25 June 2008

Rt Hon James Purnell MP

Secretary of State for Work and Pensions

Centre for Economic and Social Inclusion Conference, Birmingham

Wednesday 25 June 2008

[Check against delivery]

 

I am delighted to be here today. It’s a real pleasure to open such a significant event in the welfare calendar.

I’ve got a simple theme today: empowerment.

Power to the people.

How the principles of empowerment and devolution will drive my reforms in welfare.

At its worst, the state provides top-down, one size fits all public services, which fail to help those who don’t fit.

Our reforms over the last ten years have moved away from this conservative approach, to one where we use choice and contestability to personalise public services to what individuals want and need.

Our mission has been to give people more power because people want to do. They don’t want to be done to.

How do we do this?

By putting skills at the heart of welfare. And by reforming welfare so that it demands personal responsibility.

We will shortly be publishing our Welfare Reform Green Paper. We will provide better support, and expect more responsibility in return. Claimants should have the choice over how to get back to work, not whether they should go back to work

We want a work culture, not a welfare culture. Over the last ten years, we’ve transformed the welfare state from an essentially passive one, to a profoundly active one – and today, there are more people in employment than ever before, with a higher employment rate than the US.

But there are a few countries with higher employment rates, like Denmark and the Netherlands, who have inspired the ideas in the Green Paper. They don’t achieve this by removing the safety net. They have a more generous welfare state that requires something in return. 

That is the approach we will follow. Support to get people back in to work, but requiring them to look for and take work. Because if we can get more people to take up the support, and go in to work, we can reduce poverty and inequality. That’s why I believe that an appropriate conditionality regime can be the ally of social justice, not its enemy

But most people aspire to more than a dead end, low skill, low pay job. Hence our first goal: integrating welfare and skills, so that when you sign on for benefits, you sign on for skills.

That’s why we will improve the training we offer claimants, but also legislate to be able to require them to take up that training.

Individuals will get more control of their learning through Skills Accounts and employers will have a major role in shaping training to ensure it meets their needs.

The DWP and the Learning and Skills Council will increasingly commission services together so that that the rhetoric of integrating skills and welfare becomes a reality.

Those are our goals. Reforming welfare so people are independent. Giving them the power over their own lives. A flexible service that is right for their needs.

How do we achieve this? By making professionals accountable for results, but giving them more control over delivery. Accountability for the what, freedom to shape the how.

Accountability is key. It can be done in different ways: ideally by making the service accountable to the citizen, by giving them choice over what they get and from whom. Where that’s not possible, accountability can be through targets and inspection, or through information and elections.

You need accountability, so that the system changes when things go wrong. So that users aren’t trapped in a poor service. So that system keeps on improving.

But once you have that accountability for results, you can empower the people who deliver public services because they are best placed to know how to achieve those results. After all, they’re the ones sitting across the desk from the parents, patient, or indeed claimant.

One of the mistakes we’ve made in the last few yeas is to look as if public service reform was being done to, or despite, public servants. Instead it was always intended to free up good people and good organisations to do their jobs even better.

To devolve power to those who are responsible for delivering the service because they know best how to run the service for their customers.

In some ways, welfare is not propitious territory for devolution. We need to retain national benefits structures to avoid perverse incentives to play the system. There are economies to scale from administering benefits nationally. We explicitly set out to restrict the choice of claimants, by making benefits contingent on certain conditions. And of course there are certain common standards and services that everyone should expect wherever they live.

But even within this framework, I believe those principles of empowerment and devolution are right. Because they are what people want, and they improve the quality of our services.

So how can we move power to where it can be used most effectively?

Triple Devolution

I want to see a triple devolution. To our customers, to our providers and to communities.

This starts at the level of the individual. People know what they need. People know what works best for them. We need to give them the ability to act on that knowledge.

It is for this reason that where possible we should allow our customers the choice over which services they access, and which providers they go to.

We are testing this concept of choice between providers in 3 of our Pathways districts, allowing the flexibility to go to whoever will provide the best service.

This allows for competition between providers, to drive up standards of the programmes they offer. But it also means that our customers are able to choose the programme that is best for them.

