The claim
“The Work Programme will be the largest welfare-to-work programme the UK has seen since the 1930s.”
Chris Grayling, 15 February 2011

Cathy Newman checks it out

The Work Programme is the Government’s flagship reform of the Welfare State. Chris Grayling has described it as a “revolution in back-to-work support in Britain” which will overturn Labour’s legacy of “endemic worklessness” and “intergenerational poverty”. But how much is this a revolution in the Minister’s head? FactCheck has been speaking to industry insiders who cast serious doubt on the scale of the scheme. In fact, they suggest that companies will have to lay off their own staff because the Work Programme isn’t going to be helping as many jobless as first thought. Over to the team for more details.

The background

The Employment Minister is launching the Government’s flagship scheme to get the long-term unemployed off benefits and back to work in just over a week’s time.

He says the Work Programme is a ground-breaking programme to help cut Britain’s spiralling unemployment rate.

Providers, mainly private-sector companies, will be paid by results, so they get their cheque only once they succeed in getting people jobs.

The analysis

But tonight, there are warnings that thousands of people currently employed to help people back to work are themselves facing redundancy.

A group which represents the welfare-to-work providers has told FactCheck that as many as 10,000 jobs are at risk.

The Employment Related Services Association (Ersa) – which represents almost 85 per cent of the organisations awarded prime contracts to run the Work Programme – said the welfare-to-work industry could shrink by up to a third over several years.

Chief executive Kirsty McHugh said that although she and her members supported the work programme and wanted it to succeed, there was “huge concern”.

“The big unknown is quite how many customers are going to be going through the Work Programme. If, as we think it will, that number turns out to be quite low, our estimate is that the workforce employed to deal with those customers will shrink by 25 to 33 per cent,” she said.

Ersa’s “best guess” is that about 30,000 people are employed in the welfare-to-work industry.

She said her members’ jobs were at risk because the Government’s own predictions suggested that fewer people would be referred to the Work Programme than to similar schemes under the last Labour administration.

Mr Grayling, however, disputed Ersa’s claims. He admitted that there was a “degree of hubbub” in the industry and that he couldn’t “guarantee” that “every single person who’s worked in the industry in the past will work with the industry in the future”. But he told FactCheck: “I don’t think there will be an overall reduction of employment in the welfare-to-work industry.”

Mr Grayling added: “We are replacing a whole raft of substantially-failed programmes, which added no value whatever to people’s job search, with a revolutionary new approach which we think will transform the lives of the long term unemployed. That means I expect the industry to look very different but it absolutely doesnt mean that it will be smaller.”

The Department for Work and Pensions said 620,000 unemployed people would be referred to the Work Programme in  the remainder of this financial year, and around the same number next year. Because it is a two-year programme, more than a million people will therefore be on the scheme by next year.

That compares with just 450,000 people referred to welfare-to-work programmes under the previous Government, according to Mr Grayling. But FactCheck believes he may be underestimating the number of people supported by welfare schemes under Labour.

According to an answer to Parliament Mr Grayling gave last year, almost 1.2 million people were enrolled in the various welfare-to-work schemes in 2009/10.

That appears to suggest a big initial shortfall, earning the Minister a black mark from FactCheck, and lending weight to Ms McHugh’s explanation about the reason for job losses in the sector now [*See update below].

The Public and Commercial Services Union’s National Officer, Paul Barnsley, said the union had been made aware of 600 compulsory redundancies at one provider, Working Links, and said he was expecting to see up to 2,000 job losses in total in the next few weeks alone.

He said Ersa’s prediction of much higher numbers of redundancies over a longer timescale was “entirely correct”, adding: “I find it astonishing that this flagship programme is such an absolute shambles. Nobody knows where they are going to be a week on Monday.”

Many people employed in welfare-to-work companies which have lost contracts say they face an uncertain future just days before the Work Programme goes live.

Welfare-to-work industry insiders, who spoke to FactCheck anonymously, also said they had received no training in how the scheme will be run, ahead of an expected start date of 13 June.

A DWP spokesman said: “‘The Work Programme is set to be the one of the largest-ever payment by results programmes in the world, we expect to spend between £3-5bn helping to move claimants into employment over the life of the contract. By 2012 we expect it to be providing specialist support for around a million people.

“This is a real revolution in welfare-to-work, and will replace the previous failed programmes of the previous Government. Inevitably that will mean big changes in the welfare-to-work industry as it prepares for the new challenge of payment by results, but we expect the industry to grow over the next year in order to deliver success in this very new world of welfare-to-work support .”

Cathy Newman’s verdict

In Whitehall the talk may be of a welfare revolution, but the facts on the ground don’t at the moment bear that out.

People who have made a career out of advising the unemployed now face unemployment themselves. If the welfare overhaul was as radical as Ministers suggest, these advisers would surely be in demand, not on the dole. And the figures unearthed by FactCheck reveal the problem: Labour’s welfare schemes helped more of the unemployed last year than the Work Programme will this year.

That may change as the Government hits its stride. But in the meantime, the companies doing the heavy lifting will have to lay off valuable staff, causing potential problems in years to come.

[*Update:  After we published this piece, DWP said they were unhappy with the comparison between the figures on the numbers of people on welfare-to-work schemes that they gave to Parliament and their projections for the numbers who will be helped by the Work Programme.
The department says an unspecified number of people who aren’t covered by the Work Programme will still be able to access services through JobCentre Plus as well. 
A spokesman said: “The appropriate comparison is with the number of people accessing specialist contracted support before and after the introduction of the Work Programme, and on this basis you will see that we expect more customers to access the Work Programme in its first ten months (june 2011-march 2012) than accessed specialist contracted employment provision through all of the employment programmes succeeded by the Work Programme in 2009/10.”
The Department says only 540,000 got “specialist contracted employment provision” under the last year of the Labour schemes the Work Programme is succeeding, and is standing by its prediction that 620,000 will get the same kind of help in the first ten months of the Work Programme. FactCheck, and the people who are contacting us on daily basis to tell us of more job losses in the welfare-to-work industry, will be keeping a careful eye on whether that forecast comes true.]

The analysis by Patrick Worrall