Responsibility Agenda:

Making families stronger and

society more responsible

Contents Page 5. How will the out of work benefit system change?................................................ 28–35
5.1 The gateway
Foreword by David Cameron.............................................................................................................................. 1–2 5.2 A profiling system to tailor support
New world................................................................................................................................................................................ 3 5.3 Conditions and sanctions
5.4 Tackling long-term dependence on Incapacity Benefit
Old politics............................................................................................................................................................................... 4 5.5 Community work programmes for the long-term unemployed
5.6 Supporting lone parents
Change required................................................................................................................................................................ 5–6 6. How will we build a financial structure................................................................................ 36–45
that can deliver our goals?
Our Responsibility Agenda............................................................................................................................... 7 6.1 How can we afford a programme on the scale we need?
6.2 How much difference can we make and how much
Our welfare reform plans in summary.................................................................................................... 8 will it save?
6.3 Does the private sector have the capacity to deliver
Our welfare reform plans in detail a programme of this kind?
6.4 Can the labour market absorb a programme on this scale?
1. Overview....................................................................................................................................................................... 9–12 7. Questions for consultation................................................................................................................... 46
2. What is wrong with our return to work system?..................................................... 13–21
2.1 What is wrong with Jobseeker’s Allowance?
2.2 What is wrong with Incapacity Benefit?
2.3 What is wrong with income support for lone parents? Appendices
2.4 What is wrong with the Government’s employment
programmes? A1. Main out of work benefits 47–50
2.5 What is wrong with the Government’s new proposals?
2.6 How does our broader benefits system hold back A2. The assessment, conditionality, sanction and support system 51–52
return to work?
3. Who are we going to help?.................................................................................................................... 22–24
3.1 Claimants who are capable of work and want to do so
3.2 Claimants who are capable of work but refuse to do so
4. What succeeds? Best practice from around the world. .................................... 25–27
4.1 Clear, rapid and universal assessment of work readiness
4.2 Strong linkage of benefits to work or work-like activities:
if you do not participate you do not get benefits
4.3 Creation of a managed market for return to
work employment services
 Responsibility Agenda:
Making families stronger and
society more responsible

The Conservative Party has a vision of the Britain we want to see: a country
where people have more opportunity and control over their own lives; where
families are stronger and society more responsible; and a Britain which is safer
and greener.
In November 2007 we published the first in a series of Policy Green Papers,
introducing our Opportunity Agenda: a radical plan to raise standards in
schools and to create more good school places for parents to choose from.
The second, Power to the People, looked at how decentralised energy
production could revolutionise our electricity supply.
Labour’s bureaucratic approach has failed. We need a thorough overhaul of
the way that benefits are administered. Our plans for welfare reform will help
those who want to work into sustained employment, and cut benefits for
those who refuse to work. They will give some of our most deprived citizens
the opportunity to live independent and fulfilling lives. Above all, they will
help more people contribute to the responsible society I want to achieve.

This, the third Policy Green Paper, introduces our Responsibility Agenda.

The world in the 21st century offers amazing opportunities for individuals 8th January 2008
to exercise freedom and to improve life for themselves, their families and
their communities.

But Conservatives believe that with opportunity comes responsibility.

To make the most of the new world of freedom, we need to strengthen
the structures which bring stability and a sense of belonging: home,
neighbourhood and nation.

This Policy Green Paper sets out how a Conservative Government would
help create stable families and a more responsible society through reform
of the welfare system.

It is not acceptable that nearly five million of our fellow citizens are
languishing on out of work benefits. Mass welfare dependency is a
waste of the country’s human resources and a huge drain on the taxpayer
– benefits cost the country over £100 billion a year, by far the biggest
item in public spending.

But worse than this, benefit dependency is a tragedy for the people involved,
one of the primary causes of low aspirations and social breakdown.