Some people will question this. They will say that we can’t trust unemployed people to choose their provider. That they will go for one who is the soft touch.

I profoundly disagree. I believe these attitudes are patronising and make the mistake of tarring the majority with the sins of the minority. Most unemployed people want to get back to work and we should trust them to choose how, within a framework that has clear sanctions for playing the system.

The second devolution is to our providers - whether public, private or third sector.

That means freeing up Jobcentre Plus advisers. It is perhaps not said often enough, but Jobcentre Plus is a world class organisation – not least because of the skills and knowledge of its staff.

Today it has nearly 10,000 Personal Advisers in working with customers – encouraging, coaching, pointing people towards the support that they need.

Their record is pretty remarkable with 60 per cent of JSA claimants leaving benefit within 3 months. And over 90 per cent in a year. And it’s been achieved through fundamental but largely unheralded reform. The merger of the employment service and benefits agency, so that you cannot sign on for benefits without signing up for work.

It is striking to me how cutting edge Jobcentre Plus is – people from other countries come to visit to see what it is doing.

At the beginning of the year, I asked Lesley Strathie, Jobcentre Plus’ Chief Executive to explore how we could do more to make the most of the unique knowledge that our advisers have. Knowledge of their customers, of the local employment market, of the different services on offer.

Her report underlined the fact that the core of our regime – regular, frequent contact with our customers – is extremely effective and we should maintain that. But she also concluded that there is scope for additional flexibility to build on this approach.

She and I want to give local managers and advisers the backing to trust their judgment, and use their skills to their customers’ best advantage.

So we will trial a more flexible approach this autumn in Derbyshire and South West Wales, giving advisers greater flexibility to focus their time and support where it can have maximum impact, in a more personalised service.

Jobcentre Plus’ role today is not just about advising and providing back to work support. It is also about managing partnerships and I am struck by the magnificent way that they do this. By managing partnerships with the people in this room you have transformed the lives of thousands of people, and I want to thank you for that. But I also want to build on the strengths of Jobcentre Plus and the strengths of all providers.

DWP is already the most outsourced in Whitehall – our buildings are owned by Land Securities Trillium, and our computers by EDS. Over the years the value of outsourced services has risen from £682million in 2001 when the Department was formed to £1.86 billion. This represents 23 per cent of our £8 billion running costs and about half of our total spend with third parties. The use of private and voluntary providers for us is not revolutionary, its business as usual.

This is not an ideological issue. We are no more in favour of private providers than the public sector. It’s a pragmatic question about the best way to deliver the service. The evidence to date is that Jobcentre Plus does a world class job at initial job search; the high volume, low cost processes of the first year on Jobseekers Allowance. David Freud said he doubted anyone could do a better job. I agree with that.

After that year people need more in depth help, and providers need the freedom to innovate.

That’s why we are creating specific contracts helping the unemployed and inactive back to work.  These pay people by results, and this accountability to outcomes means that we can deregulate the process.

Our goal is what we call a black box approach – where we know the desired goal, but don’t prescribe a method.

This is a demonstration of how public service reform can empower the front line, trusting providers to do their job, within a framework of accountability for results.

My Permanent Secretary observed recently that the time has come perhaps to move beyond a formal invitation to tender in all situations. Rather than identifying a need and inviting suppliers to fill it, today I would like to suggest the possibility of a more radical approach.

I know that many providers are coming up with ideas about how our services could be improved, about how they could do more to help particular customer groups.

The strength of our provider organisations, your strength, is the potential to develop new solutions. We need to put ourselves in a position to tap into that supplier innovation more creatively.

To this end I have asked my officials to develop just such a route, putting in place what I would call a ‘right to bid’.

Where providers identify a part of our service, or a customer group that they think they could do more for in a particular region, I want to hear their proposals. I want to be able to harness this creativity, and test your ideas so that together we can develop the innovative ideas for future programmes or enhance the effectiveness of current ones to do yet more to help people back into work.

We won’t guarantee that we’ll take up every idea. But we will promise that every serious idea will be properly evaluated, by our commissioning team, who will report to myself and Leigh Lewis. And we will give you reasons for our decisions, whether to go forward or not.

