Magazine article Public Finance

New Labour Isn't Working

Magazine article Public Finance

New Labour Isn't Working

Article excerpt

Being In charge of welfare-to-work in a recession is something of a poisoned chalice. Nevertheless, the Conservative Party this week made the government's welfare task even grimmer by poaching one of its top advisers.

David Freud had been advising Work and Pensions Secretary James Purnell on how to involve the private sector and voluntary groups in helping unemployed people find work. Now Freud is to join the Conservative front bench in the Lords, apparently attracted by the chance of becoming a minister if the Tories are elected to government.

Freud was first commissioned before the 2005 general election to come up with radical proposals to help the 2.7 million people on Incapacity Benefit to find work.

His plans were almost fully adopted in a government green paper. At that stage, Freud praised the government's policy as 'a significant change in the approach to the welfare state, aimed at calling a halt to the build-up of a dependency culture and in tackling our pockets of obstinate poverty'.

However, as the recession has mounted, attention has focused on the scale of the problems facing jobcentres and whether the original costings of the private sector contracts need revision, given that it is going to take longer for unemployed people to tind work.

Speaking as news of his move broke, Freud said: 'By the end of this recession there are likely to be more people on welfare than ever before. In particular, we run the risk that another generation of long-term unemployed becomes condemned to languish outside the labour market for the rest of their lives. I see this as one of the most important challenges of the next few years.'

Indeed it is, but the task might be even harder than either Labour or the Conservatives have anticipated. The latest announcement of 850 job cuts at BMW's Mini plant at Cowley in Oxfordshire signals yet another blow to the local economy, leaving targe numbers of staff out of work and in need of retraining.

The Bank of England now says that the UK is experiencing a 'deep recession', with the economy predicted to shrink by 3% in 2009 and unemployment, now just short of 2 million, rising rapidly.

A successful welfare- to- work strategy is urgently needed, yet the government's plans are experiencing more than one setback. Aside from the defection of Freud, the expected announcement on preferred bidders for the Flexible New Deal scheme has also been delayed.

Private providers waiting to take on board the job of finding work for large numbers of new claimants have been deeply concerned about contracts that offer only 20% of the fee upfront and 80% when jobseekers are placed in permanent work. …

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