8 September 2008
Rt Hon Stephen Timms MP
Minister of State for Employment and Welfare Reform
Remploy
Monday 8 September 2008
[Check against delivery]
I am delighted to be here today and thanks to Ian Russell for the invitation to speak. I want to welcome Tim Matthews as the new Chief Executive from 1 October. I would also like to express thanks to Bob Warner for his excellent work in that role.
I want also to welcome the publication of the joint Social Market Foundation/Remploy report: “Flexible New Deal: Making it Work”. A press release is being issued today on the basis of the report which is a good deal less positive than the report itself, but I welcome the report which makes I think some valuable points about how exactly we can in detail frame these contracts to deliver what we need.
It recognises UK achievements in Welfare-to-Work, and what we are doing through Flexible New Deal. I agree with the authors that we should be aligning the incentives of jobseekers, contractors and government. The government shares with them the aim to get people into lasting work, and through Flexible New Deal we want a step change in provider performance.
Overview of Welfare Reform
Why do we believe that change of this magnitude is needed? After all, credit crunch notwithstanding, we do have more people in work in Britain than we have ever had before, after the longest unbroken expansion of any G7 economy in post-war history.
Over the last ten years, welfare reform and New Deal programmes have been a major factor in reducing the number of people on inactive benefits by over a million. The seemingly endless rise in the number of people claiming Incapacity Benefit has reversed. Last year, up to November, we saw a reduction of over 31,000, and the number of people on lone parent benefits fell by 34,000.
So, if the system has been performing so well, why have we committed ourselves to such a major programme of change?
The reason is that, while increasing employment has been impressive, we need to do better still. There are still too many people not included in the success we have seen. Too many pockets of disadvantage persist – neighbourhoods or groups within communities. We need to reform our programmes to meet the needs of all.
We have always believed that the best route out of poverty is work; that no-one should be left behind or excluded from the opportunities to increase their skills or to find and remain in work.
Green Paper
The Green Paper “No one written off”, published on 21 July, set out how we will overhaul the welfare system.
It proposes personalised support to everyone who needs it. But it also sets out a clear message that no-one capable of work has the right to a life on benefits; everyone has a role to play in contributing to society.
We recognise we need to tackle persistent inactivity. Work improves people’s health. It improves their quality of life and their children’s quality of life too. Our focus will be on the hardest to help in our society. To succeed, we need to be innovative and less regimented in delivery than we have been in the past.
The role of Government - Jobcentre Plus
Jobcentre Plus has been central to what we have achieved so far. It’s recognised as one of the best back-to-work agencies in the world, and it will continue to provide core back-to-work services to jobseekers for the first 12 months of their claim.
The Green Paper proposed giving Jobcentre Plus advisers more flexibility, and more options to individualise the support they offer to the people they are working with. But a single organisation cannot hope to meet and deal with all demands and needs of our very varied mix of customers. So we have reassessed the way we work with other government departments, with communities and other partners.
Joint commissioning
So, for example, our “Work Skills” paper summarised plans for a new integrated employment and skills service to be introduced across England in 2010/11.
It outlined how the Department for Work and Pensions and the Department for Innovation, Universities and Skills are linking the core elements of employment and skills support, developing the skills and employability of each individual person. When people come for help in finding a job, we want skills help to be part of the package – to give individuals more transferable skills, not only to get them a job but also give them a chance to stay in work, to progress and do well, to develop a career.
The role of Communities- City Strategy Pathfinders and local devolution
The changes reflect recognition that demography and the types of work and opportunities vary between locations. And, even though employment is at an all time high, there are still some areas, including inner city and rural areas, and some groups within areas, which have not seen their full share of the gains from Britain’s recent prosperity.
So we want to devolve more power to the local level, to improve the services we can offer. Our City Strategy Partnerships, in 15 cities around the UK, are leading the way in testing devolution. They are bringing together local authorities, Jobcentre Plus, regional bodies and others. We have recently announced extensions of the City Strategies through to 2010, to help ensure that the lessons will be learnt, and good practice not lost but rather be embedded in future local provision.
We are enabling cities and sub-regions to pool funding, encouraging development of cost effective and comprehensive solutions, pulling together experience and good practice to get to the heart of local needs. We think that is preferable to dozens of short-term, smaller interventions, each of which is laudable, but which together often fail to offer sustainable, long-term solutions.
I am pleased we are also introducing a new delivery model – Multi Area Agreements – to empower local partners. These will be based on delivering common standards and services wherever people live, but they will allow increased flexibility between local and central Government, and more effective joining up of public services.
This is not a case of “passing the buck”. We are keen to offer devolution where we it will add value and get more people back into work.
The role of Providers
Providers, many here today, will be key in the success of our new structure. Today is an opportunity to gain understanding of what the changes will mean for you.
Flexible New Deal is the first programme to use the new approach set out in our Commissioning Strategy. It is a radical step change and the performance expectations and the way Flexible New Deal is funded have already been highlighted as ‘challenging’ for providers. I make no apologies for this because we are determined to make a step change improvement to thousands of people’s lives.
Flexible New Deal contracts will be larger than those currently in place, and will be run by fewer Prime Providers for longer periods. Our host, Remploy,has been successful in the first round and has been invited to submit bids for eight contract packages.
Longer contracts will allow those who are successful more time to develop innovative solutions, more time to establish effective local partnerships and more time to deliver more personalised help to those with greatest needs.
It will be a very different market place. In future we will pay by results, instead of receiving payment for service. Performance expectations are challenging. We will pay providers for their success in getting people into sustainable jobs.
I know from the Flexible New Deal events around the country that concerns have been raised, for example from potential sub-contractors. I am determined that Flexible New Deal will provide opportunities for organisations of all sizes.
For many people, services will need to be highly specialised. For Prime Contractors to achieve the targets we have set, they will need to engage good, specialist organisations. Organisations like those who know their area, their customers and their business, and will be vital to the new scheme’s success.
There will be changes. We may lose some familiar names while welcoming some new ones – contractors new not only to working with my Department, but perhaps also new to working in the UK.
With fewer, larger contracts we will be able to monitor progress better, ensuring that the key values and principles of behaviour laid out in the Commissioning Strategy Code of Conduct are being met, and that Primes are meeting their obligations to the subs named in their bid proposals.
Additionally, we will be working closely with the Office of the Third Sector and other organisations to create opportunities for Flexible New Deal providers to explore new ways of working with specialist organisations, looking beyond the traditional for innovative solutions.
In June this year we launched the Third Sector Taskforce. It is working hard to involve the third sector more strongly in delivery of welfare reform. The taskforce is reporting directly to me and to the Secretary of State, so that it will be heard.
Flexible New Deal is only the beginning of the changes we plan. FND underlines our intention to be innovative in the future, so we want to keep open debate on the future of welfare reform. We want to work with providers like those here today to construct a welfare system for the 21st century, building on achievements so far.
I want to finish today by encouraging everyone here to contribute to the consultation process. The green paper consultation runs until 22 October so there is plenty of time to get in touch. We want to hear your views to help us ensure we achieve the right judgments for the future.
I look forward to all of us working together on this in the months ahead.
Thank you.
