Liam Byrne the shadow work and pensions secretary said: 'The welfare revolution we were promised has fallen apart.' Photograph: Lewis Whyld/PA Wire/Press Association Images
Buried beneath the news of Prince George's arrival on Monday was an announcement from the Department for Work and Pensions that staff working for the private IT firm Atos, delivering the controversial fitness-for-work assessments, were all to be retrained, owing to "unacceptably poor" standards of work.
Similarly, long awaited statistics showed Nick Clegg's £1bn youth contract scheme had helped little more than 2,000 people find long-term work. The numbers covered the first year of what was planned to be a three year scheme. It was dismissed by the shadow work and pensions secretary Liam Byrne as a scheme with a 95% failure rate.
These were bleak indications that all was not well within two of the government's previously much trumpeted welfare reform programmes – drowned amid royal baby hysteria. It was a significant moment for a department that is rapidly getting used to making uncomfortable admissions.
Over the past few months, the DWP has had to make disappointing announcements in at least four significant policy areas: as well as the work capability assessment announcement and the youth contract figures, the department has indicated that the timetable for implementation of its main benefits reform, universal credit, is slipping back, and has released results from the much-hyped work programme that are best described as mixed.
The DWP has been successful in making the political argument for welfare changes, and polls continue to show support for cuts to benefits across all parties. A poll by Lord Ashcroft suggested that 86% of Unite members support the government's £26,000 benefit cap – but it has repeatedly stumbled on the implementation side.
Whitehall analysts wonder if the department has bitten off more than it can chew by announcing and attempting to implement a range of ambitious new policies, affecting vast numbers of people, in one term.
Officials have come under huge strain as they struggle to push forward with reform, at a time when the departmental headcount has been cut radically. The Institute for Fiscal Studies calculated recently that between 2011 and 2016 the department will have lost 40% of its workforce. The Public and Commercial Services union said the DWP had cut 20,000 jobs since May 2010.
Labour has been struggling to marry its fervent belief that social security is a cornerstone of social democracy with a public increasingly intolerant of "benefit culture". Its spokesmen attack specific reforms, but cannot say if they will be repealed.Labour's own tough proposals for welfare, such as the requirement to work after two years on the dole, are either not known or little understood. Its best hope may lie in the claim Tory welfare is not working. Incompetence rather than ideology becomes the battleground.
Shadow work and pensions secretary Liam Byrne is moving in that direction. He said: "The welfare revolution we were promised has fallen apart. The work programme doesn't work, universal credit is disappearing into the sunset, and now we know that the youth contract has been a disaster and Atos is spinning out of control. Iain Duncan Smith has presided over the worst delivery failure seen in any government department for years."
Several policy analysts agree that part of the problem lies with the department's determination to introduce several major reforms simultaneously, focusing on getting them running, and less on how well they work once they have been launched.
Tom Gash, research director at the Institute for Government, which last week published a report questioning the government's skills at outsourcing and commissioning private companies to take on complex and risky government contracts, said: "The government's capacity to manage these programmes is not yet up there with their ambition."
Dave Simmonds, chief executive for the employment thinktank Inclusion, said: "Politicians are running too hard, pushing diminishing numbers of civil servants."Anne Begg, Labour MP and chair of the work and pensions select committee, which scrutinises the work of the DWP, said: "Any one of these major reforms would be a big reform for a department to undertake in a parliamentary cycle and they have five on at once, including pension reform. The volumes of people affected are huge. It would be a miracle if everything worked instantly.Citizens Advice says the scale of reform has made this a difficult period for claimants. "Delivering complex reforms can lead to big problems, as shown by the fact that last year Citizens Advice Bureaus dealt with almost half a million problems with employment and support allowance, 54% higher than the previous year," the charity's chief executive, Gillian Guy, said, referring to the new incapacity benefit, granted to those who pass Atos-administered fitness for work tests. "Nine out of ten of our clients that we spoke to in a recent study said they are not ready for universal credit."
The DWP said: "There is no doubt that this department is pursuing and delivering an aggressive reform agenda. We've already successfully launched the benefit cap, universal credit and the new personal independence payment, and the work programme has got over 320,000 of the hardest to help into jobs. We're bringing in our reforms safely and responsibly, and our ability to deliver these changes cannot be questioned following our well proven track record for delivery."
The key areas of difficulty for the department are currently the work programme, universal credit, the youth contract and the employment and support allowance tests.
