The government’s new back-to-work scheme was launched today as ministers hope to place more than two million unemployed people in jobs over the next five years.
Outlined in the Budget’s Growth Review, the programme will see a host of private companies and voluntary organisations enlisted to help benefit claimants find work.
Contracts totalling between £3bn and £5bn have been awarded to the providers for seven years, and are agreed on a payment-by-results basis. The scheme will replace existing employment support programmes – the New Deal, Employment Zones and Pathways to Work.
Employment Minister Chris Grayling said the programme is “probably the biggest payment-by-results scheme in the world,” adding: “It is revolutionary in the way it tailors support to jobseekers’ individual needs and pays organisations primarily for getting people into sustained employment.”
Part of the scheme’s focus will be on training in secondary and higher education to maximise growth, with apprenticeships central to the government’s plans.
Visiting Rolls Royce in Derby, Business Secretary Vince Cable welcomed the company’s commitment to 200 new apprenticeships and a new Learning and Development Centre.
Mr Cable said: “We are launching the second stage of the plan for growth with one central purpose – creating the right conditions for business to start up, invest, grow and create jobs.”
But, under the back-to-work scheme, there are concerns private organisations will cherry-pick areas where they are more likely to achieve results, leaving economically poorer areas without the necessary support.
Neil Lee, senior economist at the Work Foundation research group, said: “As the Work Programme is based on payment by results, contractors carry the initial risk.
“There is therefore the danger that private contractors will focus on investing in places where they are more likely to get people into work to secure a return on investment.”
Private companies involved in the scheme include outsourcing giants Serco and G4S, as well as voluntary groups such as Mencap, the Citizens Advice Bureau, the Prince’s Trust and Action for Blind People.
The scheme lays out differing timescales for when individuals will become eligible for support. For over 25-year-olds it will be after 12 months of unemployment and for under 25s it will be after nine months. In other circumstances, such as for young offenders, those unemployed may become eligible at an earlier date.
Mr Grayling described the system as “a giant employment dating agency” with youngsters staying with providers for up to two years.
He added that Whitehall was devolving employment strategy to the companies that know best. Payments to the organisations will be delivered in instalments over a period of up to 27 months to ensure there are incentives for keeping people in jobs.
Andrew Dutton, chief executive of A4E, one of the organisations involved, said his company would seek to build confidence in people who often had difficult backgrounds.
“They may be debt issues or housing issues or problems within the family, legal issues around housing, but often very much around supporting them to really gain confidence.”
However, shadow work and pensions secretary Liam Byrne said Labour supported the principles of the scheme but didn’t believe it was big enough to help all those looking for work.
He pointed to an extra levy on bankers as one means of generating more funding for the programme.
Latest figures in March showed 2.46 million people remain unemployed in the UK.