3. Get Britain Working
Conservative proposals to tackle unemployment
and reform welfare
Get Britain Working 1

4. Contents
1. Executive Summary 4
2. The Unemployment and Welfare Challenge 10
3. The Current Welfare to Work System 18
4. The Work Programme 29
5. Youth Action for Work 36
6. Work for Yourself 47
7. Work Together 52
8. Work Clubs 54
9. Funding Get Britain Working 57
2

5. List of Charts and Tables
Chart 1: DWP spend on unemployment benefits since 1997 (£mns)
Chart 2: All jobs (FT and PT) by industry, 1997 and 2009
Chart 3: Comparative rise in unemployment rates during past recessions – indexed from
recessions starts
Chart 4: Government projections for JSA claimants
Chart 5: Regional unemployment rates
Chart 6: Comparative local unemployment rates
Chart 7: Comparison of JSA claimants and Jobcentre Plus vacancies by occupational group
Table 1: Employment numbers by occupation
Table 2: Numbers moving onto Pathways and into paid work
Table 3: Get Britain Working costings and funding sources 2010/11 – 2012/13
Annex A: List of employment programmes and pilots run by DWP as of August 2009
Get Britain Working 3

6. 1. Executive Summary
Labour’s jobs crisis
Britain is in the grip of a jobs crisis. This year has seen the highest increase in unemployment on
record, with over 2,000 people a day losing their job. The recession is hitting every industry in every
part of the country, with people finding themselves out of work and struggling to make ends meet:
• over five million people claim out of work benefits;
• in 3.3 million households (17% of all households), no adult works;
• Britain has a higher proportion of children growing up in workless households than any other
European country;
• there are 947,000 unemployed young people aged between 16 and 24;
• this year, the Government expects to spend £36 billion on out of work benefits – a 20% rise on last
year; and
• £1 for every £3 raised in tax is spent on social security and debt interest.
We cannot go on like this. We cannot afford for people to be left behind. Ensuring we emerge from recession
with a work-ready and skilled population is essential if we want our economy to remain competitive.
The Jobs Crisis – like Labour’s Debt Crisis – cannot be solved by one policy or one programme alone. It
requires a change in economic policy and a shift in culture to unleash investment and entrepreneurial
activity. This agenda will be advanced right across the economic policy spectrum: through radical
welfare and education reform; through deregulation and de-bureaucratisation; through a new and
entrepreneurial approach to infrastructure, universities, science, skills, training, apprenticeships – all the
things that a modern economy requires for success. The introduction of this integrated approach – Get
Britain Working – will be an immediate priority following the next election.
Even before the recession Britain was already struggling with mass levels of hidden worklessness.
Almost five million people were claiming some form of out of work benefit and the bill for this level of
welfare dependency totals £346 billion for the last twelve years. Some of these people, like those with
severe disabilities and those who do invaluable work as carers, will not be able to work, but many others
could work and more importantly want to work. The Labour Government has left these people behind,
offering them the bare minimum of support and sentencing them to a life on benefits.
Conservatives believe that we have both a moral and an economic duty to change this situation. The
public finances are in a critical condition and the size of the benefits bill is just not tenable. But morally,
we cannot leave people to languish on benefits with no opportunities and no chance of changing their
own lives for the better. We have made it clear that those who can work should work, and we are
committed to giving them the tools and skills to do so.
4

7. Our plans for welfare reform will radically transform the support people receive to get into work. No
longer will anyone be left to a lifetime on benefits. Everyone who is able to will be expected to prepare
to return to work, and in return we will offer them the support they need to do so. But during the
recession we need to do even more. So as well as putting together an underlying programme of welfare
to work provision, we will introduce a series of emergency measures to offer people immediate support
through the crisis period. Our particular focus will be on young people who are at risk of being
permanently affected by a period of unemployment, but there will be increased support from day one
for all those who need it.
What are we offering?
Get Britain Working is built around four linked changes:
• a new integrated welfare-to-work initiative, The Work Programme, and four supplementary
programmes:
– Work for Yourself, offering business mentors and loans to would-be entrepreneurs,
– Work Together, a programme to connect people to volunteering opportunities in their area,
– Work Clubs, places where people can receive mentoring, skills training and help to find
local job opportunities, and
– Youth Action for Work, which over two years provides 200,000 additional apprenticeships,
100,000 additional FE college places, 100,000 ‘work pairings’, and over 40,000 additional
young apprenticeships;
• a new generation of technical schools;
• a new national ambition to turn Britain into Europe’s leading high tech exporting nation; and
• 10,000 new university places.
Conservative Work Programme v Labour New Deal
A programme for all claimants not piecemeal improvisation
Massive simplification of welfare to work not 20+ programmes
Long-term support not short-term fixes
Aligned incentives for providers not confused rules
Genuine upskilling for young people not ‘make-work’
Re-ignition of enterprise and self-help not more bureaucracy
Get Britain Working 5

8. The Work Programme
The keystone of our new policy is The Work Programme, a single integrated welfare to work
programme which will cover those transferring from Incapacity Benefits to Employment and Support
Allowance as a result of work tests, the long term unemployed, lone parents and the recently
unemployed. This fully funded programme will replace Labour’s failing New Deals, the Flexible New
Deal and Pathways to Work. It will offer support to the vast majority of the people currently on
Incapacity Benefit that have been abandoned by this government.
Through The Work Programme, we will offer people targeted, personalised help sooner – straight away
for those with serious barriers to work and at six months for those under 25.
Providers will be paid by results, driving up quality and encouraging innovation. The principle behind
payment by results is simple: if you don’t place someone in a sustainable job, you don’t earn your fee.
And a sustainable job under The Work Programme means being in work for a year or even longer, unlike
the Flexible New Deal which rewards providers when someone has been in work for just 26 weeks. This
programme is about transforming people’s lives, not finding a quick fix.
We’ll extend the period of engagement that providers have with claimants, so they can work with them
over the medium to long term, delivering better results for those individuals. In a difficult jobs market,
it also means that providers have a better chance of placing someone in a job and earning their fee.
Under the Flexible New Deal when an individual has been with a provider for a year and still not found a
job they return to Jobcentre Plus and begin the whole process again. This makes the Flexible New Deal
a flawed scheme, particularly during a period when vacancies may be scarce.
Crucially, we’ll have a differential payment system, whereby providers will earn more for helping those
who need the most support. This will discourage them from ignoring the hardest to help and only
working with the easier cases. Labour’s programmes offer the same fee for every claimant, a system
which fails to recognise that people are essentially different and require vastly different levels of
support. There is no incentive for providers to help those furthest from the labour market.
The Work Programme will be flexible and robust enough to withstand every phase of the economic cycle.
This is not just a recessionary measure. It will form the basis of our support during this crisis period and
beyond. However, in response to the recession and the unemployment crisis we are also offering a
number of emergency programmes to offer immediate help and to complement The Work Programme.
The money from the New Deal will continue to go into our new Work Programme, but will enable us to
support many more people because we are being much more aggressive in terms of payment by results. In
addition, we will abolish Train to Gain and other failing Labour schemes. And we will reduce payments for
those who should not be receiving Incapacity Benefits, which will deal with the extra up-front cost. Details of
the extra costs and the sources from which they will be funded are provided in chapter nine of this document.
6

9. Youth Action for Work is specifically focused on the cohort most at risk from long term damage
through a period of unemployment – the young. All those aged 18-24 who have been claiming JSA for
six months will be referred to a Work Programme provider with a responsibility to help that young
person into work. They may decide that the best option for that individual is to offer them training and
job support within their own organisation, or they may wish to make use of the suite of options which
our Youth Action for Work programme will make available to them.
• Work Pairings - young people will be assigned to sole traders for six months of meaningful work
experience and mentoring. The sole traders will pass through to the young people a wage equal to
the benefits that would otherwise be paid, together with £1 an hour of additional pay. Work Pairings
will be aimed at young people who are demotivated by classroom based learning but do not yet
have the skills to secure an apprenticeship or permanent job.
• Apprenticeships – we will provide 100,000 additional apprenticeships and pre-apprenticeships
each year by offering SMEs incentives to take on apprentices and by simplifying the system. We will
ensure that all apprenticeships are work focused and will make it easier for companies, especially
SMEs, to run apprenticeship programmes. We will also introduce a programme of pre-
apprenticeships for those who do not have the basic skills required to access a full apprenticeship.
• FE College places – we will help FE colleges to provide 50,000 additional training places per year
for young people who have been on JSA for six months or more. By freeing up FE colleges from the
bureaucracy of the LSC we will give them greater power to work with local partners to provide the
courses that will be of most benefit to students. We will also encourage FE colleges to work
together with Work Programme providers to offer the courses that are most appropriate.
• Vocational education for 14-16 year olds – we will expand the government’s Young
Apprenticeship (YA) scheme, which offers vocational training for 14-16 year olds, from the current
10,000 to over 30,000. We will also simplify the system to make it easier and more attractive for
schools to offer the YAs.
We recognise that young people are not the only group being affected by the unemployment crisis and
we are determined to make sure that no one gets left behind. But as well as offering emergency support
we also need to transform the British economy and bring about a real focus on enterprise and
innovation. One aspect of this will be the Work for Yourself programme to help move people into self-
employment. We will support business start-ups, including new franchised businesses. We will build a
network of business mentors and offer substantial loans to would-be entrepreneurs. Mentors will be
rewarded on the success of the businesses they support, ensuring there is a real incentive to offer
support and to finance only projects with genuine potential. We will work with specialist organisations
that already have a proven track record in this area, like the Prince’s Trust and the Bright Ideas Trust, to
offer the best support.
As well as focusing on business and enterprise we also recognise that the best hope for getting through
this crisis comes from the British people themselves. By harnessing the resilience and spirit of many of
our communities we can turn our resources towards pulling together through the crisis. To facilitate
Get Britain Working 7

