Response to Department of Work and Pension’s Welfare Reform Green Paper – No One Written Off: Reforming Welfare to Reward Responsibility This response has been written to reflect the views on „Chapter 2 – An Obligation to Work‟ of the CREATE Consortium and the Community Sector Coalition. While each of these bodies may write their own response to the Welfare Reform Green Paper in its entirety, we decided to work together specifically to co-ordinate a response to „Chapter 2 – An obligation to work‟ to reflect the serious concerns that each organisation has with the „work for your benefit‟ proposals. Response to Chapter 2: An obligation to work Our concerns focus primarily on the plans outlined to introduce „work for your benefit‟ sanctions for the projected 2% of JSA claimants who will be unable to find work after 2 years of support and interventions through the Job Centre Plus and Flexible New Deal. Current Economic Climate – Rising Unemployment It‟s dangerous to associate community work in the public mind with „scroungers‟ being punished, particularly during a time of rising unemployment. Community work is a great opportunity - part of the carrot, not one of the sticks. Getting people engaged in their communities is a crucial element in tackling worklessness and poverty, by maximising the opportunities that exist for part time, sessional and irregular work in deprived communities. With rising unemployment and increased competition for all jobs, it is likely to be those that are furthest from the labour market and most excluded for socio-economic reasons that will still be unemployed at the end of 2 years. Intervention in a community setting for this demographic should be supportive and enabling, not punitive. Nature of Community Sector Labour Market The labour market in poor communities creates predominantly part time, sessional and irregular jobs and reflects a national shift away from a 35-hour week towards a labour market that is more dynamic. Many of these are ideal „entry level‟ jobs that could be a first step into work for the long-term unemployed. The consequences of this are significant: o Community organisations often have money to create part time, sessional or short term work but are unable to recruit local unemployed people o Socially valuable work does not get done, often in our most deprived communities, where it is most needed o As a result money is lost from the local economy o Individuals stagnate, trapped on benefits instead of gaining invaluable experience and skills in a supportive, rewarding environment 1 o Individuals get work in the informal economy, which can mean working at below the minimum wage in exploitative situations, making it impossible to draw on references for future employment opportunities The „work for your benefit‟ proposal does not recognise the nature of the community sector labour market. It will be problematic to generate enough full time community work for people to do in their own community to sustain full time activity. However, people could be paid to undertake part time work for the benefit of their community, while gaining invaluable employment experience and earning some additional money to lift them out of relative poverty. Transporting people out of their community to work in other communities displaces local ownership of work that is undertaken to improve a community. o Local ownership is of crucial importance to the effectiveness and sustainability of community work. o Additional transport time on top of full time activity will be very problematic for many people, particularly those who are single parents. Experience in the US, recounted by Alison Benjamin in The Guardian1, illustrates how dangerous this can be, as the impact on children can be damaging, particularly when there is no rise in income associated with the parent‟s absence. Contracting issues The green paper states that government will “contract with public, private and voluntary providers to test out a number of models of mandatory full-time activity”. Community organisations often have a unique and trusted relationship with people who are furthest away from the labour market. There is a lack of awareness of the damage that this proposed new contractual relationship could generate between community sector providers and the residents they exist to serve, should the community sector choose to deliver „work for your benefit‟. If the government contracts with public or private sector providers to create full time unpaid community work it runs the risk of threatening the jobs that exist within the community sector and creating more unemployment. Running mandatory work schemes on behalf of government threatens the independence of the community sector and is likely to be rejected as a source of income by many community organisations. There is a concern that the way in which the Flexible New Deal contracts will be structured will lead to „creaming‟ of the most able benefit claimants and „parking‟ of the least able, in order for the FND provider to increase its chances of successfully placing people in sustainable work and being paid for these results. If this does occur, the least able will be punished through „work for your benefit‟ for the system‟s failure to support them effectively. 1 Welfare to Work: A false reasoning is driving benefits cuts, Alison Benjamin The Guardian August 2008 2 Voluntary ethos part of a healthy democracy The mandatory nature of „work for your benefit‟ goes against the ethos, which is hard working, of the community sector. At the heart of all community work is a voluntary impetus that is critical to the healthy functioning of civil society. To introduce mandatory community activity also goes against the ethos of the Department for Communities and Local Government‟s recently published Community Empowerment White Paper; Communities in Control: Real people, real power. DCLG has recognised the value and importance of the community sector in reinvigorating local democracy. Workfare doesn’t work The DWP undertook research into the effectiveness of workfare programmes in the US, Canada and Australia 2 and found that overall the „work for your benefit‟ approach is not effective. „Work for your benefit‟ is least effective for individuals with multiple barriers to entering the labour market Welfare recipients with multiple barriers often find it difficult to meet obligations to take part in unpaid work. This can lead to sanctions and, in the most extreme cases, the complete withdrawal of benefits that leaves some individuals with no work and no income. Some states in the US have scaled down large-scale, universal workfare programmes in preference for „softer‟ and more flexible models that offer greater support to those with the most barriers to work. This includes a greater reliance on subsidised jobs that pay wages rather than benefits to participants. Subsidised („transitional‟) job schemes that pay a wage can be more effective in raising employment levels than „work for benefit‟ programmes. Workfare is not only inefficient; it is unfair too, because it exploits the unemployed people forced to take part. If a job is worth doing it is worth being paid the rate for that job. Unemployed people on workfare schemes would be paid less than half the national minimum wage and the evidence does not show that workfare improves their chances of getting real jobs. It is unfair to workers who would otherwise be employed at the rate for the job to do the work done by workfare conscripts. It therefore acts to hold down the wages and reduce the employment opportunities of all workers, and has its worst effect at the bottom end of the labour market, which is where free workers are most likely to find themselves in competition with workfare workers. When workfare workers are offered to for-profit businesses other firms that do not use unpaid subsidised labour are at an unfair disadvantage – workfare is a threat to good employers, as well as to workers with jobs and unemployed workers. 