, DWP Report 175, 200378 The Wider Labour Market Impact of Employment Zones, Hasluck C et al, DWP Report 175, 200379 Buying Quality Performance, Mansour J & Johnson R, Work Directions, 200580 DWP, Employment Programme Data, Cumulative to February 200981 Work and Pensions Select Committee, Full Employment and World Class Skills: Responding to the

challenge, October 200782 HC Deb, 28 January 2009, c571W)83 DWP, Quarterly Statistical Summary, August 200984 Office of National Statistics, 2008 and 2009 data85 Department of Work and Pensions Quarterly Statistical Summary, November 200786 According to research undertaken by the Disability Rights Commission in 2005, 1.1 million

Incapacity Benefit claimants would like to return to work.87 DWP – Expenditure on key benefits88 Derived using DWP data and ONS Incapacity Benefit volumes89 The Condition Management Programme is run with local health providers to help customers manage

their health conditions or disabilities.90 Disability, Skills and Work, Social Market Foundation, June 200791 Helping People from Workless Households into Work, National Audit Office, 19 July 2007, p 7


92 Helping people from workless households into work – National Audit Office, 19 July 2007 – Note,figure is through to March 2007

93 A cost-benefit analysis of Pathways to Work for new and repeat incapacity benefit claimants, Adam,Institute for Fiscal Studies, 2008

94 Rates taken from Jobcentre Plus website95 New blow to sickness benefit applicants, Financial Times, 12 July 2009 – in some pilot areas, up to

90% of new ESA claims are being rejected under information released to the FT.96 ONS, Labour Market Statistics97 DWP, Press Release, 12 January 200998 DWP, Press Release, 22 April 200999 DWP, Press Release, 22 April 2009100 Budget 2009101 DWP, Employment Programme Data to February 2009.102 The 2009 Budget committed £1.1 billion to the Young Person’s Guarantee; approximately £1 billion

will be spent on the Future Jobs Fund if 150,000 places are subsidised at £6,500 a place, as theGovernment has committed.

103 Information provided by Jim Knight MP, DWP Employment Minister, in response to ParliamentaryQuestion posed by Theresa May MP on 21 July 2009.

104 DWP list of Future Job Fund winning bidders, July 2009 and August 2009105 One in seven councils cut jobs – new LGA survey, Local Government Chronicle, 14 January 2009106 The Young Person’s Guarantee and Future Jobs Fund, Tony Wilson, Department for Work and

Pensions107 Hansard 20 July 2009 Col 835W108 DWP Quarterly Statistical Summary, August 2009109 The JSA claimant count was 821,400 in Quarter 2 2008 (ONS, time series data, total claimant count

SA (UK), August 2009). The claimant count in July 2009 stood at 1.58 million (ONS, Labour MarketStatistics, August 2009).

110 DWP Expenditure on key benefits data. Figure includes DLA, Attendance Allowance, CarersAllowance, Employment and Support Allowance, Income Support, IS, JSA, Housing Benefit and CouncilTax benefit

111 Research conducted by Microsoft112 ONS Labour Market Statistics, September 2009113 UCAS announcement of rise in applications July 2009, Government announcement of extra university

places, July 20 2009114 ONS – Nomisweb JSA off-flow statistics, Jan 2007-Aug 2009115 Hansard 9th April 2003, c.282116 LSC, First Release, 18th December 2007117 House of Lords Economics Affairs Committee Report: Apprenticeships: Key route to skill, 2008118 House of Lords Economics Affairs Committee Report: Apprenticeships: Key route to skill, 2008119 ONS Autumn 2008 Labour Market Statistics120 BERR Statistical Press Release, 30 July 2008121 Working Rite122 Working Rite123 Kent County Council124 Kent County Council125 Kent County Council, percentage change in NEETs 2008 v 2007126 http://www.dcsf.gov.uk/rsgateway/DB/SFR/s000826/SFR02_2009_SFRTables.xls127 http://www.dcsf.gov.uk/rsgateway/DB/SFR/s000826/SFR02_2009_SFRTables.xls128 http://www.skillsactive.com/training/apprenticeships/young-apprenticeships/FINAL%20v1%20-

%20C6%20Processes%20for%20approval%20and%20commissioning%20with%20comments%20amendedfinal.doc

129 Company website130 Company website131 Hansard Written Answers 4 December 1991 – Column 133132 Hansard Written Answers 4 December 1991 – Column 133133 Hansard Written Answers 28 March 1988 vol 130, 282W134 Hansard Written Answers 28 March 1988 vol 130, 282W135 Written Answers and Statements, 23 March 2007 - Column 1184W136 NatWest Franchising Survey 2009137 NatWest Franchising Survey 2009138 The Franchise Business Economic Outlook for 2009

62

139 New Deal of the Mind: Cultural and Creative self-employment in hard times, July 2009140 DWP – Self Employment as a route from benefit; 2002141 PWC Moneytree Report – First Sequence Investments by Stage of Development, 2008142 IFSL Research, Private Equity 2009143 BERR – Low Carbon and Environmental Goods and Services – an Industry Analysis144 As of September 2009145 Times, 13 December 2008


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