1 2
 New world
Opportunities to connect
Modern technology is opening horizons and diminishing distances. The
opportunities to connect are greater than ever – there are now more mobile
phones than people in the UK, while Myspace.com has a membership of 125
million, twice the size of our population.
Society is adapting to take advantage of the new possibilities technology offers,
and to respond to the changing way we live our lives. The entrepreneurial spirit
and neighbourliness latent in the community are finding expression in a new
generation of voluntary associations, social enterprises and online networks.
The post-bureaucratic age
Britain is entering what we have called the post-bureaucratic age – an era of
dispersed knowledge and power rather than the concentration of authority in
the central state. We are finding new ways to socialise, to run our businesses
and public services, and to look after our local neighbourhoods. People are
weaving a new social fabric that is strong but flexible, founded on small,
dynamic, informal structures.
Our approach
Conservatives know that what matters in life is our relationships, our ability
to provide for our families and to contribute to our communities.
The proper response to the new global forces of the 21st century is to strengthen
the units of society, not the state. Small acts by small groups make a big
difference. Society is the product of the cooperation and interaction of
individuals, families and communities. Wisdom lies in co-operation, diversity
and innovation. The state has a responsibility to help this interaction take
place, not to replace it with its own artificial processes.
We believe that a responsible society is the links directly to our two other
priorities: it will ensure people have more control over their lives and it will
make Britain safer and greener.
3 4
Old politics
Labour is stifling society
Rather than nurturing these new possibilities for social action and
interaction, however, the present Government is stifling them under a rigid
state superstructure.
Labour’s characteristic response to the large and impersonal forces of
technology and globalisation has been to assume that the state, too, must
get ever larger and do ever more. The result is a major extension of state
control over the lives of individuals and communities – a last gasp of the
old bureaucratic age rather than an adaptation to the post-bureaucratic age.
Gordon Brown has built up distant systems of administration and bureaucracy
that not only fail basic competency tests, but are complex and insensitive,
inflexible and impersonal, with counter-productive incentives which damage
the fabric of society.
Society is at breaking point
Labour’s tax and benefits regime means it makes more sense for couples to
live apart than together. Labour’s welfare system isolates people in long-term
dependency on the state. Labour’s proliferation of new regulations and criminal
offences creates contempt for the law. Labour’s increase in targets imposed on
councils and public services undermines local democracy. Their actions are
making society less, not more, responsible.
The result is a society at breaking point. The UK now has one of the highest
rates of family breakdown in Europe, and a higher proportion of its children
living in workless households than in any other EU country. There are 600,000
more people in deep poverty than when Labour came to power. The number
of people in problem debt has risen to almost 4 million, and the number of
people with alcohol and drug disorders has risen to over 8 million. The cost
of these social failures amounts to £100 billion a year.
 Change required
Conservatives have a vision for change: from state control to social responsibility.
We believe in fostering both the traditional ties of family, neighbourhood and
nation, and the newly emerging social associations created by the internet.
Personal responsibility
The primary institution in our lives is the family. It looks after the sick, cares for
children and the elderly, supports working people and the unemployed, and provides
people with their most fulfilling relationships and most cherished memories.
Families depend on the personal responsibility of parents in caring for their
children. We want to make sure that Government supports couples rather than
undermines them, so we will make sure that more couples are offered relationship
counselling at critical moments in their lives. We will end the misguided couple
penalty in the tax credit system, and support married couples in the tax system.
And as this Policy Green Paper sets out, we will help more people off out of
work benefits and into work, so they can live independent and fulfilling lives.
Professional responsibility
We trust in the vocation of our public service professionals to deliver the higher
standards that are needed in our schools and hospitals. We believe that many
more groups can contribute to running these services, and want to open up
our vital public services to the energy and commitment that the voluntary,
charitable and private sectors can provide.
Civic responsibility
Conservatives are the party of localism. We will reverse the advance of central
government into local life.
We will inaugurate a new era of independent local government, giving back
to town halls the power to spend their money as they see fit, and to manage
local services independently of Whitehall. We will put local police forces directly
under local control, with voters given the right to choose the man or woman
who holds each force to account.
5 6
We will champion local social action, through supporting the establishment
of forms of civic engagement such as modern co-operatives. And we will offer
a new deal to third sector organisations, with more trust and responsibility.
To harness the talents, commitment and energy of young people, we will
introduce a six-week programme of National Citizen Service for all 16 year
olds. This will help young people understand the value of public service and
of contributing to our society, as well as giving them a shared experience of
living alongside others from different backgrounds.
Corporate responsibility
Businesses are crucial not just to a country’s economy but to its society:
employment practices impact directly on family and community life, while
the sourcing, production and transport of materials and products impacts
on the environment.
Conservatives are confident that British businesses can fulfil their corporate
responsibilities. In response to the environmental challenge, corporations are
already taking the lead in going carbon neutral. We also want to see them doing
more to provide a family-friendly working environment, which is why we will
give all employees with children the right to ask for flexible working.
Social cohesion through social responsibility
At the heart of our Responsibility Agenda is what we have called the Social
Covenant. This is the common bond of mutual responsibility between
individuals, the state and society. The Social Covenant is the basis of social
cohesion – a commitment on the part of all of us to fight the prejudice and
extremism which threatens our national unity.
Social cohesion does not require unlimited extensions of state power. But
it does require the state to fulfil its functions properly, including controlling
our borders. Most of all, it requires individuals and communities to celebrate
what unites us rather than exaggerating what divides us.
 Our Responsibility Agenda
Welfare reform. Work for welfare. We will introduce radical reform to help
people off out of work benefits and into paid employment.
Health. The National Health Service is our number one priority. We will scrap
Labour’s top down targets and stop their pointless reorganisations. We will
place doctors and nurses, not politicians, in charge of delivering healthcare
and ensure funding follows patients’ choices.
Rewarding marriage and strengthening relationships. Our ambition is to help
parents come together and stay together. We will end the couple penalty in the
tax credit system and pilot relationship counselling to strengthen families.
Addiction and debt. Large numbers of our citizens suffer from spirals of
addiction, poor health and debt. We will give courts powers to apply new
Drug Rehabilitation Orders, using abstinence-based treatment, and reclassify
cannabis as a class B drug. We will introduce a single Consumer Credit Act
to provide greater information and transparency for borrowers.
Responsible business. Every business has an important role to play in producing
a responsible society. Responsible businesses will get a lighter regulatory touch
– for example, equal pay audits will apply only to those firms which lose pay
discrimination cases. We want employees to be able to balance their work and
private lives better, so we will introduce further flexible working provisions.
Social care. Our ageing population means that more elderly people than ever
rely on social care. We will give people access to the money allocated for their
care and allow them to spend it as they see fit.
A cohesive society. In many of our towns and cities whole communities seem
to be living separate lives. We will work to increase cohesion across our diverse
population, and introduce 100 Social Enterprise Zones to help social enterprises
provide jobs and community services.
National Citizenship Service. We are determined to strengthen social relationships
in the teenage years by setting the course towards responsible adulthood. We
will introduce a universal, voluntary National Citizen Service Programme to help
young people make the most out of life and give them a sense of
achievement and focus.
7 8
Our welfare reform plans
in summary
REAL welfare reform to help make British
poverty history
1. Respect for those who cannot work
● Those recipients of Incapacity Benefit who really cannot work will
receive continued support and will remain outside the return to work process.
2. Employment for those who can
● Every out of work benefit claimant who is capable of doing so will be
expected to work or prepare for work.
● A comprehensive programme of support for jobseekers including
training, development, work experience and mentoring.
● Welfare-to-work services to be provided by the private and voluntary
sector on a payment by results basis, according to their success in
returning people to sustainable employment.
3. Assessments for those claiming out of work benefits
● Rapid assessments for every recipient of out of work benefits
– for all new and existing claimants.
● The assessment process will determine how much welfare-to-work
providers are paid for placing a claimant in work.
4. Limits to claiming out of work benefits
● People who refuse to join a return to work programme will lose the
right to claim out of work benefits until they do.
● People who refuse to accept reasonable job offers could lose the right
to claim out of work benefits for three years.
● Time limits applied to out of work benefit claims, so that people who
claim for more than two years out of three will be required to work for
the dole on community work programmes.
 Our welfare reform plans in detail
Overview
For too long, welfare reform has been trapped in a ghetto of technocratic
tinkering. Politicians have promised that tightening the rules here, or changing
the way benefits are paid there, will solve the severe social and economic
problems created by Britain’s welfare state.
But those problems have proved stubbornly resistant to that tinkering. Despite
repeated promises of radical reform, our welfare system still makes it possible
for people to choose a life on benefits. It still fails to encourage and help all
those who can work, to work. And it still discriminates against families.
In the end, welfare reform is less a question of rules and regulations, systems
and procedures; it is more a question of culture and values. What kind of culture
have we created when a young man can grow up in our country certain in the
knowledge that the state will provide a living for him regardless of the choices
he makes? What kind of values are we transmitting when the state, through the
benefits system, actively discourages couples from getting together and staying
together to bring up their children?
Real welfare reform should help re-ignite the social mobility that has stalled
under Labour. It should help reverse the disastrous rise in family breakdown. It
should help tackle the persistent and long-term poverty that shames our nation.
Real welfare reform must be radical not just in the detail of its policy priorities
but in the confidence of its moral authority.
So it is in that spirit that we present these initial proposals for welfare reform.
We believe it is time for an entirely new welfare system, based on an entirely
new culture of responsibility. Not the state taking responsibility away from
people and making them dependent, but people and communities taking
responsibility for themselves and achieving the success and satisfaction of
independence.
We believe that our current welfare system is broken, wasteful and a massive
barrier to the achievement of the progressive society we want to see.
9 2. Centre for Social Justice, Breakthrough Britain, July 2007, p.12
The importance of work
There is overwhelming evidence that being in work is a key component of mental
and physical wellbeing.1 In contrast, welfare dependency blights communities and
ruins lives. For a child, being brought up in a workless household is much more
likely to mean failure at school and worklessness in later life. In many communities
worklessness is being passed on from generation to generation. Millions of British
lives are being wasted.
As the Conservative Social Justice Policy Group Report convincingly showed,
work is the principal route out of poverty. Combating worklessness is the single
most important thing that we can do to lift hundreds of thousands of our fellow
citizens out of multiple deprivation and achieve our long-term goal of making
British poverty history.
Gordon Brown’s failure
Today, after ten years of a Labour government that promised to end the costs
of social failure, those costs now stand at £100 billion a year.2 After ten years
of a Labour government that promised to get people back into work, almost
five million people now depend on out of work benefits. Gordon Brown’s
shameful use of BNP slogans about “British Jobs for British Workers” serves
simply to highlight the total failure of his employment strategy.
During the past ten years, there has been no shortage of work in this country.
Indeed the Government boasts about the millions of new jobs it has “created”. But
a simple, devastating fact is now clear from all the official statistics: as many as 80
per cent of new jobs created in the past ten years have gone to migrant workers.
In many of our cities, you can walk down a street where only a handful of
households have someone in work. In large parts of many communities, only
a small minority of adults are in work. Yet only a short distance away the city
centre is often a hive of activity. Tower cranes dot the skyline. But building sites
are very often manned by migrant workers; offices, shops, restaurants, bars
and hotels are the same. It makes no sense.
1. Department of Work and Pensions, Reducing Dependency, Increasing Opportunity: options for the future of welfare to work, David Freud, p.5
10
 Of course we have already been promised change. Gordon Brown promised
that the New Deal would make all the difference, but it has not. Despite over
£3 billion spent on the New Deal, ten years later youth unemployment is
actually higher than it was in 1997. Britain has a higher proportion of children
living in workless households than any other country in Europe.
Time for REAL change
Timid tinkering with the existing system is not good enough. It is our moral
obligation to end the culture of long-term welfare dependency in Britain.
In a responsible society, individuals who are capable of working accept their
responsibility to work – and the government accepts its responsibility to help
all those who can work get into work.
We believe that the time has come to put an end to the culture of deliberate
worklessness in Britain. We believe that it should not be possible for any person
who can work to choose not to do so and live on out of work benefits instead.
We will build on the experience of the welfare reform programmes that began
in the United States and have been emulated in countries like Australia and the
Netherlands.
Our plans provide a much more comprehensive programme of support for
jobseekers. But they also mean that those who refuse to participate in the
return to work process will no longer receive out of work benefits. We will
ensure that people participate fully by introducing mandatory conditions and
time limits. The long-term unemployed will have to join community work
programmes to get them back into the work habit.
The features of our REAL programme for welfare reform include:
● Respect
for those who cannot work – recipients of Incapacity Benefit who
really cannot work will stay outside the return to work process.
11
● Employment for those who can – a comprehensive programme of support
for jobseekers including training, development, work experience and post-
employment mentoring.
● Assessments for those claiming out of work benefits – rapid assessments
for every recipient, including all new and existing claimants, to assess
suitability for work.
● Limits
to claiming out of work benefits – non-participants or those who refuse
reasonable job offers will lose their out of work benefits, and anyone who
claims for more than two out of three years will be required to work for the
dole on community work programmes.
We will fund this extended programme by bringing the principle of payment
by results to the return to work arena in the UK. The job of delivering our
programmes will be contracted to third party providers from the private and
voluntary sectors, including local authorities with relevant expertise. They will
be paid when they get people into work. If they do not, they will not be paid.
If we can emulate the success of tough programmes overseas we can make
massive inroads into the cost of social failure and generate savings amounting
to billions of pounds a year.
This document sets out the broad shape of the programme we intend to build,
sets out the timeframe for its implementation, and the financial implications of
our proposals. It illustrates how we will draw together best practice in the UK
and from other parts of the world to build a radical programme to get people
off out of work benefits. It will serve as the basis for a discussion with those in
the field over the coming months, ahead of the publication of a White Paper in
due course.
In an age where unprecedented wealth and opportunity is available to many,
but long-term poverty and multiple deprivation are still the reality of life for millions
of people, ending Britain’s welfare culture is a moral duty for any progressive
government. Gordon Brown has comprehensively failed in that duty: this
document sets out how a modern Conservative government will succeed.
12
 2. What is wrong with our return
to work system?

