After a decade of the most sustained period of economic progress for 200 years and the achievement of the highest ever employment rate of 74.5%, Labour is forging ahead with an even more ambitious employment target of 80% of the working-age population.
In contrast to the culture of past Conservative administrations, where mass worklessness was an accepted norm, with the Tories consigning millions to the economic scrapheap, New Labour has already seen 2.6 million more people enter the labour market and 900,000 fewer people claiming benefits.
The government is now aiming to go further, reinforcing the concept of labour market participation as a right which the state owes to all, particularly to its most economically disadvantaged citizens. All the evidence shows that Work brings dignity and independence, health and social – as well as financial – advantages, and is acknowledged to be the best route out of poverty for children.
David Freud’s Report on Welfare Reform in 2006 concluded that the past ten years have brought increases in employment for nearly every disadvantaged group which the government has targeted such as lone parents, older workers, ethnic minorities and disabled people.
Meeting the 80% target will mean the personalisation of public services with the goal of ensuring a decent standard of living for all and enabling engagement by all in national growth – a fully participative democracy.
The government’s current approach is to increase help for the groups which are the hardest to assist – the homeless, the low-skilled, lone parents, people with criminal records or addictions, and people experiencing multiple disadvantage. The strategy is to focus on people’s individual needs, rather than classifying them by benefit type. In exchange, citizens would undertake to take reasonable steps towards finding work.
The Secretary of State for Work and Pensions, Peter Hain has announced that he will widen the recently piloted regional sub-contractor model, with local helping benefit claimants find work and stay in it. Providers from the public, private and voluntary sector will be able to compete to run hundreds of job centres in England and Wales. Council tax benefit and housing benefit are also to be integrated with ‘in-work’ benefits, with the hope that this will encourage more people into work. And the employment support allowance, set to replace incapacity benefit in 2008, will allow claimants access to all government employment programmes. This kind of choice and flexibility is being seen as a model for other future benefit reforms.
Thinking on similar lines has also been taking place outside government. An ippr report, Citizen-Centred Welfare, advocates the creation of a single working-age benefit to replace the current, overcomplicated system of 40 separate welfare benefits which, the think tank argues, is a major hindrance to the government’s welfare to work targets.
However, any new model for tackling worklessness must encourage far more than merely finding the nearest available job for the standard client. Firstly, it must make it pay for providers to take on the most challenging cases, particularly homeless people and the mentally ill, who currently can and do slip through the provider net.
The answer is additional financial rewards for providers for taking on the most labour-intensive clients, to discourage the cherry picking which leads to social exclusion. For example, a provider could be paid twice or three time the normal rate for supporting a homeless person back to work, with perhaps an ascending scale rewarding help for assisting clients according to how many years they have already been unemployed.
Secondly, it must also always pay for providers to serve the wider economic requirements and tackle local skills shortages by supporting clients through training and career progression. Crucially, the only disadvantaged group which has not seen the reduction of its employment gap under Labour is the lowest skilled.
Thirdly, challenging gender stereotypes in employment and promoting quality work for disabled people and ethnic minorities must also form part of the package. It must create female plumbers, BME executives and disabled managers.
When the new social model for employment policy succeeds in cutting through the Gordian knot of social exclusion and multiple disadvantage it will reap untold economic, fiscal and social benefits and play an important part in honing the UK’s competitive edge in the global market.