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Flexible New Deal (Miscellaneous Provisions) Order 2009

My Lords, I thank the noble Lord, Lord Kirkwood of Kirkhope, for moving this Take Note Motion. I do not think that any of us listening to him could underestimate his desire for a consolidation Act and his support for self-employment as a route out of unemployment—a route which has shrunk very substantially to about 5,000 a year. I take this opportunity to summarise the general concerns on this side of the House with the Flexible New Deal as it stands. As many noble Lords will be aware, our concerns have led us to develop a broader approach to the issues of unemployment and welfare reform. The Flexible New Deal was developed at a time when the economy was strong and was designed to support a relatively narrow group of people into economic activity—those who had spent a long period on JSA and who in practice found it difficult to find a sustained place in the workforce. With the onset of the recession, many more people have become likely to find themselves unemployed for more than a year, not so much because they have underlying difficulties in the workplace, but because there are, for the time being, too few jobs for them. The Flexible New Deal, therefore, has become a rather different animal and the expected volumes have increased substantially—although they have decreased a little, as the noble Lord said. At the same time, the new work capability assessment seems to be sending rather more people into JSA than expected. It is entirely likely that in the years to come considerable numbers move straight from incapacity benefit to jobseeker’s allowance. Therefore, the Flexible New Deal looks to be an inappropriate programme in the present environment for a number of reasons. First, a structure which sends clients back to Jobcentre Plus after a year during the depth of a recession would send exactly the wrong incentive to the providers. The message would be: save your cash for the next tranche when there are more jobs available. In practice, of course, we want providers to make sure that their clients are kept trained and motivated when there are appropriate jobs. Secondly, there is no price differentiation in this structure. It is difficult to believe that the cost of preparing someone for work who has spent many years on incapacity benefit will be the same as for someone with an impeccable work history and a solid skill base who has been made redundant through no fault of their own. The former incapacity benefit recipient may have spent, for instance, five years or more on that benefit and then been transferred on to jobseeker’s allowance after a work capability assessment, and then wait another year to go to a provider, during which time Jobcentre Plus will have provided only modest support. The distinction between former incapacity benefit recipients who are transferred on to JSA, rather than on to the work-capable component of the employment and support allowance, also looks somewhat artificial. They are likely to need rather similar forms of support; yet under the current Flexible New Deal structure one set will go to providers, while the other will have very limited support, apart from a minority who will transfer to the planned Invest to Save pilots. Surely a sensible approach would be to consolidate the support for these groups, not least to obtain the benefits of scale and, indeed, to involve the specialists—particularly in the third sector—on the basis of the price differentiation. Finally, on this side of the House we are concerned that the programmes to support the 18 to 24 year-old age group may divert these youngsters from providers into various make-work activities. A better option would be to give this group to a provider base which is motivated to ensure that the next steps that the youngsters take genuinely add to their future employability. These are some of the reasons that we have developed a policy to help all these groups and introduce what we are calling the work programme as soon as possible. That way we will be able to get the hardest-to-help back into economic activity as we come out of the current recession, not the one after that. At the same time, many in the 18 to 24 year-old age group will have undertaken activity which will have enlarged their opportunities in life, rather than narrowed them.