Universal credit
Something has gone wrong with universal credit, the centrepiece of the welfare revolution. It may well be rectifiable and in October 2017 everyone on benefit in and out of work will be on universal credit, as Duncan Smith had always planned and insists will still happen.But with the changes to the speed with which universal credit will be introduced, and to the kind of caseload that will be put into the system, it is difficult to be confident.
Aware of the potential political damage, ministers are often unclear in public about the source of delay, repeatedly offering reassurance, insisting they had always planned to road-test ideas, and denying they were ever wedded to an artificial timetable set out in 2011.
The potential for disaster is evident. Universal credit merges six different benefits together and the claimant receives a single monthly household payment. It requires different payments to landlords, more online claims, and merges in- and out-of-work benefits, requiring a new benefit condition regime for those in work. It also requires close co-operation between the DWP systems and tax officials at HMRC.
The first steps have been baby steps. Universal credit went live on 29 April with just one jobcentre – Ashton under Lyne – accepting clams for universal credit and three other jobcentres, Wigan, Warrington and Oldham, testing the system before taking claims for universal credit in July. It had been intended that all four jobcentres would go live in April.
The aim was to start with the most simple caseload, such as a single unemployed claimant, to see how universal credit changes the claimant's behaviour and how the IT systems work.
It had been intended that from October that all new claimants receiving out of work benefits would move to universal credit, but earlier this month Duncan Smith told the work and pensions select committee that the credit would be introduced for new claimants in just six additional "hub jobcentres" – Hammersmith, Rugby, Inverness, Harrogate, Bath and Shotton, alongside the existing four "pathfinders".
This means that a project will now apply to only 10 jobcentres, fewer than 1.5% of the total. In addition, the only group of claimants included will still continue to be a narrow cohort of single people claiming jobseeker's allowance.
Anne Begg, the select committee chairwoman, asked Duncan Smith how wider lessons could be learned from this narrow test. She said: "No one is testing what it would be like for someone to have two children and all the other things that have to be in place for a complicated claim to be processed".
She queried whether it was possible on the basis of a pilot as limited as this to press ahead for all new benefit claims, not just JSA, to be brought under the umbrella of UC from April 2014. Duncan Smith replied: "In the course of 2014 jobcentres will be doing universal credit," but declined to give specifics. "We want to land this at the right moment not against an artificial timetable, but against the timetable that says we can cope with these people". No one wants another IT Whitehall welfare disaster on their hands in the run up to an election.
One reason for the delay is the arrival in May of Howard Shiplee as the new universal credit director, replacing Philip Langsdale, who died in December. Shiplee was director of construction at the London Olympics so comes with an impressive pedigree.
Asked how many people would be on UC by the end of the year, Shiplee told the select committee he would not give an answer since that would make him hostage to fortune. He spoke in broad terms of a period of reflection, rewriting handbooks, reviewing timetables, changing IT security and saying he had spent 100 days looking at the whole system. "Our team has contracted somewhat. We want to get small again while we start then we grow".
Duncan Smith, and Lord Freud, the welfare minister and former city businessman, defend the revised pace by arguing they have urged the DWP to proceed with caution, testing and retesting.
Youth unemployment contract
Conceived by Nick Clegg, this scheme saw £1bn set aside for wage incentives to get employers to take on long-term unemployed young people. It was in effect imposed on the DWP by Clegg's staff, who briefed at the time of its announcement that persuading the Tories to back it had been like trying to "persuade vegetarians to eat kebabs". By then there was a record high of 1,163,000 people aged 16 to 24 not in education, employment or training – a fifth of the total.The aim had been over three years to find jobs for 160,000 18- to 24-year-olds unemployed for six months or more – about 53,000 a year. Employers had been offered a maximum of £2,275 for retaining someone for more than six months, yet after a year only 4,690 young people had benefited from the payment, and only 2,070 had received subsidy covering the full six months.
In fairness, more employers – 21,000 – had submitted a wage subsidy application, completed at the point a young person starts a job. So the numbers may pick up if the scheme continues this year. Nevertheless on this basis very little of the £1bn set aside to tackle the scourge of youth unemployment by the coalition will ever be spent.
In the week before the statistics were released, Clegg prepared the ground for failure in a speech to the CBI, saying the Cabinet Office was to lead "a comprehensive government review into the employment, education and training provision available for 16 to 24-year-olds". He made reference to the complexity of some government jobs contracts programmes, but no explicit mention of the youth contract.
DWP sources say a mixture of the design of the scheme, and the way it was implemented from April 2012, should take the blame for what must be one of the biggest, and least noticed, public policy failures of the coalition.
