Today we fire the starting gun on what I hope will be a revolution in the way government works.
That revolution comes in the form of the Work Programme, the biggest welfare to work plan that this country has yet seen, and more importantly probably the biggest payment by results scheme that any Government has attempted.
Gordon Brown launched welfare to work in Britain thirteen years ago with the advent of his New Deals. But his approach just didn’t work. Top-down programmes were designed in Whitehall, and willing companies were paid to deliver those programmes with little incentive to succeed.
As one participant wrote to me in frustration a few years ago, it seemed to those taking part that they were just “bums on seats” for the organisations running the New Deals.
Billions of pounds were spent to little effect.
And yet Britain desperately needed effective welfare to work. Throughout the good years for the economy jobs were created – between three and four million in total. And yet again and again those jobs went to migrant workers entering Britain from overseas. People travelled thousands of miles and found work. Those on welfare down the road stayed there.
In total through Labour’s years there were always around five million people on out of work benefits. In good times and bad.
And the social problems generated by that blight of worklessness became deeper and deeper as yet more generations grew up in households entirely dependent on benefits for their income.
The Work Programme is designed to break that cycle of deprivation once and for all.
So there will be no more employment programmes designed in Whitehall. Instead the organisations who work with the long term unemployed will decide for themselves how best to tailor that support.
But crucially we will only pay them when they succeed. Not just at finding someone a job, but also in supporting them while in work so they stay in employment. They won’t be paid in full until someone has held down a job for at least eighteen months.
No Government has tried payment by results on this scale before. So we worked very hard to get it right. We used external advisers to act as “shadow bidders" so we knew what to expect from those who might want to become contractors. We asked City bankers to tell us how they might exploit the contracts, so we could close any loopholes. And we went to the financial markets to make the case for investment into this exciting new opportunity.
Today we publish the results of that process. And so far it has exceeded all our expectations. The investors and the bidders came in numbers and fought for the contracts. In total, the private sector is investing some £500 million in taking the risk that it can get large numbers of claimants back into work. Major new players like Deloitte and G4S are entering the market for the first time. Existing companies like A4E and Avanta have reorganised their affairs to fit the needs of a world of payment by results.
And they have brought with them the proof that the private sector is willing to take on the risk of delivering real change for government. Now payment by results can be used to make a difference elsewhere in Government.
But there’s another important dimension to the Work Programme too.
Alongside the private investors are a huge team of voluntary organisations lined up to deliver specialist and localised support to the welfare to work process. Two voluntary sector groups are prime contractors in their own right. But another three hundred will be part of the Work Programme teams around the country, bringing well over £100 million a year to the voluntary and not-for profit sector if they get the job right.
That’s a huge tribute to the expertise that exists in the voluntary sector, and also a big boost to the Big Society.
Some of those organisations come from the premier league of Britain’s voluntary sector. Mind, Mencap, Action for Blind People, Tomorrow’s People, the Prince’s Trust, Groundwork, and a whole long list of others will bring a degree of specialist expertise to the task that will really boost the job of getting the hardest to work into work.
But it’s not just the big charitable players that will have a place at the Work Programme table. Small local groups like Third Sector Hebrides, Sunderland North Community Business Centre and the Volunteer Centre for Kensington and Chelsea will sit alongside educational establishments like Chesterfield and Northampton Colleges.
We think we’ve got a team that can transform Britain’s welfare culture.
But they’ll have to prove they can deliver before we pay the bill.
The fact that they are all willing to come together and take that risk is a real sign that they believe things really can change. Now they just have to prove it.
They have three months to get ready. The Work Programme will start in June.