The Work Programme flounders

Iain Duncan Smith to set up review as £5bn scheme fails to help those most in need.

Iain Duncan Smith’s pledge to “make work pay” is a laudable aim that no-one would argue with. The reality, however, has been somewhat more difficult, and the Times (£) reports today that Duncan Smith is setting up a review into the Work Programme, after the £5bn programme failed to get enough long-term sick and disabled people into work.

Under the scheme, the Department for Work and Pensions (DWP) pays private companies to help get the long-term unemployed into sustainable jobs. Launched in June 2011, it replaced virtually all welfare-to-work programmes run by the department and was expected to help up to 3.3 million people back into work over five years. The contracts were “payment by results”, which transfers the financial risk away from government and onto providers.

The downside of this is that, according to the Times report, the numbers are not adding up for the 18 prime contractors involved in the scheme. Duncan Smith originally told the companies that around 30 per cent of referrals would be people claiming incapacity benefit or its replacement, employment support allowance. Companies stand to gain up to £13,800 for each person in this category who they place in a job. However, in the nine months since the programme launched, just seven per cent have actually been in this category, while the rest have been on jobseeker’s allowance. Finding employment for people on jobseeker’s allowance is worth only £3,800 to the companies. Some companies are losing hundreds of thousands of pounds because of this miscalculation.

So why isn’t it working? The Times piece cites poor IT systems, the failure of Jobcentres to refer people, and appeals against medical assessments. But these administrative issues are not the root cause; indeed, serious doubts were raised months ago about whether targets would be met. There is a very simple reason for this: if there aren’t enough vacancies to fill, the whole plan falls apart. The scheme was designed at a time when DWP expected the labour market to follow the Office for Budget Responsibility’s optimistic growth forecasts. (Needless to say, it didn’t).

The numbers simply don’t add up. As our economics editor David Blanchflower wrote in June 2011, as the scheme launched:

They promise that the programme will give 2.4 million unemployed people help to find jobs over the next five years, which seems unlikely, given that there are so few jobs available. At present, there are 2.43 million people who are unemployed and a further 2.4 million who are out of the labour force - those who are neither employed nor unemployed but want a job. The Office for National Statistics reported that, on average, there were only 469,000 vacancies available from February to April, which implies only one vacancy for every ten jobseekers. The number of jobseekers per vacancy is likely to be much higher in areas of high unemployment. There remains no evidence that the private sector will deliver the large numbers of jobs the coalition is hoping for.

The employment crisis has hardly receded since then. As more and more people face having their benefits stripped away, this highlights the fact that in this climate, there are frequently few other options.

Incidentally, the Labour government’s Pathway to Work plan was a pilot scheme which used the private sector to help incapacity benefit claimants back into work. Then, too, they failed to meet their performance targets, and were often worse than the Jobcentre. Clearly, the lessons were not learnt, as several organisations named as serious underperformers won contracts under the Work Programme.

It is no surprise that the programme is floundering; solutions, however, are harder to identify.
 

People protest against cuts to disability allowances, London, May 2011. Photograph: Getty Images

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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A global marketplace: the internet represents exporting’s biggest opportunity

The advent of the internet age has made the whole world a single marketplace. Selling goods online through digital means offers British businesses huge opportunities for international growth. The UK was one of the earliest adopters of online retail platforms, and UK online sales revenues are growing at around 20 per cent each year, not just driving wider economic growth, but promoting the British brand to an enthusiastic audience.

Global e-commerce turnover grew at a similar rate in 2014-15 to over $2.2trln. The Asia-Pacific region, for example, is embracing e-marketplaces with 28 per cent growth in 2015 to over $1trln of sales. This demonstrates the massive opportunities for UK exporters to sell their goods more easily to the world’s largest consumer markets. My department, the Department for International Trade, is committed to being a leader in promoting these opportunities. We are supporting UK businesses in identifying these markets, and are providing access to services and support to exploit this dramatic growth in digital commerce.

With the UK leading innovation, it is one of the responsibilities of government to demonstrate just what can be done. My department is investing more in digital services to reach and support many more businesses, and last November we launched our new digital trade hub: www.great.gov.uk. Working with partners such as Lloyds Banking Group, the new site will make it easier for UK businesses to access overseas business opportunities and to take those first steps to exporting.

The ‘Selling Online Overseas Tool’ within the hub was launched in collaboration with 37 e-marketplaces including Amazon and Rakuten, who collectively represent over 2bn online consumers across the globe. The first government service of its kind, the tool allows UK exporters to apply to some of the world’s leading overseas e-marketplaces in order to sell their products to customers they otherwise would not have reached. Companies can also access thousands of pounds’ worth of discounts, including waived commission and special marketing packages, created exclusively for Department for International Trade clients and the e-exporting programme team plans to deliver additional online promotions with some of the world’s leading e-marketplaces across priority markets.

We are also working with over 50 private sector partners to promote our Exporting is GREAT campaign, and to support the development and launch of our digital trade platform. The government’s Exporting is GREAT campaign is targeting potential partners across the world as our export trade hub launches in key international markets to open direct export opportunities for UK businesses. Overseas buyers will now be able to access our new ‘Find a Supplier’ service on the website which will match them with exporters across the UK who have created profiles and will be able to meet their needs.

With Lloyds in particular we are pleased that our partnership last year helped over 6,000 UK businesses to start trading overseas, and are proud of our association with the International Trade Portal. Digital marketplaces have revolutionised retail in the UK, and are now connecting consumers across the world. UK businesses need to seize this opportunity to offer their products to potentially billions of buyers and we, along with partners like Lloyds, will do all we can to help them do just that.

Taken from the New Statesman roundtable supplement Going Digital, Going Global: How digital skills can help any business trade internationally

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