27 April 2007
Opposition to Prime Minister Tony Blair's welfare reforms intensified this week when civil servants joined political opponents – including Chancellor Gordon Brown – in condemning key proposals.
An influential report, commissioned by the Department for Work and Pensions and published in February by investment banker David Freud, has polarised opinion over the provision of jobseeking services.
Freud called for services for the hardest-to-reach, such as single parents and those with minor mental health problems, to be outsourced to private and voluntary sector bodies on a 'payment by results' basis. His study was endorsed by Blair, but would carry significant short-term costs.
However, critics this week claimed that Freud had produced little evidence that private and voluntary bodies could provide adequate services; that private providers would 'cherry-pick' easy cases; and that additional investment should be used to boost existing, successful programmes.
The criticisms are outlined in a response to Freud's review, published by the Public and Commercial Services union, which represents staff delivering existing jobseekers' programmes.
'There is a persistent absence of real evidence that what is proposed is either more effective or more cost-efficient than retaining work in the public sector,' PCS general secretary Mark Serwotka said.
He accused the government of 'dogmatic hostility' to publicly provided services, despite the DWP's Jobseeker Plus agency's successful delivery of specialist welfare-to-work programmes such as New Deal and Pathways to Work.
The DWP's own research into the Employment Zones programme concluded in 2006 that 'a payment by results system [also] encouraged the pressurising of single parents into unsuitable jobs'.
Mental health charities, welfare academics, anti-poverty campaigners and backbench MPs have also expressed reservations about Freud's proposals.
Meanwhile, a leaked letter from Chief Secretary to the Treasury Stephen Timms to Work and Pensions Secretary John Hutton has outlined Brown's concerns. Timms writes: 'It might be helpful to clarify the position reached on the funding of the proposals set out in David Freud's report. As the chancellor made clear, it is not possible to develop or pilot a new funding model in the immediate future.'
The DWP denied a split between Numbers 10 and 11. But a senior Whitehall source told Public Finance that Brown, who is expected to replace Blair this summer, is 'less than keen' on 'significant aspects' of Freud's review.
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