Holes in Conservative welfare plan

5 October 2009

I’ve been getting increasingly suspicious this weekend as the Tories still refused to publish the details of their plans on welfare. Now, I’ve seen them, I’m not surprised. They are so full of holes, that the Tories are clearly hoping that the press will have moved on by the time anyone notices. It’s a clever strategy – get two days of headlines on the principles, and then hope that the momentum of Party Conference will mean the headlines are about George Osborne’s speech before the details can be scrutinized. But they end up with a policy that looks naïve and could never be implemented if they win. My old civil servants will be tearing their hair out.

There are so many things that seem wrong with the detail of the policy that it’s hard to know where to start. So, I’ve taken the Tory press release’s five headline commitments. None seems true.

1. We will simplify Labour’s numerous and piecemeal programmes into one single back-to-work programme for everyone on out of work benefits.

This would be a good idea if they were proposing to do it. Indeed, it’s government policy – with the Flexible New Deal bringing previous New Deals in to one and the December 2008 White Paper proposing the same for IB and lone parents. But the press release then goes to on to add back in Youth Action for Work, Work Pairings, Work for Yourself, Work Together, Work Clubs. So, seven programmes, not one. Moreover, these seem to have a lot of the features (especially centralized design) of the original New Deal which the Tories say failed.

2. The Work Programme will include support back into work for the 2.6 million people claiming Incapacity Benefits currently excluded by Labour.

There are no costings of these so called ‘AME-DEL’ proposals that I can see – someone should ask for a breakdown.

My very quick thoughts. They’re talking about 3 million people (they say elsewhere they’re including lone parents – presumably where youngest child is 5, so that’s another 500,000).

Let’s say the fee is £3000. Even if they could find providers to bid for contracts with only a 20% up front fee, that’s £1.8 billion. And that’s before the Conservatives have said they would fund the £3 billion proposal to end the “couple penalty” which used to come out of the savings being proposed here. Not to mention the £3 billion for the marriage tax break.

And it would mean the City being prepared to lend to providers to fund back-to-work support (the Tory proposal is that they only pay the rest of the fee when the claimant has been in work for a year). If we assume the providers will ask for a 20% profit, then they are asking the City to lend over £5 billion on an unproven model, which depends on getting people back in to work to claim the success fee. That would have been ambitious before the credit crunch. It’s simply not credible now. That’s why we’re piloting it, and why David Freud had previously said that 5 to 6 years was quick[i] <#_edn1> .

This policy reminds me of Chris Grayling’s proposal to cut National Insurance and fund that out of benefit savings – another policy that also seems to have disappeared.

3. We will abolish the Treasury’s rule that prevents the Government paying work providers using the benefits saved once someone has a job. This will allow us to offer support to the 2.6 million people on Incapacity Benefit.

There is no such rule. The question is whether there is appetite to lend.

4. We will offer greater support to the young unemployed by referring them on to the Work Programme after 6 months of unemployment compared to a year under the Flexible New Deal.

This is misleading. Young unemployed people already get this support at 6 months – the only differences are that it’s currently delivered by Job Centres and the Tories have tinkered with the options claimants get (at the moment, the options are employment subsidies, self employment, training and volunteering).

5. We will pay providers by results with a focus on truly sustainable outcomes and bigger rewards for getting the hardest to help into a job.

This already happens, for example in the Flexible New Deal which started today.

The biggest problem the Tories would have is speed. They propose tearing up existing contracts with providers of Pathways and the Flexible New Deal (for IB claimants and the unemployed respectively). That would mean penalty payments and a massive delay as they re-tender the contracts– when I was at DWP I was told that would take around 2 years to do. So, the Tory programme would not start until 2012 at the earliest, which was when I would have hoped to roll out the proposals in the White Paper anyway. So, I don’t see the benefit of cancelling these programmes and pilots. (Indeed, I bet they get private howls of anguish from providers about the planning blight this announcement has now put on those contracts).

The other big mistake the Tories are making is giving up on the Job Guarantee. In fact, this seems to me to be the bit no one has picked up on – looks to me like they are abolishing the Future Jobs Fund which is creating jobs with public and charitable organisations so we can offer everyone a job to every JSA claimant aged 18 to 24.

I think this would increase the number of claimants – training has limited value in helping people back to work. Instead, places like Denmark and the Netherlands guarantee people work but require them to take it up. That helps people such as the disabled who sometimes get overlooked in interviews. But it also forces people who are cheating the system to stop claiming. This is also the lesson from the US welfare programmes – what works is work. The Tories seem to be moving away from it (and indeed this seems to contradict the headline in the Sunday Times “Tories would force jobless to work”).

And, finally, they couldn’t do any of this since it’s all funded out of the fiscal stimulus which they opposed. This may sound like point scoring but it’s actually a real philosophical difference. They said that the stimulus should just be the automatic stabilisers – so benefits. That would mean DWP would have had £5 billion less in programme spending for 2009 and 2010. Far from offering more help, they would have had to suspend the back to work support DWP offers – as happened in the 1980s. And probably cancel the Flexible New Deal, without putting anything in its place.

