The Big Society has no place in welfare plan

Ministers’ decision to scrap the Future Jobs Fund (FJF) should not have come as a shock. As a demand side intervention in the labour market, it was always likely to be the type of dirigiste programme that the Conservatives would bin.

But the move, along with cuts to the £1.5bn Working Neighbourhoods Fund - which focuses on councils in England’s most deprived areas - raises serious questions about what role, if any, town halls will have in tackling worklessness.
 Ministers said the FJF was not delivering what it had promised and was not providing value for money. 
The reality, as LGC’s research shows, is less clear cut. The programme might have been slow to start, but had begun to provide opportunities for young people.

Many councils enhanced the programme with their own funds, either by extending the temporary jobs, raising pay levels, or providing extra job search support or training to help participants convert the opportunities into full-time employment.The true success of the scheme will therefore not be known until at least next year, when data on how many young people were able to move from FJF into full-time jobs becomes available.

Clearly the FJF was axed to make in-year savings. But the move also paves the way for the government’s new single Work Programme, set to be launched next summer. Essentially this is an expansion of the Flexible New Deal (FND), which had its first phase launched in October. But where the FND is aimed at those unemployed for 12 months, the Work Programme will take on benefit claimants at six months. It will include those on sickness benefit who were previously supported through the Pathways to Work scheme.

As with the FND, brokers will be paid by their results in helping “customers” into work, but the benchmark for success is set higher, with the lion’s share of the payment awarded when the newly employed person has been in their job for 12 months, rather than staggered payments at three and six months.

This toughening of what constitutes success - as well as the more expansive reach of the programme - has serious implications for councils. As Ian Mulheirn, Social Market Foundation director, says, only organisations with “deep pockets” will be able to deliver these contracts. Indeed, welfare minister David Freud has said he would like the welfare market to mirror that of the supermarkets’, with about four dominant players. So much for the Big Society approach to tackling worklessness that David Cameron spoke of during the election campaign.

Much, however, will depend on the geography of the contract areas. Under the FND, the contracts are broken up into 47 “prime contract” areas, which are aggregations of Jobcentre Plus districts. The government wants to change this, but it is not clear whether it favours larger or smaller areas. Lord Freud is known to prefer regional contracts and in that case councils would be ruled out.

But Dave Simmonds, Centre for Economic and Social Inclusion chief executive, said there is pressure being brought to bear on ministers to set the contracts around smaller sub-regions that reflect actual labour markets.
The latter would make it easier for councils, in consortiums, to bid for contracts. Greater Manchester, for example, has already indicated it would bid for a Work Programme contract covering the city region.
The Local Government Association is lobbying ministers for sub-regional economic development partnerships - the mooted Local Enterprise Partnerships - to be handed responsibility for commissioning jobs programmes in their area.

But Mr Simmonds says that even if ministers decide on smaller contract areas, the scale of the contracts and the financial risks involved will be such that councils, even in consortiums, will simply not have the resources to deliver them. Under the FND, Dudley MBC was the only council to win a prime contract - and the Work Programme will set the bar for bidding even higher.

The likelihood, then, is if councils are to be involved at all it will be as sub-contractors, taking on contracts from the likes of Serco and other big providers and delivering work programmes in their area. Whether they will have the capacity or resources to do so, however, is less certain. Indeed, of the 170 sub-contractors involved in FND, only nine were councils, of which only four were in England. Clearly, if councils are to have a continued role in tackling worklessness, serious hurdles will need to be overcome.