10. this we will establish Work Together, an initiative that connects people with volunteering opportunities
in their area. Meaningful activity has many benefits for those who are looking for work and many
voluntary organisations would welcome volunteers from all backgrounds to help them during this very
difficult period. We are launching www.GetBritainWorking.com which contains over one million
volunteering opportunities across the UK.
We will also build on the success of job clubs – many of which are being led by Conservative candidates
– in creating more opportunities and support within local communities. We will establish a network of
Work Clubs, places where people can gather to share experiences and offer support. These will be
similar to job clubs, but will also provide an opportunity for people to offer and receive mentoring, skills
training and to find local opportunities. We envisage that many of these Work Clubs will be set up by
existing community groups, thereby capitalising on local knowledge and resources, but we will offer
some modest funding to enable them to grow their offering.
A new generation of Technical Schools
In addition to these programmes we plan to change radically the way we train future generations so we
can build a more competitive, entrepreneurial environment. We will support the creation of a new
generation of Technical Schools. The new Technical Schools will have academy status and be open to
all students from 14. They will be sponsored by leading businesses and universities, working with the
trust set up by Lord Baker. These high quality, high tech academies will raise the status of technical
qualifications, boost Britain’s science and engineering base, and provide real choice for parents and
young people.
Europe’s leading high tech exporter
To complement this support for enterprise, Sir James Dyson, one of the world’s leading entrepreneurs
and industrialists, will head a Conservative Party taskforce looking at how we can make Britain the
leading high tech exporter in Europe. This taskforce will set out a clear vision for boosting high tech in
Britain. It will look at how we can harness the fantastic resources of our world-class university science
and engineering departments, and at how we can generate a major expansion of high tech product
development.
10,000 more university places
Demographic pressures and high youth unemployment mean that thousands of young people with good
exam results risk missing out on going to university because of an acute shortage of places. A
Conservative Government will address this problem by creating an extra 10,000 university places. We
will fund the cost for this by giving graduates an incentive to repay their student loan debts to the
taxpayer ahead of schedule.
8

11. How is our programme different from Labour’s?
Get Britain Working offers a completely different approach to Labour’s piecemeal and disjointed
policies. Instead of multiple schemes, we offer one major programme of support for the unemployed
which brings together welfare, enterprise, training, skills and education, helping to transform the
economy and promote competitiveness.
The Work Programme is a radical departure. We will provide a simple, integrated programme for all out
of work benefit claimants. Those who need the most help will be referred more quickly than under
Labour’s schemes – straightaway for the hardest to help and at six months for all 18-24 year olds.
The Work Programme providers will be paid almost entirely by results, ensuring that we get value for money.
And our system of differential payments means that providers will be incentivised to help those furthest
from the labour market, not ignore them in favour of easier to place candidates. By lengthening the period
of engagement between providers and individuals we will make it more likely that providers will be able to
help people back into work. Our whole programme is designed to achieve meaningful, long term, high
quality results. We want to transform welfare to work provision in this country to benefit everyone.
In contrast, the Flexible New Deal (FND) is only a timid step towards the reforms we really need. There is no
differential payment system – providers receive the same fee for all categories of claimant regardless of work
history or barriers to work. This encourages them to focus on the easiest cases. Under FND, a sustainable job
means being in work for 26 weeks. We don’t believe this is long enough and will instead reward providers for
getting people into work and helping them stay for at least a year. Most critically individuals in the FND regime
are not referred to specialist providers until they have been claiming JSA for 12 months. We believe that,
particularly for young people, this is too long and so we are committed to offering them better support sooner.
Youth Action for Work will offer real opportunities for young people while also offering a service to
business. We recognise that businesses of all sizes are suffering during this recession and so instead of
making it more difficult for them to take on apprentices or offer training places, we want to cut out some
of the bureaucracy. Supporting business and the unemployed should be complementary objectives.
Unlike Labour’s Young Person’s Guarantee, ours is an integrated approach with inbuilt flexibility and
personalisation. Our work and training places are meaningful and high quality. Because Youth Action for
Work will be part of the Work Programme, the providers will have an incentive to offer each young
person the form of training that is most likely to get them into a job. Channelling young people away
from provider-led support into short term placements or community task forces is a short term fix. Our
programme offers a long term solution.
Coming out of the recession with a skilled and motivated workforce will be essential if Britain is to
remain competitive. Get Britain Working is a real plan to capitalise on this opportunity to train young
people and solve the problem of underlying worklessness.
Get Britain Working 9

12. 2. The Unemployment and Welfare Challenge
Over the past decade, Britain’s economy was left vulnerable to a major economic shock. When the credit
crunch hit, we had the biggest debt-fuelled boom and the worst budget deficit of any large country. And
we have experienced the deepest recession since the war.1
Britain now faces a jobs crisis. This year we have seen the highest increase in unemployment on record.2 This
increase in unemployment is compounded by an already high benefit-dependency ratio. Despite Government
claims of record employment3, we went into the recession with enormous numbers of people on out of work
benefits.4 Even during the pre-recession boom years, we spent more on working age benefits than we raised
in council tax.5 Repeatedly the Government proclaimed unemployment was at an all time low; but, in reality,
welfare dependency has remained high. In addition to the 1.5 million people6 claiming Jobseeker’s
Allowance and the other unemployed people who are counted within the official unemployment rate of
7.9%7, 2.6 million8 people rely on Incapacity Benefit and 736,000 lone parents receive Income Support.9
An incoming government therefore faces two imperatives. The first is to ensure that we do not allow
those made unemployed because of the recession to become long-term unemployed. The second is to
tackle Britain’s long-standing structural unemployment and the welfare dependency culture.
Structural Unemployment
Our structural unemployment is unaffordable for taxpayers. We have spent £346 billion10 since 1997 on
benefits to support people of working age who are out of work. This year the DWP projects it will spend
£36 billion on these same benefits, a 20% rise on last year.11 As a result, at a time when we face the
highest budget deficit in our peacetime history, £1 for every £3 raised in tax is spent on social security
and interest payments.12
Chart 1: DWP spend on unemployment benefits since 1997 (£mns)
Source: DWP, Benefit Expenditure Tables, medium term forecast, Spring 2009
10

13. But the cost is not only monetary. There is also a terrible human cost. Before the recession began,
almost five million people13 (12%14 of the working age population) claimed out of work benefits. Some of
those claiming such benefits could not work because of disability or caring responsibilities. Others used
benefits for their original purpose, as a short term safety net between jobs. But, in too many cases,
people relied on benefits as a way of life.
The result is 3.3 million households (17% of the total) where no adult works.15 Almost two million
children live in households that depend entirely on benefits16. Britain has a higher proportion of children
growing up in workless households than in any other European country.17 One of the reasons for this is
the culture of welfare dependency that drives intergenerational worklessness.
What makes this culture of worklessness and structural unemployment particularly unfortunate is the
fact that, during the last 12 years, the economy created a net additional 2.6 million jobs18 – roughly
equal to the number of people on Incapacity Benefit. But these jobs were not filled by British citizens on
out-of-work benefits.
Chart 2: All FT and PT jobs by industry
Source: ONS, workforce jobs by industry, August 2009
Rather than tackle welfare reform during the boom times, Labour instead relied on migrant labour to
feed Britain’s labour shortage. The last twelve years represent a tragic missed opportunity to reform our
welfare system. The limited reforms Labour did introduce focused on those closest to the labour market,
by-passing those on Incapacity Benefit: over 800,000 people have been claiming Incapacity Benefit
during the entirety of Labour’s twelve years in office.19 The human and social effects of this neglect are
revealed by the fact that people who have been on Incapacity Benefit for two years or more are more
likely to die or retire than get a job.20
Eradicating welfare dependency will take significantly longer and be significantly more difficult in
today’s economic conditions than it would have been just a few years ago. Action must be taken to help
back into work those who have been stuck in the benefits trap.
Get Britain Working 11