There are some good ideas here – a single work programme (the policy put forward in the December 2008 White Paper) and moving money from training in to back-to-work programmes. But it couldn’t be delivered before 2012, leaving the unemployed without help for that period. I doubt it could be funded. And it weakens conditionality in the process, by getting rid of work requirements, especially the Future Jobs Fund.

So, the questions that should be asked:
1. How many people do the Tories expect to get back to work support?
2. How much would the service and success fees be?
3. How much would the providers be expecting to borrow?
4. Do they have provider or banks prepared to commit to this policy?
5. When would the programmes start?
6. Are they abolishing the Future Jobs Fund?

I’ve only had a couple of hours to look at this, so some of the above is back of the envelope. But their document is too…

[i] David Freud: “Funnily enough it’s happening quite fast. It’s going well,” he said of plans to move a million people off incapacity benefit and into work. He argues that the immediate economic downturn, which will make it hard for anyone to find work, let alone long-term benefit claimants, does not matter because his timeframe is longer. “This is going to take five to six years,” he said. “It will, hopefully, be ready for the next upswing.”
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4761120.ece# <http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4761120.ece>

11 Comments

11 Responses to “Holes in Conservative welfare plan”

Liberal Conspiracy » Purnell slams Tory welfare policy
October 5th, 2009 @ 8:49 pm

[...] on Open Left he said Tory plans were, “so full of holes, that the Tories are clearly hoping that the press [...]
Lee Griffin
October 5th, 2009 @ 10:09 pm

Interesting fight going on isn't it. On the one hand you have a party demonising the poor and the out of work, threatening them with destitution and a life of crime if they don't follow the government's prescribed course of “work-fare”. And now you also have the Tories giving their own perspective on the same thing!

Is this really about picking (what are minor) holes in Tory policy, or outpourings of jealous petulance at them coming so close to Purnell's own frankly despicable policies?
Tory Libertarianism: Work For 64 Quid a Week. Or Sleep Under Bridges. « Tendance Coatesy
October 6th, 2009 @ 11:36 am

[...] Mind you that hasn’t stopped James Purnell from belating (here) [...]
septicisle
October 6th, 2009 @ 8:13 pm

I notice that nowhere in this does Purnell address the feasibility or likelihood of moving 500,000 individuals from IB onto JSA when there's the simple fact that there's no jobs for those people and that even if there were employers are loth to touch those who have been sick for years with a ten-foot barge pole. The real point here is that there is next to no difference between both the Tories' and Labour's policies: both are intent on further impoverishing the most vulnerable in society, not because it will save money, as it almost certainly won't, but because the focus groups and tabloids demand it.
Seamus
October 6th, 2009 @ 10:51 pm

Fact it Workhouse, you're just cheesed off 'cos they've invaded your territory.

But don't feel insecure. Nobody can hammer the sick, poor and vulnerable quite like you.
Tory Conference: Thatcherism is back – Green Christian
October 8th, 2009 @ 7:52 pm

[...] significantly increase their chances of getting a job. In fact, their proposals seem to be mostly a rehash of what already exists, plus an incentive to new small businesses that would disadvantage existing companies, hence [...]
The Great Tory Con 2009: Highlights & Analysis. «
October 9th, 2009 @ 1:18 pm

[...] Holes In Conservative Welfare Plan – James Purnell. [...]
Badger Puzzle
October 9th, 2009 @ 3:26 pm

It was made quite clear to me at the Fringe discussion of this with Freud himself that they were intent on scrapping the Future Jobs Fund.
treborc
October 14th, 2009 @ 4:37 pm

Ask Labour because they are doing the same thing with the same person Freud, I'm sorry this is about which one can hurt the most vulnerable the worse and right now it's Labour
Web links for 15th October 2009 | ToUChstone blog: A public policy blog from the TUC
October 15th, 2009 @ 7:02 pm

[...] Holes in Conservative welfare plan : OpenLeft James Purnell discusses Conservative plans on welfare reform [...]
Robert
May 27th, 2010 @ 8:43 pm

I'm disabled the disability after an accident is called paraplegia. Mr Purnell once stated he was going to look into my case a week before he left, running away.

I have no bowel and no bladder the function has stopped I use my finger to empty my bowel and i use a catheter to empty my bladder. It's now about work i would work now I've been looking for work for weeks months years, I've failed, the one job I did find, I found myself and I ended up back in hospital undergoing emergency treatment.

The fact is a lot of people are disabled, but tell me who are these magic employers that want me.

the one question you failed to answer once before, when i asked who the hell are these employers who will allow me to take my medication during the day, allow me a carer to help clean me up when i mess myself, help me when i need to empty my bladder.

I do not know a single employer I have filled in now 800 job applications, Tesco even refused to answer my application saying where could we use you.

So answer the question who is going to employ me… thats the real question.

You ran away from the job so asking you this question is not really important anymore, I spent 40 odd years in labour, boy that was wasted……