Guest Blogpost from Richard Lynch: Mandatory ‘work for dole’ schemes have not gone away

The coalition’s ‘work for dole’ policy suffered a setback at the end of February when they were forced to drop benefit sanctions against young people on the Work Experience scheme. Unemployed 16-24 year olds will still be able to volunteer for placements on this scheme but, crucially, they will be able to leave it without having their Jobseeker’s Allowance cut, as had been happening previously. Despite this victory, however, there are still several other schemes where it is mandatory for the unemployed (and disabled) to work for their benefits and who will lose their benefits unless they do so.

Work Experience is the coalition’s entry-level scheme for introducing the young unemployed to the world of work (if not to the world of payment for work). It is run by Jobcentre Plus and applies to 16-24 year old JSA claimants who have been unemployed for between three and nine months. Jobcentre Plus advisers arrange the work placements, often in high street stores or supermarkets, and can authorise limited funding to help with travel or childcare. Apart from this, the only ‘pay’ is the claimant’s Jobseeker’s Allowance of £53.45 a week, or £1.78 an hour for a 30 hour week.

The Work Programme applies to JSA claimants aged 18-24 who have been unemployed for nine months or longer and to claimants aged 25 and over who have been unemployed for a year or more. It can also apply to long-term sick and disabled people who are recipients of Employment and Support Allowance (ESA), but who are viewed as having some capacity for work or who are expected to be fit for work within three months.

Participation in the Work Programme is mandatory for the above claimants and involves being referred by Jobcentre Plus to an outside ‘provider’ who is paid to help claimants get into work. The referral period lasts for two years and during that period involvement in work-related activity (which includes actual work) is mandatory.

Claimants who are required to participate in the Work Programme but fail to do so ‘without good cause’ will incur a benefit penalty. For JSA recipients, this involves a loss of benefit for two weeks for an initial failure, but this can rise to four and 26 weeks for repeated failures. For ESA recipients, the penalty is a benefit reduction of 50% of the value of the ‘work-related activity’ component of ESA for the first four weeks of not taking part (£13.37 a week at 2011/12 rates), followed by a reduction of 100% of the value for each subsequent week (£26.75 a week at 2011/12 rates). This means a loss of up to 28% of benefit for those aged 25 and over and of up to 33% for those aged under 25. Decisions on ‘good cause’ and sanctions will be made by Department of Work and Pensions (DWP) decision makers, rather than by Work Programme providers, and can be appealed.

Mandatory Work Activity is a compulsory scheme aimed at people ‘who have little or no understanding of what behaviours are required to obtain and keep work’ or, in other words, who are not considered to be doing enough to find and keep work. It can apply to anybody who has been unemployed for three months or more but the DWP has admitted that it will mainly affect claimants in the 25-49 age bracket and ethnic minority and disabled claimants.

The scheme gives Jobcentre Plus managers and advisers the authority to instruct selected claimants to participate in work placements for up to 30 hours a week for four weeks. Mandatory Work Activity is delivered by contracted specialist back-to-work providers and can include unpaid work in charities, cleaning companies, government offices and high street chains. Claimants who fail to participate, fail to complete a four week placement or lose a place due to ‘misconduct’ will be sanctioned (lose benefits) for 13 weeks. A second failure will lead to a six month sanction and a third failure could lead to a three year sanction, if welfare reform proposals currently making their way through Parliament are enacted.

When the DWP launched this scheme, they predicted that 10,000 people a year would be referred to it but over 24,000 were referred in its first six months.

The Community Action Programme is a scheme for claimants who have been out of work for two years or longer and which can involve them in having to work for their benefits for 30 hours a week for six months. Limited funding should be available for travel and childcare costs and participants are also offered help with job searching.

The DWP guidance note states that the scheme placements ‘must deliver a contribution to the local community’ and this can mean having to work in charities or other not for profit organisations working in the community. However placements can also be in private companies if some link or benefit to local communities can be shown.

Involvement in the CAP is mandatory and the same draconian benefit sanctions apply to it as apply to the Mandatory Work Activity scheme.

JobCentre Plus - frontage
JobCentre Plus - frontage (Photo credit: lydiashiningbrightly)

The coalition is planning to pump a massive £5 billion into the above schemes but is hard to see how effective they can be in an economy where unemployment is rising and an average of over five people are chasing every job vacancy. It is also hard to see how effective they can be when there is generally no requirement to provide work training, no limit on the number of placements in particular companies or workplaces and no real monitoring to ensure that employers do not abuse the scheme for their own benefit.

As the TUC’s Brendan Barber said, in relation to the young unemployed: ‘Work experience can be useful and helpful for many young people but it needs to be designed to help the young person, not to provide free labour for employers or to displace paid staff.’ It is also hard to see how schemes can be successful if other action is not being taken to kick-start the economy and get it growing again. As the Right to Work Campaign said: ‘The solution to the jobs crisis is to invest in jobs and training, reinstate the Education Maintenance Allowance and scrap tuition fees, so that instead of rotting on the dole queue the million young unemployed can get into employment or education.’

The jury is therefore still out on how effective these schemes will be and, whilst the coalition expects them to help 40% of unemployed participants into work, early indications suggest that the success rate is closer to 20%, and the National Audit Office suggests that 26% is a more likely outcome. And, of course, some participants who find work will have done so under their own steam, rather than as a result of what the schemes have done for them.

Yet there is one area where the schemes have already proven themselves a roaring success and that is in the amount of public money they have pumped into A4e, Avanta, G4S, Igneus, Serco, Working Links and all the other companies which have been taken on to provide back-to-work support to the job seekers referred to them. For example Igneus, an Australian company run by Theresa Reid (wife of ex Aussie PM Kevin Rudd) is already believed to have signed up to contracts worth £727 million. And Emma Harrison’s A4e (which is currently under investigation over alleged fraudulent activities) is believed to have signed up to contracts worth £438 million, which helps explain how Ms Harrison was able to pay herself £8.6 million in dividends in 2010.

The Work Experience and ‘work for dole’ schemes may or may not prove beneficial to jobseekers but there is already no doubt that they will prove a bonanza for the large number of private sector providers contracted to deliver them.

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

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