In Britain today, a total of 4.8 million people are currently claiming out of work The welfare state is not doing enough to help people who want to work and some
benefits.3 These are made up of approximately: people are taking advantage of the system. Current policies are locking people into
cycles of dependency:
Status of claimants Numbers
● one in six children live in a household where no-one works;
Jobseeker’s Allowance 837,000
Incapacity Benefit 2,640,000
Income support 1,308,000 ● Britain has the highest proportion of children in workless families in Europe;8 and
● thenumber of people claiming out of work benefits for more than five years
There are three main out of work benefits which are the focus of our plans for
reform: has grown by 600,000 since 1999.9
Share of persons aged 0–1 / living in households where no one works, 2005
● Jobseeker’s Allowance (JSA) for those unemployed but actively seeking work;
● Incapacity Benefit (IB) for those who cannot work because of illness Share of persons aged 0–17 living in households where no-one works, 2005
or disability; and
18
● income support for lone parents whose youngest child is under the
age of sixteen. 16

Despite a benign global economic climate, centralised interventions in the shape of 14

the New Deal, Pathways to Work and Employment Zones have failed to bring 12
substantial numbers of people off benefits and into work.

%
10
By following the short-termist approach of extending means-testing, Labour has
wasted ten years: 8

United Kingdom
● youth 6
unemployment is now higher than in 1997;5
4
● asmany as 80 per cent of the jobs created since 1997 have gone to

Germany

Romania
Hungary

Slovakia
Bulgaria

Belgium

Croatia
Ireland

Poland
foreign workers;6 2

● Incapacity Benefit claims for the under-25s are up 52 per cent; and 0
Country
● more than half of the people claiming Incapacity Benefit have been doing
so for more than five years.7
3. Department of Work and Pensions, Quarterly Statistical Summary, November 2007. 7. Department for Work and Pensions, Work and Pensions Longitudinal Study, IB caseload by age range and IB claims by duration of claim, August
4. The out of work benefits dealt with in this paper are working age benefits. In general they cover people aged 18-60/65. In certain circumstances 1999 and May 2007.
16-17 year olds are able to claim these out of work benefits – for example if they are parents or living alone rather than with parents or guardians. 8. Share of Persons aged 0-17 who are living in households where no-one works, Eurostat, 2006.
13 More details can be found in Appendix A1. 9. Department of Work and Pensions, Work and Pensions Longitudinal Study, Client Group analysis of the Working Age – % of the population, August 14
5. Office of National Statistics, data series AGOL and AGPM, September 2007. 1999 to May 2007.
6. Statistics Commission, Foreign workers in the UK- briefing note, December 2007.
 Many of those receiving out of work benefits desperately want a job. But this
Government has failed to create the climate or tools people need to get back into
work when they have been out of the job market for some time. This is an absurd
state of affairs when 1.4 million people have come to the UK to take up work over
the past ten years.10
2.1 What is wrong with Jobseeker’s Allowance?
It is too easy to claim Jobseeker’s Allowance repeatedly, and for many it fails to
provide a stepping stone out of worklessness.
There are 837,000 people receiving Jobseeker’s Allowance. All of the evidence
indicates that large numbers of JSA claimants are being trapped in dependency
rather than being helped into long-term work:
● around
558,000 JSA claims are repeat claims;11
● 279,000 claimants are spending more time on benefit than in work;
● 250,000 claimants have spent at least eighteen months out of the last two years ● the
claiming benefits; and
● around100,000 of all JSA claimants have spent six of the past seven years
on benefits.12
10. Statistics Commission, Foreign Workers in the UK – Briefing Note, 10 December 2007.
15 11. Department of Work and Pensions, Quarterly Statistical Summary, November 2007
12. Calculations based on figures in a speech by John Hutton MP, then Secretary of State for Work and Pensions, 20 June 2007.
2.2 What is wrong with Incapacity Benefit?
Incapacity Benefit is a trap for large numbers of people, few of whom ever find their
way back into the workplace.
There are currently 2.64 million people claiming Incapacity Benefit, 120,000 more
than in 1997.13 This in itself is a very poor record, but there are particularly
worrying trends in the number of young people claiming Incapacity Benefit:
● 52 per cent more under 25s are claiming Incapacity Benefit than in 1999;14
● there are now 6,600 16-17 year olds claiming Incapacity Benefit;15 and
● around one in fifteen Incapacity Benefit claimants is aged under 25.16
The amount of time that people remain on Incapacity Benefit is also very troubling:
● at
the moment you are more likely to die or retire than get a job if you have been
on Incapacity Benefit for more than two years;17 and
number of long-term Incapacity Benefit claimants has risen under the present
Government and more than half of the people now claiming Incapacity Benefit
have been receiving it for more than five years.18
13. Department of Work and Pensions, Quarterly Statistical Summary, November 2007; Department for Work and Pensions, 5% Sample Data, IB/SDA
Working Age caseload, May 1997.
14. Department for Work and Pensions, Work and Pensions Longitudinal Study, IB caseload by age range and IB claims by duration of claim, August
1999 and May 2007
15. Department for Work and Pensions, Work and Pensions Longitudinal Study, IB/SDA Working Age caseload by age range, May 2007.
16. Ibid.
17. Department of Work and Pensions, Press Release, 15th March, 2007.
18. Department of Work and Pensions, 5% sample data, IB/SDA working age claims by duration of claim, May 1997; Work and Pensions Longitudinal
Study, IB/SDA working age claims by duration of claim, May 2007 16
 Share of persons aged 0–1 / living in households where no one works, 2005

18

16

14

12
%

10

8
2.3 What is wrong with income support 2.4 What is wrong with the Government’s
United Kingdom

6
for lone parents? employment programmes?
4
It is well established that workless households tend to create cycles of deprivation,19 Billions have been spent on employment programmes which are failing to
Germany

Romania
Hungary

Slovakia
Bulgaria

Belgium

Croatia
Ireland

and2 there are currently 766,000 lone parents claiming income support. get people into sustained employment. The Government is currently spending
Poland