14. Cycling through the system
Also hidden behind the recession unemployment statistics is another structural problem – the perpetual
jobseeker. Before the recession started, of the 800,000 people claiming Jobseeker’s Allowance,21 two
thirds claimed the benefit before. Of those repeat claimants, one in three had made five or more claims
in the past.22 Some of those returning to Jobseeker’s Allowance do so only briefly, spending short
periods on benefits between jobs. But, for many others, Jobseeker’s Allowance is becoming a way of life:
one in five of all new Jobseeker’s Allowance claimants have claimed the benefit within the last four
weeks; one in three made a previous claim within the last three months.23 More than 250,000
Jobseeker’s Allowance claimants have spent over three-quarters of the last two years claiming benefits.24
The Jobseeker’s Allowance system currently allows people to cycle in and out of benefits. Jobseekers can
avoid the escalating conditionality requirements expected of longer term claimants by signing off the
system, just to make a brand new claim a few weeks later. Despite rules supposedly making it very
difficult to claim Jobseeker’s Allowance for longer than 18 months, there are still 7,00025 people who
have claimed it for more than five years and 31,00026 who have claimed it for between two and five
years. One of the reasons some individuals are allowed to claim Jobseeker’s Allowance for such a long
period is because the Government simply does not know what to do with them. Around 8,000 people
have been made exempt from the New Deal on the grounds they are potentially violent, have a serious
drink or drug addiction or other health issue.27
With an incoming Conservative government, this situation will end. The payment of unemployment
benefit by the state is an entitlement which is earned, not owed. In return for proper support and
intervention for those who require it, the taxpayer should expect people to follow through on their side
of the bargain. Under Conservative proposals, people will no longer be allowed to cycle through the
system. Their continued entitlement to benefits will be contingent on their efforts to find work. Once
the recession has ended, it is our intention that anyone who has been through the new system without
finding work and has claimed the Jobseeker’s Allowance for longer than two 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.28 There will also be sanctions if people turn down reasonable job offers.
Recession-related unemployment
Now the country faces not just a chronic structural unemployment problem but also a surge in
unemployment thanks to the deepest and longest recession since the war.29 The UK officially entered
recession in April 200830. Since then, unemployment has risen sharply. The number of Jobseeker’s
Allowance claimants has almost doubled in one year to 1.58 million31
The rise in unemployment since the beginning of this recession has outstripped that in the last three
recessions, as Chart 3 illustrates. According to government forecasters, unemployment will continue to rise.32
12

15. Chart 3: Comparative rise in unemployment rates during UK recessions - indexed from recession start
Source: ONS, Labour Market Statistics, September 2009. Annual change in unemployment rate indexed
from start of each recession.
In past recessions, unemployment has continued to rise after the start of the economic recovery.33 The
Government predict that this will happen again, and that unemployment will not reach pre-recession
levels for at least a decade – with two million people projected to claim Jobseeker’s Allowance in 2016
and 1.8 million still projected to be claiming Jobseeker’s Allowance as late as 2020.34
Chart 4: Government Projections for JSA Claimants (000s)
3,50
3,00
2,50
2,00
1,50
1,00
0.50
0
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21
Source: DWP, Jobcentre Plus Workload Projections, April 2009
As in the past, geographical areas – towns and cities – with higher than average unemployment rates
before the recession, have experienced a higher than average growth in unemployment since the
recession. As chart 6 illustrates, the ten areas most affected by this recession are all areas of high
unemployment35.
Get Britain Working 13

16. Chart 5: Regional Unemployment Rates
Yorkshire and the Humber Unemployment rate
Apr - Jun 2008
West Midlands
Growth in rate
Wales June 2009
South West
South East
Scotland
North West
North East
London
East of England
East
UK
0.0 2.0 4.0 6.0 8.0 10.0 12.0
Source: ONS, Labour Market Statistics, July 2009
Chart 6: Comparative Local Unemployment Rates
National Avg
Walsall
Newham
Lambeth
Manchester
Hartlepool
Wolverhampton
Birmingham
Tower Hamlets
Sandwell
Leicester
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%
Source: ONS, Local Labour Market Statistics, August 2009
It may seem counter-intuitive that when a recession hits, it is the areas where there are fewer jobs (and
therefore lower employment rates) that experience a disproportionate number of job losses. The
explanation lies in the structure of their local economies and workforces. Areas of higher than average
unemployment are often also home to a population with lower skills than the national average. This
reflects the fact that skilled industries have been lost and partially replaced with low skilled service
jobs. The loss of skilled jobs available locally has deterred people from investing in their skills. As a
result, entry-level service jobs became the only viable employment option for many in these
communities (and for those entering these communities). This in turn creates a vicious circle in which
businesses employing relatively skilled labour virtually disappear from the area. It is this economic
fragility inherent in areas of high unemployment that leads to faster than average increases in
unemployment during recessions.
14

17. However, although the impact of the recession on poor areas has been disproportionate, it has been
significant across the rest of the country. Different factors have driven up unemployment in different
regions. As would be expected given the origins of the recession, the number of managers and senior
officials losing their jobs has more than doubled in the last year36; and one third of these jobs have been
lost in London and the South East following the collapse in City financial services37. And, as the effects of
the financial collapse rippled across the economy, we have also seen large numbers of lawyers,
engineers, management consultants and other finance-related professionals losing their jobs in other
parts of the country.38
Nonetheless, as Table 1 illustrates, the bulk of jobs lost have been in the low-skilled, low-waged
occupations where recent job growth had been the greatest – catering, retail, call centres and
construction. As the credit crunch took effect, people lucky enough to have any spare cash diverted it to
pay off debts and mortgages, and retail took a hit as a direct result. The freezing of commercial lending
plunged construction projects big and small into limbo and tens of thousands of construction workers
lost their jobs.
Table 1 – Employment Numbers by Occupation39
Occupation July 2008 July 2009 % of All % change
Jobs Lost
1: Managers and Senior Officials 32,855 79,815 5 143
2: Professional Occupations 25,365 58,075 4 129
3 : Associate Professional and Technical Occupations 52,890 105,225 7 99
4 : Administrative and Secretarial Occupations 93,085 168,400 11 81
5 : Skilled Trades Occupations 97,600 207,370 13 112
6 : Personal Service Occupations 44,400 75,200 5 69
7 : Sales and Customer Service occupations 141,570 242,900 15 72
8 : Process, Plant and Machine Operatives 92,995 180,665 12 94
9 : Elementary Occupations 285,110 444,975 28 56
Total Unemployed 867,825 1,567,890 100%
Source: ONS, JSA claims by usual occupation change from July 2008 to July 2009
Current figures suggest that there are more unemployed people with low skills than there are available
low-skilled jobs. The ratio of Jobseeker’s Allowance claimants who worked in elementary occupations to
suitable low-skilled vacancies is roughly 12 to 1.40 So we have both an unemployment crisis and a skill
shortage. The failure of our education system over the past decade has made the unemployment crisis
more intractable.
Get Britain Working 15

18. Chart 7: Comparison of job seekers and vacancies by occupation
500,000
Jobseekers
450,000
Vacancies
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Managers and
Senior Officials
Professional
Occupations
Associate Professional
and Technical
Administrative
and Secretarial
Skilled Trades
Personal Service
Occupations
Sales and Customer
Service Occupations
Process Plant and
Machine Occupations
Elementary
Occupations
Source: ONS, Labour Market Statistics, September 2009: DWP, Jobcentre Plus Vacancies. September
2009, figures relate to August 2009
As a result, an incoming government must also tackle the skill mismatch. Significant and sustained
improvements in people and skills training must be made now if people are to regain financial
independence once the recovery begins in earnest.
Youth Unemployment
Young people have been hit particularly hard by this recession. There are 947,00041 unemployed young
people between the ages of 16 to 24, of whom about 500,000 claim JSA.42 Thirty eight per cent of all
unemployed claimants are young people.43 Almost a fifth of economically active 18 to 24 year olds and a
third of 16 to 17 year olds are unemployed.44 Sadly, the scale and extent of youth unemployment
reflects not just the recession but deeper structural problems with education and training in Britain
today; even before the recession began 700,000 young people were unemployed45 and almost one fifth
of young people aged 16-24 were not in education, training or employment. The associated productivity
loss to the economy was estimated at £10 million a day and the associated future earnings ‘wage scar’
on unemployed young people was between 8% to 15%.46
During and after periods of recession, many companies impose recruitment freezes. In May 2009, the
Chartered Institute of Personnel and Development47 found that almost half of all employers were not
planning to recruit any school leavers or graduates this summer. And this is happening at a time when,
through a coincidence of demography, 805,000 young people will turn 18, the largest number since
1990.48 These two factors – the larger than usual cohort of 18 year olds and the freezing of recruitment
– increase the risk that youth unemployment will exceed one million. According to research undertaken
by the Prince’s Trust, one in five teenagers receiving their GCSE results this past summer could be in
receipt of JSA by the time they are 2149.
16

