Magazine article Public Finance

Line Management

Magazine article Public Finance

Line Management

Article excerpt

LABOUR AND CONSERVATIVE frontbenchers might be going at each other hammer and tongs in the run-up to the election, but there is one area of public policy where the two parties show a striking level of agreement: welfare.

Perhaps this is not surprising, as the same man - Lord Freud - is the architect of both parties' policies. Last year, as plain David Freud, he was appointed as a policy adviser by James Purnell, the work and pensions secretary who championed Labour's get-tough stance. Now Purnell has gone, replaced by Yvette Cooper, and Freud sits on the Conservative benches of the House of Lords as shadow welfare minister.

Both parties are united in urging 'conditionality' as a central tenet of welfare reform. As Purnell put it last year: 'The message I want to send is clear - if you can work, you should work, and that will be a condition of getting benefits. There are a small number of people who are determined not to work. Avoiding work is not an option.'

This month, the get-tough regime got tougher with the passing of the Welfare Reform Act. It enshrines sanctions - cuts to payments if claimants do not meet stringent requirements, 'work for your benefit' programmes, and measures to drive lone parents of young children into employment.

Announcing the Act, which also lays the groundwork for Income Support to be scrapped, Cooper declared: 'It makes clear that almost everyone should be on a journey to work - either looking for work now or preparing for work in the future.' Despite last-minute wrangling over measures to fine jobless lone parents of pre-school children for inadequate jobseeking, the legislation produced little argument between the main parties.

Freud acknowledges the agreement on conditionality between Tories and Labour, telling Public Finance: ? don't think there's a difference on that at all.' He admits it is 'very odd having developed strategies for both sides', but says he did not really switch parties, only moved from being an advisor to a politician. He candidly admits he has never been a Labour man: 'I've always voted Conservative.'

But differences have opened up between the parties, and here Freud has made a bit of a switch. The Flexible New Deal scheme he urged on Labour has only just gone live - wholesale contracting for private and voluntary sector providers to place longterm unemployed claimants in jobs. The providers will be paid partly on results, originally estimated at more than £60,000 for each person successfully placed in work. But the Tories are threatening to axe phase two of the scheme if they are elected, throwing doubts over the contracts due to be signed early next year.

The FND provoked fury from the civil servants' Public and Commercial Services union over the 'marketisation' of the Department for Work & Pensions services. And union general secretary Mark Serwotka has slammed the introduction of voluntary sector providers as a return to the 'era when the "deserving poor" were expected to show gratitude to their charitable benefactors'.

But Freud's rethink is not a rejection of the principle of payment by results, or of privatisation. It is based instead on the economic plunge and steep rise in joblessness since the scheme was first announced. Freud tells PF: 'The FND now is being asked to do something that was not envisaged when it was set up.'

The aim was to target around 250,000 long-term unemployed people with intensive support to help them back into work, he says, and as 'a stepping stone to recreating the industry on a resultsoriented basis'. Suddenly, the recession has pitched 'a large number of cyclically unemployed people' into the equation and the scheme has 'moved from a stepping stone to the main event'.

In fact, the first-wave FND contracts have already been tweaked substantially, to give the private providers greater upfront and less results-based payments. The employment firms do not want to lose out because jobs for their hard-toplace clients are now even harder to find. …

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