The government’s mandatory work programme will cost billions and fail to work, argues ERNIE JACQUES, just like the YTS and the New Deal.
Despite spending billions of pounds on mandatory work programmes, the Department of Work and Pensions (DWP) concluded in a recent report that its schemes had had no positive outcome whatsoever. After comparing more than 3,000 mandatory work activity (MWA) referrals with 125,000 non-referred jobseekers, the study concluded that the MWA scheme had zero effect in helping people get into work.
Despite these findings, Chris Grayling (then the employment minister) decided to ignore the research and inject millions more to expand the MWA so it could take up to 70,000 referrals a year.
The National Institute of Economic and Social Research, commissioned to undertake a peer review into the research, said that: “Grayling’s decision to expand the scheme flew in the face of the evidence that showed it was not working.” 
Another damming report came from the House of Commons Public Accounts Committee, which said that the multi-billion pound work programme was “extremely poor”, with only 3.6 per cent of jobseekers getting jobs at the end of work placements.
But even this figure is likely to have been massaged given the growing evidence that managing agents, mainly private companies, concentrate on placing jobseekers who are most employable and most likely to succeed, thereby ignoring jobseekers most in need of help.
The committee was particularly scathing about the scheme’s failure to support the young and most vulnerable jobseekers. Of 9,500 people moved off incapacity benefit and placed with employers, just 20 have found jobs lasting more than three months. By any measure, this success rate of 0.2 per cent is derisory.
In a separate report, the National Audit Office said that more people would have found work if the work programme had never been launched.
So, in a time of austerity and severe economic and social hardship for millions of UK citizens, we have a government spending vast amounts of public money on schemes of no value for what appears to be ideological reasons.
But work and pensions minister Iain Duncan-Smith and the DWP refuse to accept these reports, claiming thousands of people are being moved off benefits and into jobs, and that those who criticise the work programme are presenting an out of date and “skewed picture”.
The Tories Poisoned Apple (mark 1)
None of this is new, of course. Indeed, we have been here many times before.
In 1983 Margaret Thatcher’s Conservative government introduced the Youth Training Scheme (YTS) to replace the failed Youth Opportunities Programme. It was an on-the-job training programme for school leavers aged 16 and 17, managed by the Manpower Services Commission (MSC) and widely embraced by both private and public sector employers.
While the scheme did provide work experience for many school leavers, it also proved costly to run. What’s more, some permanent staff, especially in the manufacturing and retail sectors, found their jobs were replaced by YTS trainees. Many young people who enrolled onto YTS found their employment terminated at the end of their course and – surprise, surprise – were then replaced by other YTS trainees. For many, the scheme proved to be a merry-go-round, the main beneficiaries being private sector employers.
In 1983 the ILP published a pamphlet called The Tories Poisoned Apple, written by Paul Scolfield, Eric Preston and myself, which outlined the ILP’s strong opposition to YTS. This pamphlet predicted what would happen when the work programme was properly underway in 1984 and, sadly, it proved to be all too accurate.
Much like Duncan-Smith’s scheme, YTS was supposed to provide a pathway into work, to give all young people under 18 job-related skills training, education and work opportunities. Billions were spent subsidising employers who took on jobseekers, a move which served to restructure vocational training and replace time-serving apprenticeships.
The ILP argued that the scheme enabled employers to exploit school leavers for cheap labour, provided poor quality training and education, and generated relatively few full-time jobs. We forecast that it would be used as a form of job substitution. In reality it was a clever, if expensive, way of massaging the unemployment statistics to the detriment of young, working class, jobseekers.
In short the ILP said the YTS would:
- not create work but become an agent of job destruction
- not provide quality skills training but be used as a means of replacing quality training
- not provide proper on-the-job training
- not provide trainees with a route into full-time work
- undermine the rate for the job and working conditions, and lower the wages of working people
- prove attractive to employers, the beneficiaries of cheap labour
- provide menial and only temporary work
- substitute for genuine educational opportunities
- became part of a process of privatising public services
- be an instrument in undermining trade union organisation
- be used to massage unemployment figures
- start a process of blaming unemployment on the failures of individuals
- provide poor quality (tertiary) education, skills training and work experience.
While many trade unions and Labour Party activists supported the ILP campaign, many didn’t. Some of the most vociferous opponents were Tory and Labour local authorities, which managed many thousands of YTS and Community Programme (CP) schemes on behalf of the MSC. Some prominent Labour politicians were also scathing of anyone who raised objections to YTS. Even trade unions were evenly split between those for and against involvement in the new scheme.
