27 July 2007
Gordon Brown's new ministerial team has ditched plans to create 'mega-contractors' that would enjoy lucrative regional monopolies in the forthcoming privatisation of jobseeker programmes.
Caroline Flint, the new welfare reform minister, confirmed this week that she has rejected plans to empower 11 monopoly contractors – Scotland, Wales and nine English regions – to co-ordinate individualised jobseeker services. These would be provided for the long-term unemployed, lone parents and millions of incapacity benefit claimants.
She indicated that the Department for Work and Pensions could instead opt for a different, 'prime contractor' system, possibly with a localised focus on tailored services.
The regional monopoly proposal had formed part of investment banker David Freud's review of welfare-to-work polices, commissioned by former work and pensions secretary John Hutton and published in March.
Freud suggested creating a multibillion pound jobseekers' market, with the government's Jobcentre Plus agency looking after short-term benefit claimants, with tailored support to the long-term unemployed provided by private and voluntary sector specialists.
In a welfare green paper published last week, Brown's team accepted the part-privatisation of Jobcentre Plus services.
But Flint told the work and pensions select committee on July 23: 'It is certainly in the green paper that we weren't predisposed to the idea of one [contractor] per region.'
Flint revealed that she and new Work and Pensions Secretary Peter Hain are considering alternative models involving prime contractors with substantial sub-contracting powers.
Flint also wants prime contractors to help smaller voluntary or private sector organisations, such as those delivering support to jobseekers with mental health conditions or disabled people, to manage contracts. Smaller organisations are often discouraged from taking on bigger welfare delivery roles because of their limited administrative functions.
'There are some smaller organisations with very good outputs. I'm interested in how we get the capacity [to deliver tailored services] but also how we ensure that there is sub-contracting whereby smaller providers could be helped by private contractors,' she said.
Flint is also considering inserting clauses into contracts so that the government can withdraw from unsuccessful suppliers' services and protect the public purse.
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