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Welfare to Work Presentation

The depth of the current recession is providing an additional challenge to Welfare to Work providers at a time when expectations about their potential contribution are undergoing a revolution. The number of people facing cyclical unemployment is rising steeply and is likely to continue to rise for the foreseeable future. Many forecasters project unemployment to peak at more than three million, of whom more than one million may be out of work for more than a year.

This cyclical unemployment lies on top of, and is interconnected with, high levels of structural unemployment (often disguised as disability). The risk is that the cyclically unemployed become the next generation of structurally unemployed. The risk is particularly acute for the young, many of the less skilled of whom may find it extremely difficult to enter the workforce at all.

To tackle these problems on an integrated basis - as I believe they must be - will require new levels of financial sophistication and management capability in the provider community. The welfare reform bill now proceeding through Parliament, and the White Paper behind it, envisages the commissioning of outside providers to support people from the most disadvantaged communities back into the workplace, including many of the 2.6m in receipt of Incapacity Benefit.

This conference explores the central issues in this challenge. They include the large number of people for whom programmes are now necessary; the way that differential pricing can be introduced; and the formation of consortia combining the best of the private companies and third sector specialists. Given the inevitable pressure on the public finances in the years to come, the importance of the financial arrangements will be central - with all parties looking to outside investment upfront remunerated by subsequent savings in the welfare bill. The scale of the problem suggests that this will be one area of the economy that will be booming for years to come.

Lord David Freud,
Conservative Shadow Minister for Welfare Reform