Rob Merrick: Labour cutting corners on unemployment

Apr 16 2008 by Rob Merrick, Liverpool Daily Post

IT IS bad enough that a rush to privatise welfare-to-work schemes will deprive Merseyside of a multi-million pound reward for cutting benefit bills – something I revealed earlier this year.

Now we learn it is happening, despite evidence from around the globe that paying private firms to find jobs for the unemployed is an invitation to abuse, as corners are cut to boost profits.

Remarkably, the study revealing this “unethical” behaviour was not researched by Labour MPs, or trade unions, but by a right-wing think-tank which supports the privatisation.

Is there any wonder that more and more depressed Labour figures think Gordon Brown – the man who repeatedly promised “change” last year – is morphing into Tony Blair?

I wrote in February that ministers were abandoning plans to give local councils a large share of savings made from getting incapacity benefit (IB) claimants back to work, to spend on any project they wished.

Merseyside – a known IB blackspot – was set to be among the first areas to benefit, having already won seedling funding to devise new ways to get sick and disabled people into the workplace.

The radical twist was that the Mersey authorities – Liverpool, Wirral, Sefton, St Helens, Knowsley and Halton – would keep tens of millions of pounds if a target of 37,000 fewer IB claimants was met.

Then, suddenly, the policy changed. Blairite torchbearer James Purnell, the Work and Pensions Secretary, decided £50,000 “payment-by-results” contracts would instead be handed to companies, including multi-nationals.

This week’s report by the right-wing Policy Exchange celebrates the U-turn by hailing the £1bn that the taxpayer will allegedly save as go-getting private firms tackle the work-shy.

But its report is brazenly honest about how this will be done, highlighting unscrupulous behaviour by private companies in Australia, the United States, Germany, the Netherlands and Denmark.

First, firms quickly decided the best way to maximise returns was to target the easiest benefit claimants, who would have found work through their own efforts anyway.

Second, if more difficult clients could not be found work quickly, they were “parked” – deliberately kept on benefits to get higher fees for the long-term unemployed, those put in jobs after, perhaps, 18 months.

Third, it increased profits to place people in short-term jobs, rather than “putting in extra effort to find a more sustainable placement”.

Also, more scrupulous providers were forced to cut the quality of their service to compete with the corner-cutters, and there was evidence of outright fraud in the way that records were manipulated.

Perhaps Labour MPs, among their many gripes about the Prime Minister, can find time to ask why this programme is now heading to Merseyside?