19. Faced with months or years of unemployment, there is the risk that many young people will fail to
acquire work habits and their skills base will erode; unless we take action, the young unemployed of
today are on course to become the long-term unemployed of tomorrow. We need a radical new plan to
prevent this from happening.
We believe the answer is sustained and structured improvement in the education and skills development
of young people. We do not believe that subsidised temporary ‘make-work’ jobs – which Labour is
providing through the Future Jobs Fund – can conceivably address the failure of the education system to
prepare a generation of young people for the future.
Get Britain Working 17

20. 3. The Current Welfare to Work System
“We will face up to the new issues that confront us. We will be the party of welfare reform. In
consultation and partnership with the people, we will design a modern welfare state based on
rights and duties going together, fit for the modern world.”
Labour Party Manifesto, 1997
Over the last twelve years, there has been endless rhetoric from Labour on welfare reform. During their
time in office, the Labour government have published numerous green papers and white papers
outlining changes and reforms to the welfare to work system; they have launched 22 different
employment programmes at a national level and trialled 15 alternative programmes through pilots50.
Spending has also been huge. Since 1999, the Government has spent £2.2 billion51 to create over 800
Jobcentre Plus offices following the co-location of the Benefits Agency with the Employment Service and
an estimated £5.7 billion52 on the New Deal employment programmes. This is in addition to the £346
billion that has been spent on benefit payments to those out of work.53
And yet, we went into recession with nearly five million people on out of work benefits54; we have the
highest level of youth unemployment in Europe55; and we have a record level of economic inactivity.56
It is the responsibility of an incoming government to tackle welfare reform using experience from here
and abroad. This chapter recaps the changes to welfare policy over the recent past, explains where an
incoming Conservative government will make changes, and outlines why we believe a wholesale and
radical reform of the existing welfare infrastructure is essential.
Background
Passive labour market policies gained ascendancy in the 1960s and continued through the 1970s. The
introduction of Restart interviews and a stricter availability test in 1986 marked the beginning of the
move towards active labour market programmes in Britain. In 1997, Labour were elected on a platform
of welfare reform. Frank Field was asked to “think the unthinkable”.57 But radical reform was blocked by
the then Chancellor, Gordon Brown. Instead, the top-down JSA regime and New Deal programmes were
the two means by which Labour delivered a heavily interventionist approach through the new Jobcentre
Plus offices.
At the very time the JSA regime and New Deals were rolled out, the UK embarked on one of the longest
periods of uninterrupted debt-fuelled economic growth in recent history. Labour market shortages became
acute as 2.6 million new jobs were created.58 But, despite the creation of a complex and confusing and
often contradictory set of initiatives and labour market programmes (such as the New Deal for Musicians)
to try and drive down the claimant count, up to 80% of the new jobs were filled by migrant workers.59
18

21. It gradually became increasingly clear that the prescriptive central government approach driving the New
Deal was producing diminishing results. By 2008 fewer than one in four people leaving the New Deal 25
plus went into a job.60 With funding linked to processes rather than outcomes, those with multiple
barriers to work were recycled through the system, as the easiest to help were cherry-picked. As a result,
264,000 people61 have been through the New Deal more than three times and 18,500 people62 have
been through it five times or more. After 12 years, the government has identified a group of about
250,00063 individuals whom none of the New Deal programmes, despite multiple attempts, could get
into work. These claimants cycle back and forth between brief periods of work, JSA and the New Deal
programmes. Many in this group had low skills and multiple barriers that prevented them from being
hired by employers, even during a period of tight labour market conditions. Their complex problems
could not be tackled through an employment programme that segmented people on the basis of age
and benefit alone and then mandated interventions on that basis, regardless of individual needs.
Multiple evaluations have concluded that the number of people who have entered the world of work
thanks to the JSA regime and New Deals, as opposed to those who would have found work anyway, is
very low.64 Whilst this may reflect the fact that, as an economy grows and employers find it more difficult
to compete for staff without increasing wages, employers become more willing to invest in individuals
further away from the labour market it also reflects the inadequacy of the New Deal programmes which
Labour’s own former Welfare Reform Minister, Frank Field, has described as “derisory”.65
In 2004, the Government declared its ambition to increase the UK’s employment rate from a static 75%
to 80%.66 To achieve this, over the following years the Government turned its attention to those on
‘inactive benefits’ – Income Support and Incapacity Benefit. New conditions were placed on both groups;
a new programme – Pathways to Work – was introduced for new Incapacity Benefit claimants; and the
Government announced its plans to require lone parents with older children to seek work. But, radical
reform was blocked by the then Chancellor. In 2006 the Government commissioned David Freud to
report on welfare reform. This report represented “a starting point for a long term process of
transforming the Welfare to Work system”. But again in 2007 the reforms were cold-shouldered by
Gordon Brown as Prime Minister. Eventually, under pressure from Conservatives, the Government
performed a U-turn and accepted that a programme was required for those on Incapacity Benefit and
that it should be designed around outcome-based funding. But the initiative was confined to a modest
set of pilots, delayed until 2011.
Following Freud’s report, the Government has now introduced the Flexible New Deal, under which
private and voluntary providers are contracted to work with the limited number of long-term
unemployed. Unfortunately, however, the Government’s failure to tackle welfare reform when the
economy was booming has meant that the intentions of the Flexible New Deal have not been fulfilled.
Instead, rushed measures have been taken to adapt a programme designed to help approximately
250,000 long-term unemployed people with multiple barriers, so that it can at least pretend to deal with
one million cyclically unemployed people.
Get Britain Working 19

22. The New Deal for Young People Blueprint
The New Deal for Young People was launched in 1998 and formed the blueprint for the New Deal
employment programmes that followed. All young people who had been unemployed for six months
were required to participate in the New Deal (though this approach was subsequently dropped in favour
of a system in which unemployed young people have to wait 12 months before receiving any structured
support).There were two main aspects to the blueprint: a case-loading system where claimants were
required to meet with their New Deal Personal Advisor fortnightly; and a set of prescribed ‘Gateways’ or
job search activities that all New Deal customers had to carry out at different times. During the first four
months, claimants were given intensive job search assistance and short basic skills courses. At month
five, claimants were required to choose between a six month spell of subsidised employment, full-time
education or training for 12 months, work in the voluntary sector for 6 months or work in the
Environment Taskforce.
The majority of New Deal elements were administered in-house by Jobcentre Plus staff except for the
training courses, which Jobcentre Plus contracted out to employment training providers.
The first element of the New Deals - the role of Personal Advisors in public employment service support
– has also been used in other countries, including the Netherlands, Denmark, Germany, Australia and
New Zealand. Studies have found that other employment advice providers have focused more exclusively
on employment advice than Jobcentre Plus67. In addition, the cost per successful outcome achieved by
Jobcentre Plus Personal Advisors (getting an unemployed person into a job) compared poorly with
private sector New Deal providers and Personal Advisors in other countries.68 Questions should therefore
have been raised early on about whether the role of advisor was suitable for Jobcentre Plus staff or
whether it should be carried out by private-sector or third sector providers – but such questions were
not asked.69
The second element of the New Deal blueprint – heavily and centrally prescribed and inflexible
interventions – has been even less effective. Evaluations of the New Deal for Young People pilots show
that there was significant deadweight: many New Deal for Young People participants who found work
would have done so without the programme. Moreover, a significant number of young people returned
quickly to unemployment. Last year, less than one in three New Deal participants went into employment,
whilst over half of all New Deal 25 Plus participants went back onto benefits immediately.70
According to the National Institute of Economic and Social Research, of those leaving unemployment
following the New Deal for Young People, between 50% and 80% would have done so anyway without the
programme.71 This is consistent with estimates of deadweight for the New Deal for Lone Parents which
range from 60% to 80%.72
20