20

£695 million a year on its employment programmes: New Deal, Pathways

The
0 Government admits that many lone parents could be working part-time. It is to Work (only a third of which have been rolled out) and Employment Zones.
proposing to change the rules gradually, so that by 2010 parents whose youngest
Country Since 1998, the New Deal alone has cost a total of £3 billion, and its annual
child is over seven will be expected to work rather than being entitled to claim income costs have escalated by 94 per cent.22
support. But there is little evidence of the Government actually helping large
numbers of lone parents with older children into work and off income support.
Spending on employment programmes in 2006/7 (£’000s)
The rate of reduction in the number of lone parents claiming income support has
New Deal 18-24 and 25+ (1) 321,887
slowed markedly. In 1999 the average monthly reduction was 7,950; this has now New Deal for Lone Parents 41,517
fallen to 2,280. At this rate, by June 2010 the number of claimants will be just over New Deal for Disabled People 72,981
700,000
Quarterly– achange
reduction
inof onlyParent
Lone 66,000, far short
Income of the Government’s target of
Support New Deal for Partners 613
getting another 300,000 lone parents into work.21 New Deal 50+ 247
Employment Zones 110,179
Pathways to Work (2) 148,000
15.00 Total 695,424
Quarterly change
10.00 in lone parents
Source Jobcentre Plus Annual Report 2006/7
5.00
claiming income Notes:
(1) Costs for each New Deal and Employment Zones are from the Annual Report and Accounts 2006/7 of Jobcentre Plus.
support (2) This cost was submitted to the Work and Pensions Select Committee in a written note by the DWP (Vol 2 of evidence, ev 256).
The £148 million cost is based on the ‘long run’ cost of the current Pathways network, which is one third of the intended network.
0.00
May 05

May 06
May 03

Aug 05

Aug 06
Aug 03

Aug 04

Nov 04

Nov 05

Nov 06
Nov 03

Feb 05

Feb 06

Feb 07
Feb 03

-5.00
Thousand

-10.00

-15.00

-20.00

-25.00

-30.00

-35.00
Quarterly change

17 19. Breakthrough Britain, Centre for Social Justice, 2007. 22. Hansard, 4 June 2007, Column 32W (Costs for the New Deal for Young People, New Deal for 25 plus and New Deal for Lone Parents) 18
20. Department of Work and Pensions, Quarterly Statistical Summary, November 2007.
21. Ibid.
 Despite this heavy expenditure, the performance of the New Deal is deteriorating:
● New Deal for Young People
In the first two months of 2007, only 28 per cent of leavers found sustained
jobs – compared with 54 per cent in 1998.
● New Deal 25+
In 2007 only 21 per cent of leavers found sustained jobs, compared
with 34 per cent in 2001.
● New Deal for Lone Parents
In 2006 only 22 per cent of leavers found sustained jobs compared
with 51 per cent in 1998.23
The failure of the Government’s employment programmes is demonstrated in
the number of workless households. There are now 6.1 million people living in
workless households – an increase of 200,000 from last year.24
2.5 What is wrong with the Government’s new
proposals?
In 2006, recognising the failure of the New Deal, the Government
commissioned David Freud, of the Portland Trust, to make recommendations
about a new approach to getting people back to work. The radical blueprint set
out in the Freud report, involving the contracting out of the return to work
process to a series of independent providers on a payment by results basis,
offers a clear way forward for the UK.
Tony Blair and then Work and Pensions Secretary John Hutton were enthusiastic
about the Freud report. Gordon Brown was not, and it was initially buried. More
recently, the Government has adopted some of its language, and has modified
some of its welfare-to-work plans to enable it to be seen to be acting tough on
welfare issues.
19 23. House of Commons Library analysis and Department of Work and Pensions tabulation tool, February 2007.
24. Office of National Statistics, Work and Worklessness among households, August 2007
However, reflecting its failure over the last ten years to help people back into
work, Labour’s plans are just tweaking at the margins. They will have no serious
impact on the culture of worklessness or the poverty it produces.
2.5.1 Changes to the New Deal
The Government plans to make gradual reforms to the New Deal in the next
few years. It will introduce a skills health check for some new claimants and
merge the New Deal for Young People and New Deal for 25+ into one new
‘Flexible New Deal’ delivered by Jobcentre Plus and private and voluntary
sector providers.
The Flexible New Deal will still mean that JSA claimants have to wait at least
a year before being referred to a private or voluntary sector provider, and
the majority of back to work services will still be provided by Jobcentre Plus.25
Also, Flexible New Deal will not deal with people who are abusing the system by
repeat claims of JSA because it fails to set time limits for receipt of the benefit.26
2.5.2 Pathways to Work
Pathways to Work programmes apply to new claimants of Incapacity Benefit and
are scheduled to be rolled out to existing claimants under the age of 25. But
the under 25s represent only six per cent of existing claimants, so this change
will do nothing to help the vast majority of Incapacity Benefit claimants back
into work.
2.5.3 Work Capability Assessment
A new Work Capability Assessment (WCA) is forecast to reduce by ten per cent
the number of people accessing Incapacity Benefit from a new claim. But, again,
this will have no impact on those who are already claiming Incapacity Benefit.
As a result, even assuming that it is successful in its own terms, it will only
reduce IB rolls by just 20,000 a year, less than one per cent of the total number
of claimants.27
25. Department of Work and Pensions, Ready for work: full employment in our generation, December 2007 20
26. Ibid.
27. Department of Work and Pensions, Press release, 19 November 2007

2.6 How does our broader benefits system hold
back return to work?
One of the most frequent complaints from benefit recipients about the welfare-
to-work issue is that some of the detailed elements of the benefit system
actively discriminate against people returning to work.
Examples of this include the fact that people can lose benefits if they embark
on a short full-time training course, even if this course is a central part of
preparing them to get back into work.
This Green Paper has not sought to address the obstacles to returning to work
in the wider benefit system. This is a separate and complex project, and the
Government is also planning to introduce some changes. We intend to review
this issue as part of the next phase of our work, leading up to the publication
of a full White Paper in due course.
21
3. Who are we are going to help?
Our radical programme is built on three simple principles:
1. if you are able to work there will be no automatic out of work benefits;
2. if you are out of work, we will do everything we can to help you back
into work; and,
3. if you are medically unable to work then we will give you the help you need.
There is a clear link between a culture of worklessness in the family and the
likelihood that a young person will end up failing in education and failing
to enter the workplace after school, leading many families into a spiral of
dependency. We want to help as many as possible of the 4.8 million people
currently receiving out of work benefits, and, reflecting our principles, our
policy is designed to be flexible and to give the amount of help that is right
for each individual.
We can split those current recipients of out of work benefits who are capable
of some form of work into two categories: those who want to work and those
who do not. We will take a very different approach to each type of claimant.
22
 3.1 Claimants who are capable of work and want
to do to so
The majority of out of work benefit claimants want to work but find that taking
the right steps back into work is something that they are ill-equipped to do.
They may lack the skills, self-confidence or family exposure to the culture
of work, and so getting a job can be a difficult and daunting prospect. Our
approach is to offer these people the support, training and encouragement
they need to successfully re-enter the workplace.
Equally, although there are clearly some people who have managed to use
Incapacity Benefit registration as a way of avoiding the greater conditionality
and lower cash amounts of Jobseeker’s Allowance, most of those receiving
Incapacity Benefit do or have faced genuine health issues. Many will need
to look for a different kind of job to the one they held previously if they are
to return to work. Some, including often those with mental health issues,
will face self-confidence challenges in returning to the workplace.
3.2 Claimants who are capable of work but who
refuse to do so
While the majority of out of work benefit claimants would like to work if
they could, there is a significant minority who are playing the system. Equally,
there are clearly some people who have managed to use Incapacity Benefit
registration as a way of avoiding the greater conditionality and lower cash
amounts of Jobseeker’s Allowance,
Our welfare system has tolerated this kind of abuse for too long, and the
Government has done little to clamp down on those that exploit the system.
In line with our principles, we will deal robustly with those who can work but
who refuse to do so, with tough but fair sanctions and time limits meaning
that those who refuse to participate in our welfare programmes or accept
reasonable job offers will lose their right to claim out of work benefits.

It is not easy for any of these people to make the leap into a job. Just as they
have a responsibility to make themselves ready for work and to seek work
which they are able to do, so we as a society have a responsibility to ensure
that they have access to effective help in taking those steps.

