Using the New Deal money better
The New Deal puts too many people on unnecessary or ineffective schemes rather than into real jobs. Liberal Democrats will tailor assistance so that jobseekers get the package of support they need to get work. We will also scrap benefit sanctions which leave genuine claimants unable to feed and house themselves.
With the launch of the first of the New Deal programmes in 1998 Tony Blair pledged to break a culture where people think there is no hope and they have no prospects in life". The New Deal has largely failed to achieve its aims. Less than half of New Deal leavers have achieved sustainable employment, and those with the greatest barriers to employment are receiving the least funding.
Numerous reports expose the truth behind the Government's boast that the New Deal for Young People has got over a quarter of a million under 25's off benefit and into work. The National Audit Office in 2002 reported, that only around 14% of under 25's found jobs directly because of the New Deal. Most of the other 86% "would have found work anyway because of turnover in the Labour Market and growth in the economy."
The Liberal Democrats would refocus the £791million annual New Deal budget into support for those who need most help in accessing the job market, rather than on programmes that see the already job ready get into work fairly easily - as they would do anyway when the job market is buoyant.
We cannot afford to continue to ignore the plight of those who face the greatest difficulty in gaining work, including the 1.2 million disabled people who want to work. It is unjust to them, and is an appalling waste of the nation's human capital.
The Prime Minister's recent attack on people who "languish on benefits" revealed his failure to understand the reality of life for those trapped by an inflexible benefit system and sidelined by the New Deal. Even a worker on the minimum wage earns more than the highest rate of incapacity benefit leaving little incentive to 'languish'.
A pitiful 5% of the New Deal's budget is spent on supporting disabled people into work - ensuring that the most needy receive the least help. This makes little economic sense considering that the cost of benefits for disabled people is in the region of £23 billion compared to £10 billion for non-disabled people. Over the last year organisations such as Shaw Trust, Groundwork Trust and Employment Opportunities were so successful in getting people off incapacity benefit and into work, that the Government instructed them to slow down because they were exceeding their budgets. This shows that the 'carrot' of help is much more successful than the Gradgrind stick of threats and sanctions.
The Liberal Democrats would develop a more flexible and intensive programme to help those experiencing severe difficulties gaining employment, particularly disabled people, lone parents, ethnic minorities and the over-50s. Individual Work Scheme advisers would maintain links with those jobseekers who are hardest to help, to support them during their first few months of employment.
The rigidity of the present system is a disincentive for disabled people looking to return to work. Under the Labour Government an individual must work a minimum of 16 hours per week in order to qualify for Disabled Person's Tax Credit. For many disabled people it is hugely difficult to meet this requirement, due to the fluctuating nature of many disabilities, and the fatigue from which many disabled people suffer.
The Liberal Democrats would investigate the feasibility of introducing a partial capacity benefit. The flexibility of this benefit would enable and encourage disabled people to do varying amounts of paid work without fear of becoming ineligible for benefits.
The proposed expansion of the successful Pathways to Work scheme, which offers the unemployed help and support, presents a welcome departure from the 'big stick' approach that has so far dominated New Labour's welfare reform. Successive reports published by the Department for Work and Pensions itself have shown the negative impact of benefit sanctions, with a recent University College of London study demonstrating a link between claimants disappearing from the register due to sanctions and a 2-3% increase in crime. Favouring 'the carrot', the Liberal Democrats would replace the New Deal's sanctions with incentives that encourage participants to abide by employment schemes, as has already been shown by work in some Employment Zone experiments.
When Blair promised to 'break' a culture characterised by lack of opportunity, he embarked upon an aggressive and ineffective welfare policy reminiscent of the disastrous 1834 Poor Law. Blaming the 'undeserving poor' and the 'feckless unemployed' for the reality of economic cycles, structural economic change and the 'barriers' of disability was a Victorian mistake that both Thatcher and New Labour were wrong to copy.
[This briefing note is taken from an article by Paul Holmes MP, then Liberal Democrat Shadow Minister for Work and Disability, published in the House Magazine, January 2005]