23. The Growth of New Deals
Despite these severe shortcomings, the New Deal blueprint was then replicated for different claimant
populations. This was predicated on the view that unemployed peoples’ behaviour could be clustered by
benefit type and that all lone parents, for instance, behaved similarly and required the same
interventions. As a result, numerous further programmes were introduced:
• New Deal 25 Plus: Mandatory programme for all JSA claimants at 18 months. Introduced in 1998.
• New Deal for Lone Parents: Voluntary programme for lone parents on Income Support. Introduced in
1998.
• New Deal for Partners: Voluntary programme for partners and spouses of JSA/Incapacity Benefit and
IS claimants. Introduced in 1999.
• New Deal for Musicians: Voluntary programme for unemployed musicians. Introduced in 1999.
• New Deal 50 Plus: Voluntary programme for JSA claimants over the age of 50. Introduced in 2000.
• New Deal for Disabled People: Voluntary programme for Incapacity Benefit and IS claimants.
Introduced in 2001.
• New Deal for Skills: Voluntary programme for unemployed people with literacy problems. Introduced
in 2005.
All of the programmes were run by Jobcentre Plus and followed a set of centrally prescribed
interventions that could only be varied marginally according to the participant. Performance of the
differing New Deals varied significantly. However, across all the programmes, there was poor
performance despite the increasing buoyancy of the labour market over the period. For example, the
average job entry rates for the New Deal for Young People and New Deal 25 Plus was 40%.73
The comparative job outcomes rates seem particularly low when three factors are taken into
consideration. First, the economy grew during the period.74 Second, there were large deadweight costs,
that is individuals who would have found work regardless of the New Deal programme. Third, the New
Deal programmes were segmented by customer group, at greater cost, to provide greater and
specialised support and therefore maximise job outcomes. The result of these low job outcome rates
has been a cost per job outcome which is unsustainable going forward.
Employment Zones
From 2000, the Government tested an alternative employment programme delivery model in some of
Britain’s most deprived areas – Employment Zones. The Employment Zone model trialled an alternative
approach to welfare to work provision that included greater use of the private and voluntary sector and a
limited introduction of payments by results. Employment Zone providers were paid £300 for the first 4
weeks; at 26 weeks, providers were paid an amount equal to the average unemployment benefit
payment for 21 weeks which the provider then passed onto the claimant. All other payments under the
contract were outcome-based and the outcome was defined as a 13-week job outcome.
Get Britain Working 21

24. Despite the fact Employment Zones were based in the most deprived areas, they were found to
outperform the New Deals. Research estimates that Employment Zones delivered between 8%75-14%76
more job outcomes than comparative Jobcentre Plus areas and 32%77 more job outcomes when
compared to the long-term unemployed. Most significantly, evaluations indicate that Employment Zone
participants were less likely to return to unemployment.78
There is consensus that the total flexibility given to Employment Zone providers led to a number of
innovations in delivery which in turn drove the higher performance. For instance, the physical design
and location of Employment Zone facilities were markedly different and a number of specialist advisory
roles were created, such as in-work advisors, outreach advisors and recruitment consultants as well as
clinical psychologists.79
Despite the improved outcomes from Employment Zones, they operated only in a very limited number of
areas accounting for only seven percent of employment programme participants under Labour.80 In
2004, the Government announced its intention to launch ‘Building on the New Deal’, a series of pilots to
introduce the lessons learnt from Employment Zones into the New Deal programmes. However, despite
the fanfare these pilots never happened.81
Flexible New Deal
In December 2007, following the report by David Freud, the Government announced the creation of the
Flexible New Deal. The Flexible New Deal was to replace New Deal 25 Plus, New Deal for Young People,
New Deal for Musicians and New Deal 50 Plus. Participation on the Flexible New Deal was intended to be
mandatory for all JSA claimants over 12 months.
It was agreed that the Flexible New Deal would be introduced in two phases. During the autumn of
2008, the DWP ran the tendering process to award the FND contracts phase one which were to replace
the New Deals in half the country. The DWP allocated a fixed pot of funding for each geographical area
and asked FND providers to bid on a unit cost basis; by committing to a high job outcome rate, bidders
lowered their unit cost per job outcome. This raises obvious questions about the quality of provision.
We have consistently raised concerns about the Flexible New Deal model, arguing that it continues to
abandon people on Incapacity Benefit. There are currently no mandatory back to work programmes for
the 2.6 million existing claimants on Incapacity Benefit. Flexible New Deal was the Government’s
opportunity to extend help to all these people; but they did not take the opportunity.
Second, under the Flexible New Deal young people are not given any structured support for 12 months.
This is double the length of time they had to wait for support under the original New Deal.
22

25. Third, the current structure of the Flexible New Deal runs the risk of encouraging providers to park
clients since the service fee and outcome payment does not vary by claimant; a claimant who is work-
ready when he or she arrives earns a provider the same fee as a claimant who requires hours of training
and coaching. Providers, particularly in a context of tight resources, are therefore likely to identify work-
ready claimants and prioritise their time and resources on them, to the detriment of those who would be
more expensive to help. Differential pricing would address this issue – but the Government have missed
that opportunity too.
Fourth, 26 weeks in work should not count as a sustainable job outcome. Under the Flexible New Deal,
providers will receive 70% of their fee once a person has been in work for just 13 weeks. A high-
performing employment programme should help people for longer.
As well as these underlying problems, the Government’s response to the recession has been to change
the phase on Flexible New Deal contracts to pay more for process and less for results than was originally
envisaged. Flexible New Deal providers will now receive not the originally intended 20%, but rather 40%
of their payment up front; so the Government is shouldering more of the risk with no guarantee of
achieving better outcomes. This pricing change made what was an already flawed programme
significantly worse.
Also, under the Flexible New Deal, the provider has only one year to place a claimant into work. Until
vacancies start to reappear in the economy, it is likely to be more difficult to get people into work within
this timescale. The danger is that providers will spend little on claimants, knowing it will be very difficult
to place people into jobs within one year. This would provide poor results for claimants and the
taxpayer. Extending the period by which providers can earn an outcome payment to more than one year
would prevent such behaviour; but that opportunity, too, was missed.
Finally, the Flexible New Deal was never designed to handle the volumes of claimants that are now
anticipated. Rather than addressing this issue head-on, the Government have tried to reduce the
numbers of people who move onto the Flexible New Deal by diverting them into other activities, such as
those in the Young Person’s Guarantee. While this will keep numbers down in the short-term, it will not
provide people with the support and investment they require in the medium-term.
In short, the Flexible New Deal contracts, as structure, will not deliver the best possible outcomes either
for benefit claimants or for the taxpayer.
Support for Lone Parents
Legislation was passed in November 200882 to change the rules for the 736,00083 lone parents claiming
income support. By November 2010, after a series of gradual changes, parents whose youngest child is
over seven will be expected to work rather than being entitled to income support.
Get Britain Working 23

26. There has been little evidence of the Government providing support that lone parents need to overcome
barriers and return to work. In May 1999, an average of 7,950 lone parents left income support
following a return to work. By February 2009, the number had fallen to under 6,00084. Progress towards
the Government’s target of getting another 300,000 lone parents into work has stalled.85
Support for People on Incapacity Benefit
Whilst a significant amount of Government attention and money has been spent on the unemployed over
the last decade, little attention has been spent on the 2.6 million Incapacity Benefit claimants.
Many people who claim Incapacity Benefit are too sick or disabled to work and a Conservative
government will protect those in this position. However, many people who claim Incapacity Benefit
would like to return to work.86 And, for a country with a National Health Service free at the point of use,
we have a disproportionate percentage of adults not working on health grounds. Some have recovered
from episodes of depression, anxiety or other illnesses; others have learned to manage their health
condition and the sad fact is many should never have been signed onto Incapacity Benefit in the first
place. We cannot afford to waste the talent of the 7% of the working age population out of work for
health reasons and we can no longer afford to pay billions of pounds of Incapacity Benefits each year to
people who could be at work.87
In 2001 the Government launched the New Deal for Disabled People. Under this voluntary programme,
existing Incapacity Benefit claimants were referred to a ‘Job Broker’ who would assess skills, identify
suitable job opportunities and work with the individual throughout the job application and interview
process. However, take-up of the programme has remained very low with only 1.5% of all Incapacity
Benefit claimants choosing to enrol on the programme each year.88 For the majority of Labour’s tenure,
this has been the only programme that targeted existing Incapacity Benefit claimants, despite the fact
there were significant labour shortages across many job-appropriate industries.
Further attempts were made with the introduction of seven Pathways to Work pilots in 2003/04 that
targeted support on new claimants of Incapacity Benefit entry. From 2004 onwards the Pathways model
was rolled out across the rest of the country. 40% of the Pathways areas are run in-house by Jobcentre
Plus and 60% are run by providers on the Government’s behalf.
Under the Pathways model, new Incapacity Benefit claimants are required to attend a Work Focused Interview
with a Personal Advisor. If deemed appropriate, the Personal Advisor refers the individual onto four further
Work Focused Interviews; entry onto the New Deal for Disabled People (as outlined above) or onto a Condition
Management Programme89. Advisors can also access a return to work credit which pays Pathways participants
£40 a week for a year if their gross annual earnings are no more than £15,000; and an additional £300 of
discretionary cash spend which the Personal Adviser can use to support purchases or activities that increase
the chances of finding work. However, the Pathways programme is flawed because there are no measures
24