Where people want to work but have difficulty persuading employers to hire
them, we need to give them the means to make themselves more attractive
to employers.

Where people have become afraid even to apply for work, we need to help
them to build the work habit and give them the confidence to get back into
job market.

Where people want to work but cannot (for example, because of childcare
commitments) we must enable them to get closer to the job market so that
they can go back to work at a time which is right for them and for their
families.
23 24
 4. What succeeds? Best practice from
around the world
Many countries have introduced new measures to reduce welfare dependency
and to help jobseekers return to work. In the US, poverty, child poverty and
welfare caseloads have all fallen as a result of federal and state welfare
programmes.28 The Australian welfare-to-work providers have achieved a
ten percentage point increase in the likelihood of people who are out of work
finding and keeping a job – an impact which puts Australia right at the top of
the OECD range.29 These are the goals we want to achieve through our reform
of the UK’s welfare system.
We have reviewed the progress made and the lessons to be learned from the
main examples in Australia, New Zealand, the Netherlands, Germany, and
several states in the USA. No one model is directly transferable to the UK but
the best include three key areas of focus that underpin our policy proposals.
4.1 Clear, rapid and universal assessment
of work readiness
Key factors in successful international reforms have been the establishment of
a clear outline of the return to work process, simplification of the programmes
and pathways provided to help individuals, and a focus on rapidly engaging
people into the back to work process. Like the current system in the UK, many
countries started with a fragmented array of interventions and different rules
for different types of jobseeker. But, in countries with successful return to work
programmes, these interventions have been reduced in number and have been
linked to standardised systems of assessment.30
In Australia, a standard assessment is used. The Job Seeker Classification
Instrument (JSCI) was introduced in 1997 to assess all applicants for benefits,
including the disabled and lone parents, within two days of their first claim. The
JSCI score, which is updated regularly, determines what type of work (if any)
would be suitable for each claimant and how much and how quickly they need
help to find a job. Claimants with no barriers to work are connected with
a welfare-to-work provider within two days.31
28. Welfare Reform at 10: Analyzing Welfare Caseload Fluctuations, 1996–2002, Michael J. New, Center for Data Analysis Report #06-07, Heritage
Foundation, 2006
29. What works and for whom: a review of OECD countries’ experiences with active labour market policies John Martin and David Grubb 2001 and
Customised Assistance, Job Search Training, Work for the Dole and Mutual Obligation-A Net Impact Study, DEWR April 2006
25 30. DEWR Net Impact Study April 2006, reports that Work for the Dole participants were 20 per cent more likely to gain employment after
participating in the programme.
31. See www.workplace.gov.au for a full overview of the Job Seeker Classification Instrument
The City of New York introduced a standard skills assessment to determine
work readiness and the degree of intervention required, and rolled out this
assessment to the entire welfare caseload over a two year period. This process
is applied at the start of a claim and applicants immediately begin an intensive
four- and six-week back to work programme. Claimants are then referred on to
a welfare-to-work provider.32 Universal assessments allow much better targeting
of spending, ensuring that intensive assistance is offered to those that need it
most and at the appropriate times.
4.2 Strong linkage of benefits to work or
work-like activities: if you do not participate
you do not get benefits
The United States and Australia have gone furthest in making explicit the link
between benefits and work for the able-bodied. Underlying these reforms are
two key concepts: first that work experience helps jobseekers become more
employable; and second that benefits involve responsibilities for recipients.
In Australia, many able-bodied jobseekers are required to “Work for the Dole”
by engaging in socially useful local work placements for six months, helping
them to find work and also benefiting their communities.33 If they do not
participate, their benefits are reduced.
In many states in the USA, including California, New York and Wisconsin,
all able-bodied welfare claimants are required to participate in work or work-
related activities, and there have been dramatic falls in claims during the time
that these measures were in place.34
32. Welfare Reform in New York City during the Giuliani Administration: A Study of Programme Implementation, Urban Institute of Washington
July 2002
33. Ibid.
34. The Urban Institute series of reports dating from 2001 profiles the TANF changes in thirteen states and reported TANF caseload falls of 33 per 26
cent from 1996 to 1999 in New York State, 47 per cent between 1995 and 1999 in California and 59 per cent between 1997 and 1999 in
Wisconsin. Most TANF claimants were subject to new conditionality regimes from 1997.

4.3 Creation of a managed market for back to
work employment services
In almost all the countries studied, successful labour market reforms
have involved private or third sector organisations operating back to
work programmes. In the Netherlands, over 600 private organisations help
jobseekers at a local or national level, while in Germany job seekers can
choose to register with a private provider if the government services have
failed to help them find work after six weeks.35
Again, the United States and Australia have gone furthest in outsourcing many
elements of the return to work process to third party welfare-to-work providers
(WTWPs). These private and not-for-profit organisations have provided skills
assessments, job search training, intensive and customised employment
assistance and provision of work placements. Contract structures and payment
arrangements vary but the best examples from Australia use performance
based payments, ensure efficient competition between WTWPs for contracts,
allow jobseeker choice, and provide dynamic and transparent data on job
placement performance.
27 35. Before and After the Hartz Reforms: The Performance of Active Labour Market Policy in Germany. Jacobi and Kluve, 2006
5. How will the out of work
benefit system change?
In contrast to the present Government’s timid tinkering, we propose a
radical reform agenda. In line with international experience of successful
welfare-to-work programmes, our proposals for reform in the UK will mean:
● a
new system of assessment;
● new conditions for receiving out of work benefits; and
● new help for people to get back into work through a network of
welfare-to-work providers.
The rules outlined below will mean that out of work benefit claims follow a three
year cycle. At the end of the three year period, claimants will be able to re-start
the assessment process, but subject to the restoration of sanctions if they choose
not to participate or choose to refuse reasonable job offers. Further details of how
our reforms will apply to different groups are set out in Appendix A2.
5.1 The gateway
We expect Jobcentre Plus to continue to be the first port of call when someone
has lost their job or cannot work. It will continue to be the jobseeker’s gateway
to employment services. Jobcentre Plus will also continue to manage the benefit
system and impose the sanctions regime (as opposed to providing specialist
employment services).
International evidence suggests that early intervention and assistance is crucial.
Within 24 hours of a claim, Jobcentre Plus will provide an in-depth assessment
to evaluate claimants’ needs and capabilities. Using this information we can
design a package with the right balance of support and benefits to help the
claimant back into work.
28
 5.2 A profiling system to tailor support
Each claimant for out of work benefit faces different challenges, and our system
must reflect this. Not all people can or should be treated the same. Problems
encountered by someone well established in work, but who has been made
redundant, are very different to those of someone who has been receiving
Incapacity Benefit for many years.
effective programmes allow independent providers room to innovate. The
welfare-to-work providers will have a strong incentive to offer the best possible
tailored support because they will be paid by results – receiving full payment
only when they get people into jobs and keep them in jobs for a sustained period.
However, we will expect each employment programme to include a number of
core elements. These will include:

We intend to use a profiling system similar to the standard assessments used ● training to increase suitability for work;
in New York City or Australia to categorise each person looking for work, with
● personalised
career and recruitment advice and support prior to entering the
finely graded levels of difficulty associated with placing them in work. The
categorisation will be part of the initial assessment at Jobcentre Plus within 24 workplace; and
hours of a benefit claim. At one end of the scale will be those deemed to be
● sustained mentoring and development advice after re-entering employment.
most likely to be able to find a new job, who will be given a period of up to six
months to do so before they are referred to a welfare-to-work provider. At the
We see post-employment mentoring as a key part of the programme, and
other end of the scale will be those facing the most difficult challenges who will
something which has been missing in this country. Such mentoring helps
be referred immediately. Between these extremes, claimants with challenges of
when problems arise at work which may be difficult for a new recruit to discuss
varying degrees will be given varying lengths of time within which to find work
with an employer – a skill issue, for example. Reports from welfare-to-work
supported only by Jobcentre Plus before being referred to a specialist welfare-
providers in other countries make clear that people are significantly more likely
to-work provider.
to stay in work after getting a job if they receive this type of post-employment
This profiling tool will be rapidly extended to the entire stock of JSA and IB support.
claimants as they are brought into the new system.