Conservatives privately argued they had been right to be wary of Liberal Democrat "kebabs". They were instinctively sceptical of wage subsidy schemes, and had shut down Labour's future jobs fund for that very reason.
In a labour market in which there was a good supply of new young recruits, a wage subsidy set at the level of the youth contract was always too low to attract employers to choose to take the risk of hiring someone jobless for six months or more.
Yet if the subsidy was set far higher, there was a danger of "job substitution", simply providing a subsidy for employers to hire someone they would have hired anyway. Initially the scheme had been aimed only those young people unemployed for more than nine months, and in a bid to broaden the potential client group, this number had to be reduced to six months.
It was also clear something went wrong in the implementation. Specialist youth contract advisers, including some staff dedicated to engaging with employers, were established in jobcentres. Yet within seven months of the scheme's launch the DWP was reporting take up of the work experience element of the scheme, and little interest from employers in the wage subsidy element. An internal March 2012 report found employers were "more interested in finding the right candidate and that the wage incentive had little impact on this".
The CBI protested last year that there were 47 initiatives for employers looking to train and hire young people. Others were frustrated that the three prongs of the youth contract scheme, which also includes work experience and apprenticeships, were being run through different government departments.
Youth unemployment has fallen by 59,000 since the scheme's launch, but the low take-up of the wage incentive scheme means it can claim little credit.
The work programme
Labour's welfare to work scheme, the flexible new deal, was abandoned by the coalition, and quickly replaced with a radical payment-by-results initiative, contracting dozens of private companies – like G4S and Ingeus – as well as a few charities, to provide what David Cameron promised would be the "biggest, boldest effort to get people off benefits and into work that this country has ever seen".
Figures released at the end of June showed that this programme – the linchpin of the coalition's welfare-to-work vision – was failing to help the most disadvantaged into work.
Only 5.3% of people on incapacity benefit were found work lasting for six months, significantly under the government's minimum performance benchmark of 16.5%. The programme was beginning to work for mainstream, less challenging job seekers but was struggling to help sick and disabled people.
When the £5bn programme was launched in 2011 one of its explicit aims was to get 2.4m long term unemployed and sickness benefit recipients back into work.
The drive to save money by only paying private contractors for results was widely welcomed, but has had a number of unintended consequences.
Although providers can earn up to £14,000 for getting someone who has been on incapacity benefit into a job that endures for two years, it is so hard to get these clients jobs, that they are still seen as risky, and are often "parked" (abandoned, without any investment into helping them with training, for example, because they are unlikely to recoup dividends).
"Many of the difficulties within the work programme are because of the speed of implementation that [former work and pensions minister] Chris Grayling and Iain Duncan Smith have insisted on. They publicly committed themselves at an early stage for the programme to be up and running within a year of taking government," said Dave Simmonds, the chief executive of Inclusion. "To achieve that there have been a number of compromises and corners cut, which in a normal procurement process you wouldn't want to cut."
Tom Gash from the Institute for Government said ministerial changes and rotation of key civil servants had also proved unhelpful.
Fitness for work testing
The government inherited the controversial work capability assessment from Labour, who contracted the private IT firm Atos to carry out the tests determining eligibility for the new incapacity benefit, employment and support allowance, in 2008. Despite concerns from a range of charities about the effectiveness of the test, the DWP decided to go ahead in 2010 with a huge expansion of the scheme, to reassess 1.5 million incapacity benefit claimants at a rate of about 11,000 a week.
The DWP's announcement this week that it will be bringing in new providers alongside Atos to perform the tests, and to retrain existing Atos staff, has delighted campaigners who have long warned that large numbers of vulnerable people have wrongly had vital payments removed.
This week it emerged that the annual cost of appeals against decision on the employment and support allowance, the benefit which began to replace incapacity benefit in October 2008, has risen to over £66m; the cost trebled from £21m in 2009/10 to £66m in 2012/13.
The total number of people appealing every year – both inside and outside of tribunals – has risen from 279,000 in 2009-10 to 465,000 in 2012-13.
The test has been characterised approvingly in the Daily Mail as a "tough new test to weed out the workshy" and much media coverage of the revised test portrays claimants who are found fit for work as "scroungers" who have been "trying it on to get sickness benefit".
Although Atos (which receives over £110m a year to perform the tests) attracts much criticism for its poor implementation of the policy, a change in provider may not change the experience of many claimants, since the core government policy is to make the test more stringent, so that fewer claimants are eligible.
Guardian