27. within the programme to help people improve their skills. Disabled people and people with long-term health
conditions are twice as likely to have no qualifications as the rest of the population, and only 59% of the
disabled population is qualified to level two, compared with 76% for the rest of the population90. Another
problem is that, like the New Deals, the Pathwasys programme is highly prescriptive and does not give
sufficient flexibility to providers to work with claimants. Providers complain that it has therefore been difficult
to develop a working relationship with local health care providers – often essential for clients in this group.
A 2007 study by the National Audit Office found that the Pathways programme had cost £304 million91
over the years since 2003 and that, in this time it had cumulatively placed only 67,000 people (or 2.6%
of all Incapacity Benefit claimants) back into work; this equates to a job entry rate of 15% for the
programme at a cost of £4,500 per initial job entry.92
Table 2: Numbers moving into Pathways and into paid work through to January 200793
All Claimants New Claimants Existing Claimants
Pathways entrants 455,780 427,290 28,480
Subsequent job entry 67,410 59,760 7,660
Job outcome rate 15% 14% 29%
Source: Institute for Fiscal Studies, 2008
It became clear that radical change was required if the Incapacity Benefit trap was to be tackled
seriously. In January 2006 the Government published A New Deal for Welfare, a Green Paper which set
out the introduction of the Employment and Support Allowance, the successor to Incapacity Benefit. The
changes were codified in the Welfare Reform Act which gained assent in May 2007 and the new benefit
was introduced in October 2008. Under these reforms, new claimants undergo a medical assessment –
the Work Capability Assessment (WCA) - during the first 13 weeks of their claim to determine whether
and to what extent their illness or disability affects their ability to work. Claimants are then streamed
onto different benefit categories (and associated payments) according to the outcome of their
assessment. People who are deemed to have no capability for work are paid a ‘Support Component’ of
£30.8594 in addition to the Basic Allowance of £64.30. People who are deemed to have limited capability
for work-related activity receive a ‘Work Related Activity Component’ payment of £25.20 in addition to
the Basic Allowance.
While tackling new claimants, Labour refused originally to commit to moving existing Incapacity Benefit
claimants onto the new Employment and Support Allowance. However under pressure from
Conservatives, the Government announced in the 2008 Budget that it would reassess all 2.6 million
existing Incapacity Benefit claimants through the Work Capability Assessment over a period of three
years. Early results from the tougher Work Capability Assessment pilots indicate a much higher than
expected proportion of new ESA applicants who have been judged able to work and have had their
claims rejected.95
Get Britain Working 25

28. The real tragedy is that despite all of the Government’s welfare reform rhetoric over the last ten years, the
largest population of benefit claimants, both in terms of numbers of people and cost, has been essentially
ignored. As a result, at the very time the Government could have helped hundreds of thousands of Incapacity
Benefit claimants back into work – during the period of tight labour market conditions – it did very little. The
number of Incapacity Benefit claimants rose to a record high96, despite the range and availability of jobs.
And despite Labour’s claims to be getting to grips with welfare reform once and for all, it is still currently
failing to provide proper welfare to work programmes for the 2.6 million people on Incapacity Benefit.
Labour’s Response to the Unemployment Crisis
Britain entered recession in April 2008. Following pressure from Conservatives, from January 2009, the
Government announced a series of measures for the unemployed with particular emphasis on the
young. These included a government subsidy for employers hiring unemployed people called the
‘Golden Hello’97, the Young Person’s Guarantee98 and the Future Job Fund99. These measures cost £1.7
billion.100 An extra £3 billion was awarded in the Pre-Budget Report 2008 and Budget 2009 to reverse
jobs cuts in Jobcentre Plus and to increase Flexible New Deal volumes.
But the approach to the jobs crisis has thus far been unintegrated and piecemeal, with no clear strategy
for tackling the problems we face. Each of the crisis programmes suffers from sever structural flaws.
And the programmes almost entirely end in March 2011, despite the fact that unemployment is
predicted to remain significantly above pre recession levels for some years to come.
The Young Person’s Guarantee
The Young Person’s Guarantee is intended to offer a job, work-focused training or meaningful activity to
all 18-24 year olds before they reach the 10 month stage of their Jobseeker’s Allowance claim and this is
means to be fulfilled via:
1. a subsidised six month job placement through the Future Jobs Fund; or
2. support to take an existing job in a key employment sector; or
3. a work-focused training place for a maximum of 6 months; or
4. a place on a Community Task Force.
However, the Government has already tested this approach before through the New Deal for Young
People, a programme that only managed to place one in five young people into work. 101 It is as if we
have wound the clock back twelve years. The original offer of support under the New Deal for Young
People was:
a. a subsidized six month job placement; or
b. training; or
c. volunteering; or
d. a place on the environment task force.
26

29. The key difference between the Young Person’s Guarantee and the New Deal for Young People is that
support will be offered four months later under the Young Person’s Guarantee.
While some young people may benefit from these options, the New Deal has taught us that a
prescriptive approach to tackling unemployment ultimately fails. Diverting all young people onto full
time activity – in order to artificially lower the unemployment figures - may actually prevent some young
people from actively looking for and moving into work.
Future Jobs Fund
100,000 six month work placements for young people are to be funded through the £1 billion Future
Jobs Fund102 and an additional 50,000 places are to be made available to all unemployed people in
unemployment ‘hot-spots’.103 The jobs are to be offered in three separate tranches over a period of 18
months. Employers are to be given a £6,500 subsidy by the Government to cover the cost of each six
month work placement and the DWP determines centrally which employers can offer subsidised work
placements through a bidding process.
The first round of bidding was completed in August 2009. Almost all of the successful bids were made
by local councils.104 This raised concerns that council jobs were being displaced since most councils
were in the process of shedding jobs at the time the bids were made.105 Questions have also been raised
about the quality of the Future Jobs Fund jobs themselves and whether any could turn into permanent
positions in the future. DWP’s bid criteria for the first round of Future Jobs Fund jobs did not include any
indication of whether the job could become permanent if the candidate excelled106.
Support to take an existing job in a key employment sector
The Government has committed to helping up to 100,000 young people access existing jobs in key
employment sectors. 50,000 of these jobs are to be in the Government’s Care First programme under
which employers will receive a £1,500 subsidy to take on new social care workers. The other 50,000
jobs are expected to be in key growth sectors such as hospitality. Employers are to be eligible for a
£2,000 subsidy for employing a young person who has been on Jobseeker’s Allowance.
Work Focused Training Course
The Government has reserved a budget of £122 million107 over 2009-11 to support young people in
work-focused and pre-employment training.
As the maximum period a young person can attend training under the Young Person’s Guarantee is six
months, longer term training which provides significant new skills or a qualification is disqualified
automatically. This is a significant short-coming of the Young Person’s Guarantee and a missed opportunity.
Young people, particularly those with low skills, should be encouraged and supported to invest in hard skills
and qualifications while jobs are thin on the ground. The Further Education college system and Apprenticeship
structure are well placed to work with young people to address skills deficits but Further Education courses or
Apprenticeships of over six months are carelessly debarred by the Government’s scheme.
Get Britain Working 27

30. Community Taskforce
When the Young Person’s Guarantee becomes mandatory in 2010, young people who cannot secure a
Future Jobs Fund job, or who choose not to undertake work-focused training will be required to
participate on the Community Taskforce for 13 weeks. So far, the Government has been unable or
unwilling to provide any detail on what activity these taskforces will entail.
Those who return to Jobseeker’s Allowance after completing a Young Person’s Guarantee placement will
be directed to the Flexible New Deal programme. With most Future Jobs Fund placements unlikely to
lead to permanent work, it is likely that many young people will find themselves unemployed again once
their placement finishes. This would mirror the experience of the New Deal for Young People.
In short, the Young Person’s Guarantee does not offer long-term investment or solutions for young
people, despite its hefty price tag. None of the four elements of the Young Person’s Guarantee will help
young people to overcome the educational and skills deficits which hinder so many. Such short term
make-work programmes and offers of meaningless guarantees are no substitute for sustained
investment and a commitment to young people. In this period of economic uncertainty we need to equip
young people with the skills and training they require to turn their lives around – and the Young
Person’s Guarantee does not offer the prospect of that happening.
28