The assessment will also be used to determine how much a welfare-to-work

provider is paid when a particular claimant is found a job. Claimants who have
been assessed as more difficult to place will attract a higher success fee for the
welfare-to-work provider than those who have been assessed as being easier to
place. This variable fee system is of the utmost importance – it is the only way
of ensuring that the welfare-to-work providers invest sufficient resources in the
people who need most help to get jobs, rather than just leaving them on
benefits and tackling the easier cases.

We will not prescribe the methods used by welfare-to-work providers to help

people back to work, because the international evidence suggests that the most

29 30
 5.3 Conditions and sanctions Depending on circumstances, the loss of out of work benefits would have
a significant impact on income. For a couple claiming JSA, they would forgo
The success of conditional benefit systems in other countries shows that using £92.80 a week – more than half their total income, assuming they also claim
conditions and sanctions helps to build the culture of work that people need to housing and council tax benefits. For parents on JSA or IB, they could lose
get back into the job market. between a quarter and a third of their income if they fail to comply with the
conditions of the welfare programme.
Under our proposals, there will be three main types of condition applied to the
receipt of out of work benefits. In the case of parents who are subject to out of work benefit sanction, child- and
● Everyone
family-related entitlements such as child benefit and child tax credit will not be
referred by Jobcentre Plus to a welfare-to-work provider will be
affected. The operation of conditionality for parents will specifically allow for
expected to participate in a return to work programme. If they are not willing
special circumstances – such as the need for childcare faced by individual parents.
to participate, they will cease to be eligible to receive out of work benefits.
However, there must remain a clear financial penalty in the form of lost out of
If they fail to participate in any part of the programme without a reasonable
work benefits for wilful non-participation. We will consult on the current operation
excuse, they will also be liable to lose some or all of their out of work
of hardship payments and on their interaction with the sanctions regime.
benefits during the period of non-participation.
● Everyone who receives a reasonable job offer, as defined by the current
government guidelines and confirmed in their initial assessment (and Work
Capability Assessment if relevant), will be expected to accept that offer. If
they do not do so, they will lose one month’s out of work benefits. If they
refuse a second reasonable offer, they will lose three months’ out of work
benefits. If they refuse a third reasonable offer, they will be excluded from
receiving further out of work benefits for a period of three years.
● We will apply a time limit to the receipt of Jobseeker’s Allowance for long-term
and repeat claimants. Our intention is that anyone who has been through the
new system without finding work and has claimed the allowance for longer
than two out of the previous three years will be required to join a mandatory
long-term community work scheme as a condition of continuing to receive
benefit support.

31 32
 5.4 Tackling long-term dependence on Incapacity
Benefit
We want support for those who are incapacitated in some way to be designed
around what someone can do rather than what they cannot. Our aim is to help
as many as possible of those who have incapacities, but who are capable of at
least some work, into jobs.
We will require all current recipients of Incapacity Benefit to go through a
thorough Work Capability Assessment as soon as is practicable.
People whose disabilities make it impossible for them to work will continue to receive
unconditional support, but will be able to access support services on a voluntary basis.
People with a non-permanent condition will be asked to repeat the Work
Capability Assessment at regular intervals.
Those who are found to be fully capable of working will be transferred
immediately onto Jobseeker’s Allowance and will be required to seek work
in the normal way. For those making inappropriate use of Incapacity Benefit,
this will lead to a benefit cut of around £20 a week.
Recipients of Incapacity Benefit who are found to be partially incapacitated but
capable of preparation for work will be referred to welfare-to-work providers,
but with additional support to reflect their conditions.
5.5 Community work programmes for the
long-term unemployed
It is well established that the longer someone is out of the workplace the more
difficult it is for them to go back. But the current system allows the long-term
unemployed to continue to claim Jobseeker’s Allowance for most of their lives
without participating in proper back to work schemes. 250,000 people have
been on JSA for eighteen months out of the previous two years and 100,000
people have claimed for six out of the previous seven years.36
33 36. Calculations based on figures in a speech by John Hutton, MP, then Secretary of State for Work and Pensions, 20th June, 2007
We will not allow anyone claiming Jobseeker’s Allowance over a long period
to do nothing.
We will apply a time limit to the receipt of Jobseeker’s Allowance for long-term
and repeat claimants. The exact criteria for the time limit will be subject to
consultation, but we envisage that anyone who has been through the new
system and has claimed the allowance for longer than two out of the previous
three years will be required to join a community work scheme as a condition of
continuing to receive benefit support.
The design of the community work scheme will build on successful
international schemes like the Australian “Work for the Dole” programme.
Participants will be required to spend most of their time in supervised
productive work in their communities while still retaining access to back to
work activities as designed by their welfare-to-work provider.
Failure to participate in these community work programmes without certified
sickness or other compassionate reasons for absence will lead to an immediate
loss of out of work benefits on a pro-rata basis: as in any other form of
employment, payment will depend on turning up for work. Participation will
be for one year, at the end of which participants will start a fresh back to work
cycle with a fresh assessment.
We envisage that the programme will be administered by a national network
of private and non-profit organisations that will be paid on a per-claimant
basis. These may or may not be the same welfare-to-work providers who are
delivering back to work services. We will consult with providers on the details
of how the scheme should operate.
34
 6. How we will build a financial
structure that can deliver our goals

5.6 Supporting lone parents
The Government is in the process of significantly tightening the rules for
lone parents.
We accept the widespread evidence that helping a household make the
transition from worklessness to work has beneficial effects for both parents
and children alike.
Our Social Justice Policy Group recommended that all lone parents with children
of school age should be expected to return to part-time work. It proposed that
those with children at primary school should be expected to work for at least
twenty hours a week and that parents with children at secondary school should
be expected to work for at least 30 hours a week.
Both we and the Government have accepted the principle behind these
recommendations. By 2010 we will inherit a situation where lone parents
with children over the age of seven will have ceased to receive income support,
and will have been transferred to Jobseeker’s Allowance. We will accept this
approach, though we will make some refinements.
This section describes how our proposals will work financially and how we
will generate savings in the overall welfare bill to release funds to spend on
other commitments.
There are four particular areas that need to be addressed:
● how we can afford to build a welfare-to-work programme that goes so far,
in scale, beyond the current Government’s limited plans;
● how many additional job placements are we aiming to achieve, and what
kind of savings do we expect to be able to generate as a result;
● who are the contractors who would take on this task, and are they sufficient
in number to be able to deal with the scale of the challenge; and
● how can we be certain that the jobs exist for sufficient numbers of those
claiming out of work benefits to be able to deliver a rapid reduction in the
number of claimants?

We will ensure that there are important safeguards to the conditionality applied
to those on Jobseeker’s Allowance. In particular, we will ensure that the
definition of a reasonable job as applied to parents will reflect the limitations
that good parenting places on the ability to work.

We want to ensure that lone parents are encouraged to return to work, but
not forced into a position where they have to work hours that are completely
incompatible with good parenting.

In addition, our policy is to give all parents with children under the age of
eighteen the right to seek flexible working from their employers. Our childcare
strategy will also address the challenges faced by parents of school-age children.

