The work programme is broken but the problem is much wider

This week has seen the release of the first official statistics outlining how the work programme is performing. The data has led to the work programme being widely labelled as a failure and having little success in helping individual’s secure sustainable employment. The Centre for Local Economic Strategies (CLES) believes we need to take a broader look at how the wider labour market operates and create a new, more locally led system.

The work programme was launched in 2011 using a predominantly private sector led delivery model to support the ‘harder to help’ claimants back to work. Using a payment by results mechanism, it had a clear focus upon delivering sustainable employment outcomes. However, the figures released this week make grim reading:

• just 3.6% of referrals to the work programme have found sustainable employment. The figure is as low as 1.4% in Blackpool and Dundee.

• the level of job outcomes is lowest for those considered furthest away from the labour market – just 0.3% of employment support allowance claimant that previously claimed incapacity benefit achieved a job outcome.

• In total, the number of job outcomes achieved to date is 56% lower than the DWP’s minimum expectations.

There is a wider context to these figures that should be acknowledged. Firstly, the data only relates to the first year of delivery and so performance is likely to improve, all be it from a very low base. More fundamentally, the work programme has been introduced in the middle of an economic recession meaning it operates in the toughest possible climate for getting the most challenging cases back into long-term work. These conditions are unlikely to change any time soon in the north of England, where a successful work programme is needed the most.

The work programme therefore needs reforming. CLES’ local economic futures workstream is arguing for a national framework of action to promote local economic growth. This would involve greater local control of welfare budgets and the design of interventions at the local level. We also believe the work programme should move away from a centrally contracted to one where local areas, led by local authorities, decide what is best for their area. This is likely to mean local voluntary and community sector organisations can play a greater role in the work programme, and one where they are appropriately funded without being exposed to unreasonable levels of risk.

However, the current debate should have a much wider focus than the just the work programme. CESI’s comparator analysis shows that 4.5% those referred to the work programme who are unemployed and aged 25+ achieved a job outcome. Previous schemes such as flexible new deal and the new deal programme barely did any better, achieving job outcome rates of 5.0% and 5.6% respectively in their first 14 months of delivery. It is not just the work programme that isn’t working, but also the wider labour market and successive attempts at reforming the welfare to work agenda.

CLES’ experience suggests these failings are deep rooted. The labour market is broken, offering little incentive or hope of finding long term, sustainable employment for too many people. It is characterised by part time, temporary and ‘zero hour’ employment contracts that are of poor quality, offer no security and do not accommodate caring responsibilities. Low wage levels are also a problem, particularly at the lower end of the labour market meaning the majority of children experiencing poverty live in households where at least one adult works.  This means that entering employment just provides a shift from out of work poverty, to in work poverty for too many people.

CLES’ local economic futures workstream will argue for radical changes to local labour markets and the welfare reform agenda. We believe this should involve a national economic development strategy to create jobs outside of the south east of England that would help the work programme to succeed. National action is also required to reform employment practices so work provides greater security and is a realistic option for more people; while national adoption of the living wage would to help tackle in work poverty. Greater local flexibility is also needed such as the devolution of welfare reform budgets and responsibilities to local areas including the work programme. Social city deals should also be established to give local areas greater power, flexibility and resources over employment programmes.

The work programme clearly isn’t working but wider ranging reforms are required to make it work.