In July 1997, details of a new scheme to get 250,000 people back to work over the next four years were announced by the UK's new Chancellor of the Exchequer, Gordon Brown, in his first Budget. The scheme generally received a positive response from the social partners.
Today, in one in five households in the UK, there is no-one of working age earning a wage, and the new Labour Government has made getting people back to work one of its key priorities (UK9704125F). This involves not only the promotion of jobs but also a reorganisation of the benefit system, and Welfare to Work is the Government's response. The Welfare to Work programme - the details of which were set out in the Budget presented on 2 July 1997 - is essentially three schemes aimed at unemployment among young people, long-term unemployed adults, and lone parents. The schemes will be administered by the Employment Service and the Benefits Agency, while an advisory taskforce headed by Sir Peter Davis, chief executive of the Prudential insurance group will:
- take account of the requests of employers and the rest of the community;
- harness the energies of the above behind the schemes; and
- keep government informed of the progress of the schemes and advise on any changes.
The scheme will be funded from a "windfall" tax on the profits of the companies privatised by previous Conservative administrations, and from savings made on benefit payments. Schemes will be piloted in several areas before being introduced nationwide in April 1998.
Young unemployed people
Starting from 1998, every young person aged 18-25 who is unemployed for more than six months will be offered a first step on the employment ladder. Employers will receive a subsidy equivalent to GBP 60 a week for six months if they employ a young person under the Government's "New Deal". Furthermore, GBP 750 will be provided to employers for every placement, in relation to its education and training component. Each individual will have continuous support from the Employment Service throughout the programme, through "mentors".
Four options are available, all involving training leading to qualifications:
- a job with an employer- including at least one day per week (or its equivalent) in education or training designed to lead to an accredited qualification;
- work with a voluntary organisation- a job for six months with a voluntary sector employer, again including day-release education or training towards accredited qualifications;
- work on the Environment Taskforce - a job for six months with the Government's Environment Taskforce, which will include day-release education or training towards accredited qualifications; or
- full-time education or training - for those without the qualifications they need to have good employment prospects, an opportunity to do so via approved courses.
The Government insists that there will be no fifth option of staying at home: when people sign on for benefit they will be signing up for work. Benefits will be cut if young people refuse to take up the opportunities.
Unemployed adults
There are 350,000 adult men and women who have been out of work for two years or longer. The second component of the Welfare to Work programme will offer employers a subsidy of GBP 75 a week to employ long-term unemployed people. For those who lack skills and have in the past been debarred by the "16-hour rule" from obtaining them, this rule will be relaxed (the 16-hour rule meant that if people went into education for more than 16 hours per week they would lose their entitlement to benefits). The effect will be that when long-term unemployed people sign on for benefit, they too will now sign up for work or training.
From June 1998, 10,000 men and women aged 25 and over who have been unemployed for over two years will be offered the opportunity to take up full-time education without benefits penalty. This will ensure that they have the qualifications they need to move back into the world of work and to hold down a job.
Lone parents
The Government says that, as a matter of principle, lone parents should also have the right to work; there are at present some one million lone parents bringing up two million children on benefit. According to the Chancellor, Gordon Brown: "Any welfare to work programme that seriously tackles poverty in our country must put new employment opportunities in the hands of lone parents." The Chancellor is allocating a total of GBP 200 million from the windfall fund for what is described as the most innovative programme any Government has introduced for advice, training and daytime and after-school childcare to support lone parents.
Currently, lone parents on benefit receive little encouragement to seek work before their youngest child is 16. Under the programme, when the youngest child is in the second term of full-time schooling, lone parents will be invited for job-search interviews and offered help in finding work that suits their circumstances.
Commentary
The Government has been calling on business and voluntary organisations to support the new schemes, and the general response has been positive, despite some worries. Private sector companies like Prudential, Ford, Rover, Tesco and Sainsbury's are already beginning to make contributions to the preliminary discussions, while Prince Charles has given his support by announcing cooperation between the Prince's Trust volunteer scheme and the Government's scheme. The Trades Union Congress (TUC) has also welcomed the Government's approach to jobs.
However concerns have been expressed that the scheme will not create real jobs and that they may be irrelevant because of falling unemployment levels in general. The fact that research has been showing that unemployed people are more likely to end up in low-paid insecure employment also creates the danger that the schemes may only reinforce this trend. The TUC has called for equivalent pay rates for the job, childcare facilities and good-quality training as means of combating some of these problems. The unions have also said that they will be encouraging employers to keep staff on after their initial six-month period under the new programme. (MW Gilman, IRRU)