The failure of the Work Programme

Just 3.5 per cent of the 878,000 jobseekers referred to the programme have found work for six months or more.

Yesterday, Rafael revealed a letter from employment minister Mark Hoban to coalition MPs preparing them for bad news on the Work Programme, the government’s flagship welfare-to-work scheme that pays private and voluntary sector organisations to place people in work. This morning, we found out what the bad news is.

The first official statistics on the scheme's success rate show that just 3.5 per cent (31,000) of the 878,000 people referred to the programme between June 2011 and July 2012 found a job for six months or more (defined as "sustainable work"). This is significantly below the 5.5 per cent minimum performance target set by the government, which means that fewer people are finding work than if the Work Programme had never existed. The figure is even worse if one looks at the first 12 months of the scheme, the time frame that the government's target was based on, rather than the first 14 months (June 2011 to July 2012). Over that period, only 2.3 per cent (18,270) of the 785,360 people referred found sustainable work.

As expected, Hoban is insisting that it's too early to judge the scheme. He said:

Clearly these figures only give a snapshot picture as we're one year in, and the Work Programme offers support to claimants for two years, but these results are encouraging and something providers can look to build on

But by any measure (including the government's), this is a bad start for what David Cameron hailed as "the biggest back-to-work programme since the 1930s".

Work and Pensions Secretary Iain Duncan Smith arrives for a Cabinet meeting at 10 Downing Street. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.