12 September 2008
Thousands of long-term jobseekers will be 'parked' on benefits under the government's £2bn Flexible New Deal employment policy, the Social Market Foundation has warned.
Its report, published on September 8, said private contractors would be reluctant to help jobseekers with complex needs, such as literacy and health problems. The FND, which will replace the New Deal in October 2009, is based on a single payment for placing a person in work.
'Since clients remain with prime contractors for only 12 months, the latter have strong incentives to identify those they can help quickly and park others. Setting a financial penalty… would limit this,' said the report.
The authors examined how effective FND would be in four areas: cost-effective commissioning; helping all jobseekers; preventing 'revolving door' employment; and stimulating innovation in welfare-to-work provision. In each of these, FND promised to be less effective than it could or should be, they said.
Stephen Timms, minister for employment and welfare reform, said: 'A significant proportion of the income providers will receive will be for getting someone into work for six months in the first instance, and we will be reviewing this to move towards a longer-term incentive of 18 months.'
Beth Carruthers, a director for Remploy, which helps disabled people into jobs, told Public Finance: 'If we personalise services we can ensure the funds are used where they are most needed.'
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