Published on 10 Jun 2011 Sections ,

‘Fingers crossed’ for welfare-to-work gamble

Employment Minister Chris Grayling tells Channel 4 News he is “keeping his fingers crossed” as he launches a revolutionary new scheme to get people off benefits.

Employment Minister Chris Grayling has insisted the Government’s flagship scheme to get people off benefits and back to work will succeed, despite facing a storm of criticism.

The Department of Work and Pensions (DWP) launched the Work Programme on Friday, calling it the biggest single payment by results employment programme ever introduced in the UK.

The Government predicts that, by the next financial year, more than 1 million unemployed people will be enrolled on the scheme, which replaces a raft of programmes introduced under Labour including the New Deals, Employment Zones and Pathways to Work.

The Work Programme sees contracts worth up to £5 billion awarded to 18 “prime contractors”, who will subcontract services to smaller suppliers, including some from the voluntary sector. After a small up-front payment, they will only be paid if they can show that their clients have found and kept a job.

Ministers say more than 500 voluntary sector groups and charities have signed up to help deliver the programme, including Mencap, the Citizens Advice Bureau, the Prince’s Trust and Action for Blind People.

Mr Grayling told Channel 4 News the reliance on private sector suppliers was “a very new approach”, adding: “I’ll certainly be keeping my fingers crossed that they are successful.”

The Work Programme has been dogged by criticism since details of it were announced last year.

There was disappointment in the voluntary sector when it was announced that only two out of 18 of the prime contractors were not from the Private Sector.

One voluntary organisation, the Wise Group, said it was considering legal action after losing out to bidders from the private sector offering very little input from volunteers, in defiance of DWP guidance.

Read Channel 4 News FactCheck on welfare-to-work redundancies

Channel 4 News reported last week that a welfare-to-work industry association is predicting that 10,000 people employed to help job seekers under the old programmes could lose their jobs due to the changeover to the Work Programme.

Mr Grayling said he “did not recognise” that, adding: “After all the dust has settled down and the Work Programme is in place, I believe we will have a much bigger industry than we have now.”

As well as reporting widespread redundancies, sources in the Welfare to Work industry have told Channel 4 News they have received no training ahead of the launch date.

Some even said there was nothing in place to help to help people with drug and alcohol problems in certain areas after the demise of the previous schemes.

The Work Foundation think tank said the Work Programme would fail unemployed people in poorer regions.

Neil Lee, the group’s senior economist, said: “The Work Programme is based on a national payment structure and does not take into account local and regional variations in labour demand. Economic growth is faltering and parts of the country – still dealing with the fallout from the recession – are facing significant public sector job losses.

“As the Work Programme is based on payment by results, contractors carry the initial risk. There is therefore the danger that private contractors will focus on investing in places where they are more likely to get people into work to secure a return on investment.”

Mr Grayling told Channel 4 News there had been “intense competition” among bidders for contracts “in every single part of Britain”.

Shadow work and pensions secretary Liam Byrne said: “We support the principles of the Work Programme, which builds on Labour’s reforms. But there’s a real worry now that the Tory-led government is not putting enough fuel in the tank.”