35 36
 6.1 How can we afford a programme on the scale
we need?
The Government is currently spending £695 million a year on welfare-to-work
programmes, and plans to increase this to a figure in excess of £1 billion by
2010. Yet even an increase in spend at this level is not sufficient to allow
Ministers to build programmes to help the 2.6 million people currently claiming
Incapacity Benefit.
The evidence provided in Chapter 2 also shows that current programmes
are not substantial enough to have a lasting impact on levels of worklessness.
There are two key policy decisions that we have taken which will change
normal practice for return to work programmes in this country, and which
will enable us to build something much broader in scale than the plans of the
current Government.
6.1.1 Payment by results
The first is that we intend to pay the independent providers who take on the
welfare-to-work task substantially or completely on the results they achieve.
This is established practice in countries like Australia, and it allows us to
synchronise outcome payments to the providers with the benefit payments
saved once someone is back in work.
That means the providers pay most, or all, of the upfront costs of delivering the
programme. They start to recoup their money when they get someone back into work.
They are only paid in full once someone is fully established back in the workplace.
So, in a typical contract, we would expect to make stage payments to a provider
over the course of a year or so after someone is back in work. If they lose their job,
the payments stop. Again this is established international practice.
37
6.1.2 Amending accounting rules
The second element of the change is to alter the current way that government
runs its finances. At the moment, Treasury rules insist that the cost of welfare-
to-work programmes is met out of the annual departmental budget for
the Department for Work and Pensions. When those budgets run out, those
programmes end. We have been informed privately by some of the Government’s
existing providers for the New Deal programme that they have been told on
occasions to stop working as they have got too many people back into work
and the budgets have run out.
This will always limit the size of programmes according to the Department
for Work and Pensions’ regular annual budget.
Treasury rules mean that programmes which would deliver lower benefit
expenditure and would save money for the Government are not allowed.
They stipulate that money saved from what is called Annually Managed
Expenditure – the regular bill for benefit and other payments – cannot be
used to top up return to work programme costs.
The limit prevents investments that would save money. Given that the average
annual saving from getting someone from Incapacity Benefit into work is more
than £5,000, the scope for encouraging up-front investment by independent
providers through paying them out of benefits saved is huge.
The Government’s failure to implement the recommendation from their own
adviser, David Freud, that welfare-to-work should be delivered on a payment
by results basis is a key reason why the Government has not introduced return
to work programmes for most of the 2.6 million people in receipt of Incapacity
Benefit. This is why David Freud has publicly criticised the current accounting
limitations.
38
 6.1.3 Items of additional expenditure 6.2 How much difference can we make and how
There are two areas of expenditure within our plans which will fall outside much will it save?
the basic contract structure with the return to work providers.
The obvious and immediate question about a programme of this kind is how
The first is the additional cost of assessments for people currently on many people it will be able to move off out of work benefits into work – and
Incapacity Benefit. as a result how much money will be saved.

The second is the cost of the community work programmes for long-term We share the Government’s long-term target of an 80 per cent employment rate
and repeat claimants. International evidence suggests that these can delivered for people of working age.
at an annual cost of between £1,000 and £1,500 per participant.37 The first
However, the Government’s current targets for individual benefit claimant
programmes will commence around two years after the introduction of the
groups are wholly unattainable with current programmes. The Government’s
new system.
audited financial projections are based on the assumption that its own targets
In total these costs amount to substantially less than half the planned will be missed.
Department for Work and Pensions departmental expenditure of over £1bn a
An example of this is the goal of moving one million people off Incapacity
year by 2010 on welfare-to-work programmes such as the New Deal, once the
Benefit by 2016. In 2006 Ministers set a target of reducing the number of
existing programmes have been merged with the new payment by results
claimants by one million over the subsequent decade. By late 2007 they had
structure. This is because it will no longer be necessary to fund programmes
managed only a reduction of 60,000.38 At that rate of progress, it will take until
like the New Deal from departmental budgets, as their work will have been
around 2040 for them to hit the one million target, 24 years behind schedule.
subsumed into our new return to work arrangements. As a result, their budgets
will be freed up for other purposes. Our radical programme will increase the rate at which those who can work
re-enter the workplace.

We will reduce drop out rates, and through post-employment mentoring will
reduce the recycling of claimants through Government programmes.

We expect to see an initial, one-off reduction in the number of out of work

benefit claimants as a result of the introduction of tougher sanctions and
conditions.

39 37. For example see http://www.annualreport.dewrsb.gov.au/2004/part2es/1403.htm for the costs of the Australian Work for the Dole scheme. 38. Department of Work and Pensions, Work and Pensions Longitudinal Study, IB/SDA claimants Feb 2006, May 2007 . 40
 Evaluation of welfare-to-work programmes around the world suggest that Existing welfare-to-work programmes in the UK, for example the New Deal
an efficient system of payment by results combined with tough conditions for Young People, achieve a maximum additionality of seven per cent.40 But
can produce significantly improved employment outcomes. For example, this is deceptive because, at present, there are no mandatory welfare-to-work
participants in the Job Search Training and Customised Assistance programmes programmes for existing recipients of incapacity benefit. Those that do exist
in Australia had employment rates after twelve months that were more than only apply to claimants of jobseekers allowance, who are closest to the labour
ten percentage points higher than a control group of non-participants. market, and should therefore be easiest to get back into work. As a result of
this, additionality figures in the UK represent a success rate well below the
The success rates of their programmes are set out below. comparable figures being achieved in Australia and elsewhere.
The Australian Experience To achieve our goals, we have to do two things. We have to increase the rate of
success of getting conventional jobseekers back into work to the kind of levels
being achieved in Australia. In addition, we have to bring the existing recipients
Programme Total Employment Control Percentage Weighted
participants to rate 12 group (non- point average of Incapacity Benefit into the net, and bring their employment rate up to the
FYE June 2005 months after participant) improvement (per cent) levels being achieved in other countries as well.
programme employment over control
commencement rate after 12 group To illustrate the potential savings from a successful programme, David Freud’s
(per cent) months (per cent)
(per cent)
report indicated that the average saving to the Exchequer of moving someone
off out of work benefits is £5,000, even before taking into account any
Job Search 144,300 58.9 47.7 11.2 2.4 additional tax revenues. On that basis, and once initial payments have been
Training made to the welfare-to-work provider, each increase in work placements of
Customised 298,900 46 35.9 10.1 4.6 100,000 would generate overall ongoing savings to the Exchequer of £500
Assistance million per annum.
Work for the 81,900 39.4 32.1 7.3 0.9
Dole As an indicator of the potential of getting this right, achieving the long-term
Mutual 148,900 46.6 38.4 8.2 1.7 goal of getting 80 per cent of people into employment would involve getting
Obligation an additional 2.3 million people into work.41 The Social Justice Policy Group
Total 9.6 estimated that full savings from successful welfare reform could be £8 billion
per year.42

Research by the OECD has found that targeted interventions and monitoring
have achieved similar levels of additionality in countries such as the
Netherlands.39

We have built our model around the experience of what has worked in
other countries.
40. Institute for Fiscal Studies, Long-Term Effects Of A Mandatory Multistage Program: The New Deal For Young People In The UK, Giacomo De
41 39. What works and for whom, a review of OECD countries’ experiences with active labour market policies, Martin and Grubb, 2001.
Giorgi, page 1, 2007. 42
41. Department for Work and Pensions, In work better off: next steps to full employment, July 2006, p8.
42. Social Justice Policy Group, Breakthrough Britain, July 2007
 In the medium term, international experience shows that radical welfare reform
significantly reduces benefit rolls. For example in the Australian Job Network
scheme, between 39 per cent and 66 per cent of participants found jobs,
depending on the type of scheme and category of participant. The Intensive
Assistance scheme for participants whose profile closely resembles UK
Incapacity Benefit claimants had a success rate of 45 per cent.43
By contrast, the Government’s target for reductions in Incapacity Benefit
claimants represents a reduction of 120,000 claimants per year between now
and 2016. By the end of a five year Parliament, that represents a reduction of
600,000, or just twelve per cent of the nearly five million people who are
currently out of work and on benefits.
Even hitting the Government’s own target for Incapacity Benefit would be
equivalent to a cumulative saving of £3 billion a year by the end of a five year
Parliament. This alone would be sufficient to meet our commitment to eliminate
the couple penalty in the tax credit system.
6.3 Does the private sector have the capacity to
deliver a programme of this kind?
There is already a well established international welfare-to-work industry, with
participants in the United Kingdom ranging from large private sector providers
through to smaller third sector groups such as Tomorrow’s People.
The development of some of the current Government’s programmes has
established many businesses in the United Kingdom, though most remain on a
relatively small scale by comparison with the bigger international programmes.
However, we know from discussions with several of the major international
providers that there is a clear willingness to invest in the UK.
Our plan is to build a programme based around the concept set out by David
Freud in his report.
This will involve responsibility for return to work provision being contracted
43 43. Independent Review of the Job Network, Australian Productivity Commission, Report No. 21, 2002
to an organisation or range of organisations in different geographic areas of the
country. We will consult on the best contracting model based on international
and domestic experience, and a series of pilots will inform the model that is
rolled out nationally.
International experience suggests a number of important lessons for the design
of contracting for return to work schemes on a payment by results basis.
First, as well as competition for contracts, competition between providers
within contracts can be an important driver of good performance. It also creates
the potential for credible alternative bidders when contracts come up for
renewal. Participant choice can also be an important driver of provider
performance.
Second, the Australian star rating system provides a good model for monitoring
provider performance. The system has been effective in driving up performance
and informing the choice of prime contractor when contracts are renewed.
Third, smaller specialist providers can play a crucial role in helping some of
the hardest to reach groups. Maintaining productive relationships between
different types of provider and ensuring that claimants are referred to the
provider whose expertise most closely matches their needs are important
features of a successful system.
Securing the future of these smaller, largely third sector providers, within the
overall structure of a system of payment by results, will be a key criterion for
us in shaping the new generation of contracts.
44
 7. Questions for consultation