So, despite significant support from some across the Labour movement, the ILP campaign was largely ignored (not for the first time). Fast forward 12 years to 1995, and here’s Kevin Barron MP, then Labour’s spokesperson on training, with the following damming indictment of YTS:
“Up to 60 per cent of young people who attend the government’s Youth Training Scheme have no qualification when they leave… Half of all youth trainees do not find a job at the end of their training and 58 per cent leave early.
“One in every two young people have no qualification to show for the training. This isn’t a youth training policy; it’s a disgrace.”
YTS was eventually abolished as an expensive failure. And that has been the experience of all training schemes since industrial training boards and apprentice schools were abolished.
New Labour and the New Deal
When Labour took office is 1997 it designed a New Deal programme, funded initially by a one-off £5 billion windfall tax on privatised utility companies. When it launched in 1998, the New Deal for Young People provided a mix of skills training, education and work experience.
The key elements included an initial ‘gateway’ period lasting up to four months during which an employment service adviser worked with the jobseeker to improve their job search skills and help them find work. If they didn’t find work they were faced with four options:
- a six month period of subsidised employment
- a course of full-time education and training
- a job in the voluntary sector
- a job with the Environmental Task Force.
Unlike the YTS, Labour’s scheme had no hidden agenda and was motivated, I believe, by a desire to help young, working class jobseekers get good quality vocational education and training as a pathway into full-time permanent work.
In October 2009 the New Deal scheme was rebranded as the Flexible New Deal and the mandatory work programmes were outsourced to private sector agencies such as Action for Employment (A4e). Jobseekers who failed to fully cooperate were threatened with loss of benefit for up to 26 weeks. Jim Knight MP, then Minister for Employment and Welfare Reform, put it bluntly:
“We have a responsibility to make it slightly more uncomfortable for those on benefits, to make them want to get off it… They are not entitled to just spend their life on benefits.”
This toughened up version of New Deal represented a determined attempt by the Labour government to force jobseekers off benefits and onto mandatory work placement programmes.
Training company A4e went on to win government contracts worth more than £200 million but was later found to have claimed large sums of money for ‘ghost trainees’. A former manager at its Edinburgh office admitted that, although they received government money to train jobseekers under the Community Task Force programme, they sent the trainees home because the company refused to authorise funding for training sessions.
She said: “There was nothing we could do with these young people. It was heart-breaking because they were unemployed 18 to 24-year-olds, full of hope, desperate to get training so they could get a job. They believed we would help them.”
The same manager also admitted the company claimed £2,000 per person for finding jobs that often lasted only for days. “People would be found a job on a construction site that only lasted a day and that was enough to claim the money,” she said. “It was easy because there was just a tick-box on the form to say the job was ‘expected to last at least 13 weeks’, but often labourers were being put out of work again after 24 hours.”
It appears that such fraudulent practice was endemic throughout company offices across the UK. Another whistle-blower said he “was under pressure from managers to reach quotas for finding jobs for the unemployed and forging signatures used to go on all the time … because it was made very clear to you that you would lose your job unless you reached your targets”.
The owner of A4e is said to have taken £8.5 million in dividend payments and went on to become David Cameron’s ‘Back To Work Tsar’ before being forced to resign.
The point here is not that this is typical but to point out that there is a very real problem of transparency when recording programme outputs and assessing value for money. Outsourcing management and payment by results makes it more difficult to identify sharp practice and put a stop to dishonest accounting.
Working Tax Credits
In 2003 the Labour government introduced tax credits to work alongside the New Deal as a means of topping up low wages in many service and manufacturing jobs. The assumption was that public subsidy could motivate unemployed people to take on low paid work and also lift millions of working people out of poverty.
The downside of Labour’s tax credit system is, of course, that subsidising private companies to pay poverty wages is problematic and undesirable. It’s also true that there is not much job satisfaction in doing jobs that are unskilled, boring and menial, day-in day-out, year after year, and which are so undervalued by their employers that they merit poverty wages.
Assessments of Labour’s New Deal and working tax credits have been mixed, even from some senior Labour politicians. For example, Frank Field, the former minister for welfare reform, concluded that “the jobs scheme and related tax credits had cost £75 billion yet failed, even at the height of the boom, to produce results.”
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See also: Poverty Knocks
