Those targeted by new Workfare scheme make up just 2% of benefits bill

Those targeted by a new workfare scheme to be announced by chancellor George Osborne today make up just 5 per cent of JSA claims and 2.5 per cent of the benefits bill.

Those targeted by a new workfare scheme to be announced by chancellor George Osborne today make up just 5 per cent of JSA claims and 2.5 per cent of the total benefits bill, according to figures from the Department for Work and Pensions (DWP).

Osborne is set to announce at Conservative Party conference in Manchester shortly that 200,000 benefit claimants who have been out of work for two years will be placed on a new Help to Work scheme, where they will be made to either work 30 hours a week for six months doing community work, attend the jobcentre on a daily basis to look for work, or undertake a mandatory regime for dealing with the issues causing their unemployment, such as mental health problems or drug addiction.

According to today’s Independent, these will be the “most stringent conditions ever on the long-term unemployed”.

The politics of the announcement are clear. Caps on the amount of money claimants can receive and sanctions on those receiving out of work benefits are a vote winner. A recent YouGov poll found that 79 per cent of people, including 71 per cent of Labour voters, support the government’s £26,000 benefit cap; and a survey last year found that 36 per thought it should be less than £20,000 a year.

The evidence that Workfare-style policies make good policy, however, is less clear.

Aside from the fact that, as mentioned, the 200,000 long-term claimants of unemployment benefit targeted by Osborne make up just 5 per cent of JSA claims and only 2.5 per cent of the overall benefits bill, the UK also spends less on unemployment benefit as a share of national income than every other major European country except Norway.

Long-term unemployment is clearly an undesirable thing to have, but contrasted with some of the other problems facing the UK – such as the fact that prices have risen faster than wages in all but one month of David Cameron’s premiership – it’s a bizarre headline announcement for your chancellor’s keynote speech.

As it stands, the government’s current Workfare scheme which was introduced in 2011 applies to those who have been out of work for more than a year. The new Help to Work programme will apply to those out of work for more than two years.

Despite being one of Work and Pensions secretary Iain Duncan Smith’s flagship policies, the 2011 scheme has not been particularly successful at getting people back to work, and is currently delivering outcomes close to the performance of the programme it replaced. For those who have moved onto the programme from Employment and Support Allowance, just 4 per cent have found employment.

In this respect, today’s announcement may be seen as a response to the failure of current Workfare policies.

There is no reason to think, however, that the criticisms levelled at workfare won’t also apply to the new scheme. Is, for example, a person spending 30 hours a week picking up litter more or less likely to find a paying job? Research which looked at similar schemes in the US, Canada and Australia found that:

“There is little evidence that workfare increases the likelihood of finding work. It can even reduce employment chances by limiting the time available for job search and by failing to provide the skills and experience valued by employers. Subsidised (‘transitional’) job schemes that pay a wage can be more effective in raising employment levels than ‘work for benefit’ programmes. Workfare is least effective in getting people into jobs in weak labour markets where unemployment is high.”

As shadow chief secretary to the treasury Rachel Reeves put it, “The experience so far has been they cost quite a bit of money and don’t deliver that much in the way of results.”

The new scheme will cost £300 million a year. As yet, there is very little evidence to suggest it will deliver a return on that investment.

This graphic from IPPR shows the stark difference between public perception and reality when it comes to benefits.

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28 Responses to “Those targeted by new Workfare scheme make up just 2% of benefits bill”

  1. LB

    What human rights?

    Simple choice. If you want money from others then you have to comply with the strings.

    If you want something else you are free to choose.

    No rights issues

  2. LB

    Correct. If you don’t then all claimants get tarred with the behaviour of the bad.

    E,g labours insistance that we have to fund spare bedrooms for those on benefits is bonkers.

    Labour’s 104,000 a year payments to people for housing benefits.

    Until labour makes its mind up, is it for the scrounges or for the workers it’s screwed. And In Particular it needs to be honest about not paying pensions because it can’t

  3. Ralph Musgrave

    “Subsidised (‘transitional’) job schemes that pay a wage can be more effective in raising employment levels than ‘work for benefit’ programmes..” Excuse me? What’s the difference between “subsidised transitional job schemes” and workfare? They are both a form of temporary subsidised employment!!!

    As to the idea that subsidised temporary work / workfare does not improve employment chances, there is evidence of such a benefit (particularly in the case of subsidised temporary work in the private sector) from the two Swiss studies. See the works by Gerfin and Steiger which I cite on this blog post of mine:

    http://ralphanomics.blogspot.co.uk/2012/01/effect-of-temporary-subsidised.html

    As to “failing to provide the skills and experience valued by employers” my answer to that is that workfare is no worse in that respect than unemployment. So that’s not an argument against workfare. Moreover, the evidence is that the sort of training normally offered alongside or as an alternative to workfare schemes is useless.

    And if you want a really advanced consideration of this subject (100 miles above everyone’s head unfortunately) see this paper of mine:
    http://mpra.ub.uni-muenchen.de/19094/

  4. GO

    “Those targeted by new Workfare scheme make up just 2% of benefits bill”

    “the 200,000 long-term claimants of unemployment benefit targeted by Osborne make up just 5 per cent of JSA claims and only 2.5 per cent of the overall benefits bill”

    Sorry, but I think you’ve misread the figures.

    JSA accounts for 2.5% of the benefits bill in total (see the bottom pie chart on p. 21 of the IPPR report you link to). The amount spent on the claimants targeted by this new scheme – those out of work for three years or more – is 5% *of that 2.5%*.

    So those targeted by this scheme don’t make up anything close to 2%, or 2.5%, of the overall benefits bill. They make up 5% of 2.5% = 0.125%.

  5. stuart

    2 years is too long to be on benefits, give something back , the streets are filthy the grass. Verges need cutting , park benches need painting .
    Most just get into the non working groove up at 10 am daytime tv , feed fat face, afternoon tv , beer from tesco annoy neighbours playing music loud until early hours , have another kid claim more benefit , smelly dirty no self respect.

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