31. 4. The Work Programme
Introduction
The Conservative approach to welfare reform set out in this document is more radical and more
comprehensive than the half-hearted measures that have been belatedly adopted by the current Labour
Government. We will introduce a single, fully-funded integrated programme of welfare to work which will
cover more people, intervene earlier and be more focused on results – getting people into work and
helping them to stay there.
A Conservative government will introduce The Work Programme built on the key principles of our
approach to welfare reform announced in our 2008 Green Paper. This will be the central programme,
designed to help both the cyclically and structurally unemployed.
An incoming government will face two great jobs challenges. First, we must take action to address the
number of people on out of work benefits, three million of whom have not worked for long periods of
time – either by virtue of claiming Incapacity Benefit or as a result of long spells on Jobseeker’s
Allowance.108 We must provide structured long-term support to help hundreds of thousands of people in
the condition to make the transition from welfare dependency into sustainable jobs.
Second, we must provide hope and a future in employment for the 800,000 people have who have
joined Jobseeker’s Allowance since the beginning of the recession109 and for others who become
unemployed. To ensure that such people are able to fill the jobs created as the economy comes out of
recession, we must provide effective support and access to genuine training and skills development.
Through The Work Programme, we are committed to giving people access to structured employment
support much earlier in the cycle. We believe that young people, in particular, should be provided
dedicated case managers and mentors through The Work Programme from six months into their claim.
By intervening earlier, a spell of unemployment can be prevented from turning into a period of
protracted unemployment. Those with poor attachment to the labour market and former Incapacity
Benefit claimants will be transferred to The Work Programme on a rapid basis.
The Work Programme Principles
The Work Programme is a radical departure from Labour’s approach to employment programmes and its
core principles are different:
One Employment Programme
We will replace Labour’s numerous unemployment programmes with one flagship programme – The
Work Programme. First, we believe that specialist employment support providers are better than
Get Britain Working 29

32. Whitehall-based civil servants to identify employment barriers and to segment groups of unemployed
people. The system today centrally streams people according to which benefit they claim – different
employment programmes have been created for different benefit types.
We do not believe that people are defined by the type of benefit they receive but by the employment barriers
they face. For this reason, we believe all people should have access to one employment programme.
Second, we believe that many individuals – particularly those who have claimed Incapacity Benefit for
many years – will require specialist support. The Work Programme providers will be given incentives to
work with voluntary and specialist organisations to address particular employment barriers as they arise
in the population of participants. This flexibility is not possible in centrally designed and prescribed
employment programmes; nor is it easily achieved when there are multiple employment programmes.
Third, it is costly to run multiple employment programmes. The Flexible New Deal goes some way to
tackling this since it replaces the New Deal for Young People and New Deal 25 Plus. However, there are
still multiple employment programmes and support mechanisms that are contracted for separately,
despite the fact they all deliver broadly similar support. We believe that it would be better value for
taxpayer if the majority of programmes were rolled into one.
Therefore, under Conservative proposals all unemployed people of working age claiming benefits will be
referred to The Work Programme. The entry points will be staged, reflecting the likelihood of claimants
finding work under their own steam. Those who have not worked for many years (such as former
Incapacity Benefit recipients) will move onto the programme rapidly - young people aged 16-24 will be
referred after six months, and those who have established solid work experience could be transferred
up to 12 months after their first claim. The types of claimant include:
• people who have lost their job during the recession;
• the long-term unemployed or people who cycle through the welfare to work system repeatedly
without securing employment;
• people who have migrated off Incapacity Benefit onto Jobseeker’s Allowance following a Work Capability
Assessment in cases where they have been found to be fully able to work. For many, this will be the first
exposure to an employment programme following many years outside of the workforce; and
• people who have migrated off Incapacity Benefit onto the ‘Employment’ component of the
Employment and Support Allowance following a Work Capability Assessment where they have been
found to be able to undertake some work-related activities. Again, for many, this will be the first
exposure to an employment programme after many years outside of the workforce.
Differential payments
As The Work Programme will cover all unemployed people, payments to providers must reflect the fact
that some people will be relatively easy to help while others will require significant investment. An
individual who has become unemployed as a result of the recession is likely to require less help than an
individual who has claimed Incapacity Benefit for several years.
30

33. The amount paid by the taxpayer to Work Programme providers to help an unemployed person into a
job will therefore vary depending on a range of factors such as how long an individual has been out of
the labour market, their health, and their skills. Factors like these have often been found to be reliable
indicators of the relative difficulty and cost of restoring an individual into the world of work. As the
system develops, differential pricing is likely to become increasingly sophisticated.
Outcome-based contracts
The level of investment in people who have been unemployed for a long time – and who are likely to
remain unemployed unless the Government offers them targeted support – should be assessed against
the medium-term cost to the taxpayer. By investing in the long-term unemployed now, the taxpayer will
save money in the medium-term and society will benefit immediately. We believe that the current
Government’s refusal to invest significantly in the long-term unemployed and those on Incapacity Benefit
has been irresponsible and short-sighted. By insisting on payment by results, the necessary investment
can be provided without an unaffordable upfront cost to the taxpayer.
The Conservatives have long argued for the establishment of outcome-based contracts. This is why we
believe that private and third sector providers should only be paid when they have delivered. Under
circumstances of fiscal crisis, we cannot afford to waste a single penny – and, through payment by
results, we can ensure that no public money is wasted – the provider takes the risk the taxpayer pays
only as the taxpayer saves.
We are therefore determined to restore the correct balance between upfront financing for providers and
rewards for positive results.
We have also considered the question of what constitutes a positive outcome. We believe that the
answer is sustained employment for a period well beyond the current 26 weeks. Individuals need not
stay with the same employer throughout the retention period, but must remain in employment.
Traditionally employment support has come to an end once an individual moves into work. However, many
people require extended support as they made their way into the world of work. This is particularly the
case for individuals who have health conditions to manage. Linking outcome payments to longer retention
periods will ensure Work Programme providers provide participants with post-employment support. The
provision of post-employment support will help prevent the cycle of people moving into work, facing a set
of problems they do not know how to negotiate, quitting work and returning onto benefits.
Accordingly, once on The Work Programme, unemployed people will remain the responsibility of
providers for an extended period, both in and out of work. This means we will eliminate the revolving
door between providers and Jobcentre Plus. The providers will be rewarded for sustained participation
by their clients in the world of work, for periods which in some cases may extend as long as three years.
Short breaks as clients change or upgrade jobs, or undergo training, will be absorbed within the
proposed structure.
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34. The DEL:AME Switch
One of the anomalies of the Government’s public expenditure management system is the division of
public expenditure into DEL – Departmental Expenditure Limit – and AME – Annually Managed
Expenditure. DEL covers the funding that is spent by government departments through multi-year
Spending Review Agreements. In the context of DWP, DEL includes all funds spent on employment
programmes and the running of Jobcentre Plus. AME consists of large, volatile and demand-led spending
which cannot be subject to multi-year spending limits; in DWP’s case this includes out of work benefit
payments of £35 billion in 2009/10.110
While DEL expenditure is controlled tightly by HM Treasury and departments are held to account for
spending within agreed limits, there is no active management of AME.
There is at present no linkage between DEL and AME expenditure. The Government does not consider
the cost of effective employment support (DEL spend) against the fiscal gain of a year-long move into
employment (AME savings). Instead, per capita DEL limits are set and managed in isolation. So the
amount of money that can be spent on programmes for getting people into work is limited and takes no
account of the money the Government could save by getting someone off benefit and into work.
This is short-sighted, since the total AME cost of a long-term unemployed individual is significant. David
Freud calculated in his report that the gross annual saving to the DWP of moving an average recipient off
Incapacity Benefit into work is £5,900. With wider exchequer gains (offsetting direct and indirect taxes
paid with additional tax credits) this figure rises to £9,000. The equivalent figures for Jobseeker’s
Allowance are £4,100 and £8,100 respectively.
We believe it makes more sense to share AME savings for a fixed period of time than to pay out AME
through benefits indefinitely. Our proposals will therefore introduce the DEL:AME switch where there is a
reliable counter-factual against which to measure savings. Groups for which this is suitable may include
the long-term unemployed, including former Incapacity Benefit recipients and those claimants who have
cycled back and forth from Jobseeker’s Allowance. By contracting out and paying by results, we can give
successful Work Programme providers greater rewards for taking a greater share of the risk, provide
structured employment support to all benefit claimants and not just those in Jobseeker’s Allowance, (as
is the case today) and make large long-term savings for the taxpayer.
We recognise that, given the mix of claimants and the current economic conditions, it may take Work
Programme providers a significant period of time to place people successfully into work. We also
recognise that Work Programme providers will require interim finance. We would expect such
investment to be financeable in normal conditions, particularly once providers have established a track
record. However, given the more difficult conditions the financial markets now face, we would be
prepared to work with providers to find a way to secure cash-flow funding. We are in addition prepared
to fund modest service payments to providers when they take on clients.
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35. Business-led Training Modules
We accept too, that in the current economic circumstances it is necessary to ensure that Work
Programme providers have access to a variety of options which, in addition to their own in-house
programmes, enable them to provide claimants with appropriate education and training.
Hence, we will support training programmes designed by business and experts to provide current sector
specific skills. Training that has been designed directly by major business and experts will ensure Work
Programme participants have the soft skills and basic industry skills that employers use as sifting
criteria. The business-led training programmes will also give participants an overview of jobs in given
sectors before they apply. The training content, materials, structure and delivery means will be designed
and determined by business and experts.
Three programmes will be set-up immediately, with more to follow.
Service Academy
We will launch a Service Academy programme to provide pre-employment customer service skills
courses with the active co-operation of sector skills councils and of service sector employers. The
courses will provide excellent grounding and rebuild the confidence of any long-term unemployed
person, so that he or she will be in a position to enter a service sector job.
We will take advantage of the parallel new programmes developed by Skillsmart Retail and
People1st to prepare people to work in the retail and hospitality sectors. The Service Academy will
foster a customer service mindset in participants through training and a two-week work placement
with companies across the two industries. Among the companies prepared to provide work
experience are Asda, Travelodge and Tesco.
The Service Academy will help claimants to build their motivation and confidence, understand
better what the interview process involves, tailor their CVs, understand how retail and hospitality
operations work and develop the skills they need to work in the retail environment.
IT Academy
Almost 10 million Britons lack basic IT skills.111 Many of these people are long-term unemployed.
In particular lack of IT literacy will be a significant barrier for long-term unemployed claimants who
have health issues and therefore can only do office-based work. In September 2009, Microsoft
announced its commitment to provide on-line IT training and support to help up to 500,000
unemployed people find work through a £50mn investment called Britain Works. Microsoft has
agreed to deliver part of this commitment through The Work Programme. The IT Academy will
provide basic IT skills proficiency at a minimum through to basic software developer capabilities
where appropriate.
Get Britain Working 33