City Strategy Pathfinders

So we want to devolve delivery to our customers and our providers. But we also want to devolve power to the local level. That’s because the causes of worklessness differ. In the past, whole regions suffered from high unemployment. Today, no region has a claimant unemployment level higher than 4 per cent

But in all of our regions, there are parts of our community that have been left behind. The rising tide has still left some stranded beyond the water.

We should be careful not to stigmatise any of these areas. In all of them, there are people doing the right thing. In all of them, there are people who would love to work, but have been trapped on benefits.

And, yes, in all of them, there is a minority who are playing the system and should never be on benefits in the first place.

But whatever powers we give people, we won’t get a single person back in to work unless they are used effectively.

And as the problems of worklessness have become more localised, so the solutions have too. The London Child Poverty Commission identified London’s barriers to work. The Greater Manchester councils are pressing us to have targets which focus on long term inactivity, and industrial dislocation. Glasgow are developing a groundbreaking approach guaranteeing all school-leavers an apprenticeship, to make the most of the Commonwealth Games effect in the run up to 2014.

Different opportunities. Specific barriers. Which require bespoke solutions.

And to get those bespoke solutions, I want to devolve power to the local level, so that cities and sub-regions can pool funding. Put their budgets together to develop a comprehensive solution, not dozens of small interventions.

As people in this room will know, we’ve been piloting this approach for the last two years in our City Strategy areas. We’ve given them pump priming and greater flexibility – and already we are seeing them innovate and succeed.

This is just the start however. We don’t want to strangle these new ideas at birth. So, I’m delighted, therefore, to be able to announce today that we are extending the City Strategy Pathfinders for a further two years, until 2011. We will extend the current offer to all 15 of the Pathfinders, continue to provide the DWP support and offer a further £5 million to further build their capacity.

But we want to go further. We don’t want to wait until these pilots are completed before extending the principles that we know work.

So I’m also announcing today that we will pursue a new delivery model, with a common spine across the country, but local flexibility to local circumstances.

As with City Strategy areas, that will mean that we consult local partners on how we commission our programmes for their area.  We want them not only to have a role in setting out the context in which the programme should be delivered but also in evaluating the proposals from bidders and in on-going performance management. This is the first level, the core model.

But some areas will want to go further. This will need to be a deal: something for something. We only want to devolve power where we believe it will get more people back in to work, not for the sake of it.

So, we will challenge areas to demonstrate their success in getting people back to work, and their ability to bring in additional resources. Where they do this, we will develop co-commissioning arrangements so that they can supplement the spine of national provision with additional wraparound services to address specific local issues. We will also increase influence for the Pathfinders over future DWP policy development and commissioning processes.

This approach is already working well in Newcastle, for example, where they have set up City Futures, an arm’s length company bringing together local drugs charities, community organisations, council services and private providers to offer a service that is seamless to claimants. With a no wrong door approach, but an ability to personalise the help to the individual, by directing her to the right provider. This is the second level, the wraparound model.

And, most radically, for the most committed areas, we want to experiment with a fully devolved model. In this third tier of autonomy, we would challenge areas to meet strict criteria – including ambitious pooling of budgets and a record of successful delivery, partnership working and clear governance arrangements.

Where authorities meet those goals, we propose to give them a role or the role in letting contracts in the first place. Getting people back in to work is no longer just about job search. It’s also about skills, health, addiction treatment, childcare, transport. If local areas can show that they are drawing resources together in a way that adds to the size of the contracts on offer, to their reach, and to their effectiveness, we will look to devolve contracting decisions, including exploring whether this could include ESF funding.

This is the third model of devolution, the joint venture model.

My politics is not about a top down state that throws people to the margins, or cuts them out from decisions that affect them. Nor is it a state that abandons people in the name of independence.

Instead, we should go back to the original meaning of politics.

‘Polis’ – the city state – politics the business of the citizens.

Where power belongs to the citizen, not the state.

All of us in this room are part of this process – and I look forward to working with you all to help people achieve what they have determined

Thank you.