New deal hit target but missed the point

In 1997 I was involved in the formation of the New Deal, which provided an incentive to prompt some 250,000 long-term unemployed young people to enter the world of work. The focus was on identifying ways around the barriers that were keeping them out of jobs and providing a pathway of support into work. There was also, however, a punitive element that saw benefits denied to those young people who didn’t engage with the scheme.

The government’s green paper on benefit reform is about to be published – and the ideas already trailed are highly reminiscent of the New Deal. Even the language of work and pensions secretary David Blunkett in urging those on incapacity benefit to find work rather than “sitting at home watching daytime television” echoes chancellor Gordon Brown’s insistence that the New Deal offered no fifth option “to stay in bed watching television”.

With unemployment low the focus now is on incapacity benefit. Labour has identified the 2.7 million people on incapacity benefit as the new front in the war on poverty and also the largest chunk of unemployment benefits. The government aims to move one million of this group off benefits through the reforms, which will define Labour’s third-term welfare policy in the way the New Deal defined the first term.

I should say first that I welcome the intention. Evidence suggests that as many as nine in 10 people on incapacity benefit  want to work, though they need far more advice and support to make that happen. Given that the largest proportion of these claimants have mental rather than physical health challenges, these reforms are a chance to create a virtuous circle that moves people away from benefits and tackles the isolation and social exclusion that so often exacerbate mental ill health.

Blunkett claimed engaging with the world of work would “overcome depression and stress a lot more than people sitting at home watching daytime television”, suggesting that mental health is indeed the real focus of these reforms. Yet if that is the case it will require a far more sophisticated approach than carrot and stick.

The government has stated that engagement in the work-focused programmes will only be necessary for those who can be expected to return to work, whereas those with more severe challenges will be exempt. Yet people often fall between categories or at least move fluidly between them over time. Those with fluctuating mental health, for example, may be able to work for long periods but will need flexibility from government and employers to allow them space to manage an episode of ill health.

A more accurate model would see a gradient between 100 per cent state support and 100 per cent work with people moving back and forth. Yet it is unclear whether the proposed system can accommodate such a model. We need to see an equal input from the Department of Health as the Department for Education and Skills and social care needs to be central to that.

A major worry is how the support will be delivered. Many disability groups have raised concerns that an expansion of the Pathways2Work programme will be incompatible with the planned cuts to Jobcentre Plus staff and funding. Add to that the fact that Progress2Work, another major employment scheme, has a less-than-clear future when the funding runs out and the question of implementation could become decisive. The reforms must ensure that these two initiatives do not die on the vine.

Looking back on the New Deal now I feel as if we hit the target but missed the point. Many of those who found work through the scheme needed it the least and may have found work anyway. The forthcoming green paper has the opportunity to make some fundamental changes to the UK welfare system – we need all parties to embrace that opportunity and think radically about how to extend “the hand up” to those who most need it.

Lord Victor Adebowale is chief executive of learning difficulties, mental health and substance misuse agency Turning Point