36. Young Entrepreneur Academy
Many young people are interested in working for themselves are looking for help to get started.
Bright Ideas Trust has developed a series of training courses for young people that cover the
basics of self-employment and entrepreneurship – focusing on the essentials of how to prepare
financial projections, where to get help and how to develop a business plan. The courses provide
a strong overview of the basics of starting a business or working for yourself and are an effective
way to introduce young people to self-employment before they take the plunge. Bright Ideas Trust
has agreed to work with Work Programme providers to deliver their training programmes across
the country.
How The Work Programme will be introduced
As the contracts for all of the private sector-led employment and support programmes conclude, we will
replace them with The Work Programme. We will also phase-out all employment programmes led by
Jobcentre Plus and incorporate them into The Work Programme.
Clearly, the detailed timing of our introduction of The Work Programme will depend on the election
timetable and the position of Flexible New Deal contracting rounds. The first wave of the Flexible New
Deal is contracted and being rolled out across half the country from October 2009. Under current
timescales, the Government has indicated that the process of contracting for Flexible New Deal phase
two will be continuing in spring 2010.
An incoming Conservative government will replace the Flexible New Deal phase two with The Work
Programme. We will also seek to renegotiate the Flexible New Deal phase one contracts to incorporate
the principles outlined above.
Why The Work Programme is needed
We are proposing significant changes to the welfare to work system during a period when more people
than ever rely on the system. Some would argue that at a time like this we should abandon welfare
reform. But never has it been more necessary. We cannot afford to continue with a system that expects
little and invests little in the millions of people on Incapacity Benefit. We cannot afford to continue
rolling out an unemployment support programme – the Flexible New Deal – that we believe is flawed and
that was designed during a different economic era for a completely different client base. Now is the
time to invest in people if we are to prevent a whole new generation from becoming welfare dependent.
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37. We believe that work is the best route out of poverty and that transforming our welfare to work system
is a moral as well as a financial imperative. We cannot decently leave people trapped in a cycle of
worklessness, deprivation and family breakdown. Any government has a duty to offer people who are
caught in that trap the best help possible to transform their own lives.
But we must go beyond the core Work Programme itself to support our radical welfare reform plans we
are creating a range of additional programmes to support claimants and those providers preparing them
for work. These are Youth Action for Work, Work for Yourself, Work Together and Work Clubs. They are
all integrated into The Work Programme, to form a single, coherent whole.
Get Britain Working 35

38. 5. Youth Action for Work
Young people have been particularly badly affected during the current recession. 947,000 16-24 year
olds are now unemployed, the highest number since ONS records began. Youth unemployment now
accounts for 38% of total unemployment112.
The dire situation for young people in Britain is the compound of two separate crises; a structural
unemployment crisis and a cyclical unemployment crisis. The Government’s failure to make significant
inroads in the NEET population when the economy was buoyant leaves a large cohort of young people
who were already out of work even further from the job market and the education system during the
recession. Meanwhile, as other young people graduate from education, or leave insecure jobs during the
recession, many are finding no opportunities to work, despite being work-ready and work-focused. This
summer’s fiasco on university place funding, which left tens of thousands of A-Level students unable to
find a place at university,113 coupled with the Government’s ongoing failure to satisfy demand for
Apprenticeships, means that many of these young people are unable to find a way of further developing
their skills as an alternative to worklessness.
If a Conservative government is elected, it will inherit both of these crises, and will require solutions to
re-engage young people who have become disengaged from work or training, while also helping job-
ready young people to remain active and return to employment as quickly as possible.
With both of these groups, it is important to intervene early. It is vital that young people, who have
limited or no experience of work, are supported early to ensure they retain or develop working habits
and to maintain their self-esteem. Whatever their educational and social background, ten months
claiming Jobseeker’s Allowance with no activity, as the current Government allows to happen, could have
a negative effect on a young person’s skills, development and self-esteem that lasts for the rest of
their life.
We believe that once young people have been out of work for six months, they are in real need of help.
Only 25% of 18-24 year olds who leave Jobseeker’s Allowance between 6 to 12 months leave to a job114.
Far more of them simply stop claiming.
The type of help that young people need varies depending on their situation. By making Youth Action for
Work available to all young people who have claimed Jobseeker’s Allowance for over six months, we will
ensure that there are options available to help the work-ready find work, to help those with skills- gaps
to increase their skills and to re-engage those facing more complex barriers to work. In addition to the
job search and other support offered by Work Programme providers, Youth Action for Work will give
access to a range of training and work experience opportunities. These programmes are designed to
ensure that any young person, whatever their educational achievement or social circumstances, can join
a pathway to a qualification or a sustainable job.
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39. As young people approach six months on Jobseeker’s Allowance, they will be transferred to The Work
Programme. The provider will be responsible for ensuring that they are given the support appropriate to
them. The provider may guide the individual towards a sustainable job, towards a Youth Action for Work
support programme, or towards an alternative programme of their own design.
For skilled young people, who wish to prepare for a vocational career we will seek to create an additional
100,000 apprenticeships and other training places. We will do this by offering SMEs incentives to take
on apprentices, enabling employers to be paid upfront, and thus widening their options on purchasing
training places.
As part of these 100,000 places, we will offer pre-apprenticeships - a preparation route for young people
who want to do an apprenticeship, but who have not yet acquired the necessary skills.
We will also introduce the Work Pairing programme, which will create up to 100,000 places over two
years. This programme will team up teenagers with sole traders for extended one-to-one work
mentoring of six months. We will help to create an intermediary market to manage this, along the lines
of successful models already pioneered.
We will also create an extra 50,000 Further Education college places in each of two years, by allocating
our NEETs fund to increase Further Education college and other training places for this group. This will
enable Work Programme providers to provide effective help for young people who have become
disengaged from employment, education and training, or who are at risk of becoming disengaged, and
have left education with skills gaps.
To encourage young people to take up these places, we will change the rules which necessitate linking
courses to a paper qualification, and which therefore drive out innovative ways of re-engaging NEETs. We
will ensure specifically that Work Programme providers are recognised as being able to link young
people to Further Education colleges and to the voluntary and charity sector providers, which already
shows some success in re-engaging young people with education and training.
For young people who are work-ready, in addition to the intensive job search support provided by their
Work Programme provider, we will work with businesses and charities to open up more internship
opportunities to young people. Following pressure, the present Government have recently announced
that they will allow young people who are unemployed for six months or more to continue claiming
Jobseeker’s Allowance whilst participating in an internship. We welcome this move; however, current
rules state that in order to take up this offer, the internship must be arranged through Jobcentre Plus.
We will get rid of this unnecessary bureaucracy and allow young people who have taken the initiative to
arrange an internship privately to take advantage of this rule change as well.
Get Britain Working 37