Is the Coalition Government's welfare-to-work programme worse than useless?
When the Work Programme was launched in June 2011 it was described as "a revolution in welfare". Private companies and charities were to be paid by results, based on their success in getting long-term unemployed people back into work. The so-called dead-weight level for this scheme was calculated at 5%. In other words, about 5% of those referred would have got back into work anyway. The contractors were set the extremely modest initial target of getting 5.5% into "sustainable employment". That usually means at least six months of continuous employment.
Figures released yesterday show that, up to July, all 18 prime contractors (including Ingeus and Working Links covering Scotland) missed the target. In fact, just 31,240 people have managed to find sustainable employment, out of 877,880 claimants who have been put on the programme. This is barely 3.5%. Yet the scheme has so far cost the public purse £435 million. In some areas of Scotland the results are even worse. In Dundee about 3500 were referred to the programme but just 50 found sustainable employment.
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In Glasgow fewer people found work than would have landed permanent jobs without Government help, according to the Government's own yardstick. Employment Minister Mark Hoban put the poor performance down to much weaker-than-expected growth figures. So the Government's excuse for missing one target is that it missed another.
Ever since the last election the Coalition has been happy to allow the impression to be conveyed that there are jobs to be had and the unemployed are merely workshy loafers. The truth is that a lack of demand has produced a lack of jobs and until this is addressed long-term unemployment will continue to rise.
Yesterday, the Government was trying to argue that its scheme offered good value at less than £3000 a head, compared with Labour's £7000 for its Pathways to Work scheme. But that is because the current scheme is failing and contractors are not picking up the payments for successful placements. Indeed, some charities employed as sub-contractors claim they are being driven out of business by the scheme. Significantly, the success rate for Pathways to Work was nearer 7%, suggesting the considerable barriers to work encountered by the long-term unemployed can be overcome but only at a high cost.
The current set-up is a bad deal for clients and taxpayers. Even with higher payments for the hard-to-place, providers find it easier to focus their energies on those most likely to get work. This leaves the disabled, the mentally ill, ex-offenders and those with drug and alcohol problems, further than ever from the workplace or dependent on specialist charities.
One argument is that schemes like this are bound to fail while the labour market is contracting and should be attempted only during boom times. That is the dialogue of despair. Lives can and have been turned around by work programmes. However, as The Herald has argued before, it was a mistake for the Coalition to jettison a well-designed scheme inherited from the previous Government and impose a new one that relied too heavily on get-rich-quick private contractors rather than charities and not-for-profit organisations with proven track records in this field.