As Labour announces plans to guarantee jobs for the long-term unemployed, Channel 4 News assesses whether government schemes – from the new deal to the work programme – actually work.
It is no surprise that Labour chose to tackle work for its first major policy announcement. Although unemployment figures have been gradually falling over the past few months, the overall figures mask a growth in the long-term unemployed and in part-time work.
The party is proposing a guaranteed six-month job for those unemployed for two years or more, funded by limiting tax relief on pensions for high earners. Participants would be offered 25 hours a week of work for six months at the national minimum wage – or facing lose their benefits.
This latest proposed scheme for work is the latest in a long line of government employment programmes. The first was Labour’s 1997/98 new deal, which set out a range of programmes targeted at getting specific groups back to work – and crucially, withdrawing benefits for those who refused it. And the most recent has been the government’s overarching work programme.
“This government is very committed to reducing prescription on providers, increasing flexibility, focusing on outcomes and paying by results,” Tony Wilson, who led the Future Jobs Fund and now works at the think-tank Inclusion, told Channel 4 News. “Ultimately, the only outcome that matters is a job.”
Which schemes work depends on who is talking and what measures are used. The work programme’s failure to meet its target was well publicised in November last year: just 3.5 per cent of people on the scheme found a job for six months or more – against a coalition target of 5.5 per cent.
The government insists that it is too early to assess the scheme, arguing that over 50 per cent of participants have come off benefits. It also says it provides much better value than Labour’s previous flexible new deal and future jobs fund, which promised six-month job opportunities or training for young people on jobseeker’s allowance.
However the DWP’s impact assessment published last November was very positive about the future jobs fund. It found that the scheme helped participants to succeed in the labour market long term and had an impact in getting them off benefits.
Crucially, it found that despite the cost of £6,850 per participant – paid by the government to the employer – the scheme had a net benefit to society of approximately £7,750 per participant.
This is important, as the scheme was slated by coalition ministers as too expensive and ineffective, but as Mr Wilson told Channel 4 News: “There are things we can learn here: just because something is expensive doesn’t mean it won’t be worth it in the end.”
What the many schemes have shown is that different approaches work for different groups of job-seekers, says Jonathan Portes, NIESR director and former cabinet chief economist.
For example work experience is very effective for young people, while the long-term unemployed benefit from a meaningful guarantee of work – like the FJF – plus an element of compulsion.
“For people who have not been unemployed very long, the basic regime of jobcentre plus and personal adviser support does actually work quite well,” he told Channel 4 News. “In a recession, it’s best to spend more time on that – this has worked well under this government and previous.”
Mr Portes is cautiously optimistic about Labour’s jobs guarantee, and welcomes more aggressive intervention for long-term unemployed. But he adds: “If you really want to make a big dent in the problem you need to start earlier. On the whole, I would start it at nine or six months [of being unemployed] in these conditions”.
Read more on FactCheck: Clegg’s Youth Contract vs Labour’s Future Jobs Fund
Despite the complaints about snap decisions being made too quickly, schemes being cut before their worth has been gauged, and being at the mercy of party ideology, international evidence shows that comprehensive support for job-seekers – with incentives to work and for employers to employ – is better than nothing.
“The evidence suggests that providing people with a full package of support and the right kind of work experience – ideally with additional pay and the hope of a job at the end of it – is crucial,” writes the Joseph Rowntree Foundation’s Chris Goulden.
Labour market analysts are keen to point out that a lot of the changes in schemes are natural progressions related to the most up to date policy thinking at the time. A case of “evolution, rather than revolution,” Paul Sissons, from the Work Foundation, told Channel 4 News.
“More active labour market schemes are generally beneficial,” adds Mr Sissons. “Some work better than others, but certainly, I don’t think we should be leaving people in the benefit system to look for work unsupported.”