6.4 Can the labour market absorb a programme Over the next few months we intend to consult widely on the proposals
outlined in this Green Paper. There are a number of issues in particular
on this scale? which we intend to discuss with relevant groups and individuals:
Over the last ten years in the United Kingdom total employment has increased ● the
by 2.7 million. At the same time the Government admits that at least 1.4 million sanctions and conditionality set out in this document;
migrant workers have found employment in the UK. There has been ● the rules for lone parents;
considerable confusion about what proportion of the growth in employment
can be accounted for by migrant workers but even these most conservative ● the contracting structure for the new return to work providers;
Government statistics show the figure to be at least 50 per cent and possibly
as much as 80 per cent.44 ● how to ensure that the new structure does not exclude smaller providers,
particularly in the third sector; and
While there are clear doubts about the employment outlook for the immediate
future, official figures from the Office of National Statistics continue to predict ● the scope and detail of the community work programmes.
net immigration into the United Kingdom each year running at 190,000 per
annum.45 These are people looking to live and work in Britain.

Our goal is to control the number of migrants coming to Britain while at the
same time looking to move people off out of work benefits and back into the
workplace. In this context, our plans are perfectly containable within current
employment trends in the United Kingdom.

Furthermore, in the event of an economic downturn and a rise in

unemployment, these reforms will help the unemployed to find those
jobs that are available.

45 44. Statistics Commission, Foreign Workers in the UK briefing note, December 2007 46
45. Office for National Statistics, Long-term assumptions for UK population projections, 27 September 2007
 Appendices
A1 Main out of work benefits

JSA and the New Deal Incapacity Benefit

There are currently around 800,000 people on Jobseeker’s Allowance (JSA). The
basic rate of JSA for a single person aged 25 or over is £59.15 per week, rising
to £92.80 for a couple.
To claim JSA a person needs to be ‘actively seeking work’. In the first instance,
a claimant has to call Jobcentre Plus to book an appointment. They then attend
their local Jobcentre Plus to draw up a Jobseeker’s Agreement. The claimant is
expected to take steps each week to find work or improve their chances of
getting work (or both). Claimants will normally be expected to take at least
three steps each week while they are getting JSA. This could include drawing
up a CV or contacting employers for work.
Claimants must visit their local Jobcentre Plus at least every two weeks. During
the visit they will have to sign a declaration to say that they have been actively
seeking work, that they are still available for work, and that there has been no
change in circumstance which might affect their entitlement. They will discuss
what opportunities are available for work. If claimants do not visit their
Jobcentre Plus when asked to do so they risk losing their benefit. However,
only around 12,000 people are sanctioned each year, and the majority of these
sanctions last for just two weeks.46
Incapacity Benefit (IB) customers make up the largest group people on out
of work benefits in Britain, with 2.6 million people of working age currently
receiving IB. This number has grown significantly since the 1970s. It is paid
to those who cannot work because of illness or disability.
There are three rates of IB, which vary according to how long the person has
spent on the benefit, including any time spent on Statutory Sick Pay:
● the
short-term lower rate (currently £59.20 a week) for the first 28
weeks of incapacity
● the
short-term higher rate (currently £70.05 a week) from 29 to 52
weeks of incapacity
● the
long-term rate (currently £78.50 a week) after 52 weeks
Existing Incapacity Benefit recipients are not currently required to participate
in any back to work programmes.

JSA claimants may lose their benefit if they break any of the eligibility conditions.
This could include:

● not making yourself available for work

● not actively look for work and training, or
● not having a current Jobseeker’s Agreement.

If a young person have been claiming JSA for over six months, or someone
over 25 has been claiming for over eighteen months they will be referred onto
the New Deal programme to help them get back to work.

47 46. Hansard, 30 January 2007, Column 258W.

48
 Employment and Support Allowance
The new employment and support allowance (ESA) will replace IB for new
customers in 2008. The ESA has three components. The basic benefit will be
set at the level of JSA. A new personal capability assessment process will assess
not only disability or illness but also potential capacity for work. Claimants
will be divided into two groups: those exempt from work, who will receive the
support element of the ESA, and those who are deemed capable of work, who
will move on to the employment element of the allowance and to participate
in preparation for work activities. If they fail to fully participate in the process
they will receive a lower level of benefit under the Government’s plans.
49
Income support for lone parents
Income support is a means-tested benefit paid to those with low incomes.
Lone parents are currently entitled to claim income support until their youngest
child is sixteen, at which point they move onto JSA.
Recipients are required to attend a work focused interview (WFI) at the start
of their claim in order to receive the benefit, a follow up WFI at six months,
then regular (usually annual) WFIs subsequently. However they are not
required to take any action beyond the WFI. Failure to turn up to a WFI
can result in sanctions.
From 2008 parents whose youngest child is aged eleven or over will have
to claim JSA instead of income support. The government plans to lower the
age of the youngest child to seven in 2010.
50
 Appendices
A2 The assessment, conditionality,
sanction and support system

Claimant type JSA, closest to JSA, furthest from Employment Support Claimant type JSA, closest to JSA, furthest from Employment Support
labour market labour market, Allowance/IB Allowance/IB labour market labour market, Allowance/IB Allowance/IB
e.g. severe skill e.g. severe skill
needs needs

Immediate • Initial • Initial • Initial • Initial

assessment assessment assessment assessment 2 years + claims • Community work scheme for long- • No community work but WCA
within 24 hours within 24 hours within 24 hours within 24 hours of benefit term JSA claimants reassessment and continued support
within 3 year
• Low assessment • High assessment • Work Capability • WCA within • Clock starts with initial assessment
period
score (i.e. score (i.e. hard Assessment three months
• Lasts for one year
not hard to to help) leads (WCA) within
• Optional referral
help) leads to to immediate three months
to WTWP at Sanctions • Benefit sanctions for non-participation • EA claimants • No sanctions,
six months referral to WTWP
• Referral to WTWP any point on at all stages, or if turn down brought into but regular WCA
supported job on a payment by
after WCA on a payment by reasonable job offer the sanctions to reassess work
search with results basis
a payment by results basis – 1st: one month regime, but capability
Jobcentre Plus
results basis – 2nd: three months with maximum
– 3rd: up to three years sanction length
of three months
• Sanction for non-attendance at
6 months • Referral to WTWP • Continued • Continued • Optional compulsory work schemes is pro-rata • Definition of
on a payment by investment investment continued benefit loss “reasonable job”
results basis by WTWP on by WTWP on investment depends on
a payment by a payment by by WTWP on WCA
results basis results basis a payment by
results basis

12 to 24 months • Reassessment of • Reassessment of • Reassessment of • Optional

needs needs needs continued
investment
• Continued • Continued • Continued
by WTWP on
investment investment investment
a payment by
by WTWP on by WTWP on by WTWP on
results basis
a payment by a payment by a payment by
results basis results basis results basis

51 Promoted by Alan Mabbutt on behalf of the Conservative Party, both at 30 Millbank, London SW1P 4DP 52
Printed by TPF Group, Avro House, Harlequin Avenue, Brentford TW8 9EW.