2 A comparative review of workfare programmes in the United States, Canada and Australia Richard Crisp and Del Roy Fletcher, DWP 2008 3 Proposed Alternative from the CREATE Consortium: The Community Allowance as an alternative to Work for your Benefits In January 2002, the Neighbourhood Renewal Unit, in the Office of the Deputy Prime Minister (now CLG), established the National Community Forum to advise Government Ministers and ensure that policy makers could hear about the experience of neighbourhood renewal from a grass-roots perspective. At the end of their first 2-day meeting, all 24 forum members agreed that the benefits system represented by far the biggest barrier to neighbourhood renewal. Why? The £ billions a year we spend on benefits (not in administration or in employment support, but the actual weekly money) is keeping people just above absolute poverty but forms no part of the ladders or bridges that we need to lift people out of poverty. The benefits system is constructed as an on-off switch not a dimmer switch. Research at Oxford University3 has found that the benefits system is over-responsive to part time, sessional and irregular work and that as a consequence people prefer to stay with the certainty of benefits rather than risk losing them and having their income and other safeguards like free school meals thrown into chaos for months. Over the last 8 years the CREATE Consortium4 has evolved from the National Community Forum‟s work on this issue, to develop a proposal called a Community Allowance. The work to pilot a Community Allowance is backed by over 80 organisations5, including key national infrastructure organisations from England, Scotland, Northern Ireland and Wales. Over 60 community- based organisations wish to pilot the Community Allowance for the benefit of their community. The CREATE Consortium is holding a pilot planning meeting on November 3rd 2008 to develop the detail of how a pilot programme could work with community organisations from across the country. We want participating community organisations to be able to pay people to do work that strengthens their neighbourhood, while supporting them on their journey back to work, without it affecting any of their benefits for a limited time period. This would act as a transitional work scheme for the most excluded from the labour market. Maximum earnings on top of benefits would be capped at £4,305 or the equivalent of up to 15 hours a week on the minimum wage. Earnings could fluctuate depending on what work is available and the payment of benefits would be unaffected over the course of one year. This would enable participants to gain paid work experience, access training and support and develop an active focus in seeking other work opportunities To pilot the Community Allowance we estimate this would cost £69,000 per pilot area, which would generate £92,000 of investment in jobs in 3 Kemp, Peter, Oxford University, cited his work at an IPPR seminar on Housing Benefit Sept 2008 4 The CREATE Consortium is Development Trusts Association, Community Links, the National Community Forum and the British Urban Regeneration Association 5 An up to date list of the 80 organisations backing the call for the Community Allowance to be piloted can be found on the Community Allowance‟s website: http://www.communityallowance.org/get_involved/Back+the+Campaign.htm 4 the local economy – the pilot would also enable us to calculate an additional cost saving to the state from the socially beneficial work that is undertaken. We wish to pilot the Community Allowance as an alternative to „work for your benefit‟ and within the Flexible New Deal to explore with DWP the impact of an enabling approach to welfare on the most excluded from the labour market. Outcomes: The Benefits For the individual participant the Community Allowance would enable them to: Gain access to personalised, tailored support and training, from a local community anchor organisation, that would address barriers preventing them from working Unlock their talents to increase their confidence, skills, knowledge and experience Build new connections with people and groups in their neighbourhood, increasing their social capital, health and well-being Draw people away from the informal economy For the local community: Vital work for the well-being of the community is carried out; this work will benefit the local community in a number of ways, making it cleaner, greener, safer, healthier and more cohesive while generating considerable cost savings for the state For the local economy: We have estimated that around 80 part time (4 hours a week) jobs could be generated by the Community Allowance on a single estate, unlocking around £92,000 a year investment into each disadvantaged community Money invested in this way not only improves the lives of individual residents, but also circulates within the local economy rather than being drained away via external contractors At a time of economic downturn, these part time, sessional and short term jobs are a relatively stable source of work for local people, as funding for them comes from a range of statutory sector partners involved in neighbourhood renewal and mainstream service provision, enabling the community anchor to earn additional income through trading, creating a virtuous circle of economic development Policy Context The Government‟s aim to pilot the Community Allowance was announced in the Community Empowerment White Paper6 The UK National Action Plan on Social Inclusion7 talks of increasing labour market participation through targeting areas of high 6 Communities in Control: Real people, real power, CLG July 2008 p. 37 5 worklessness by devolving decision-making and empowering communities Work Skills: Unlocking Talent8 - we would like to unlock the resources in Skills Accounts and Train to Gain initiatives in neighbourhoods with high concentrations of worklessness through Community Allowance pilots The DWP Welfare Reform Green Paper9 has proposals to pilot „work for your benefit‟ initiatives for the projected 2% of JSA claimants who are still unemployed after 2 years by requiring them to undertake mandatory full time work in their community, the DWP‟s own research10 has found that this approach is not effective Appendix Information about contributing organisations The CREATE Consortium is a network of 4 organisations that is campaigning to establish a Community Allowance in the UK benefits system. Staff at the Development Trusts Association, Community Links and activists from the National Community Forum have contributed to this response through the CREATE Co-ordinator. The Community Sector Coalition is a membership body of 20 national infrastructure organisations that primarily work to support and develop the community sector in England. The Coalition‟s Director has contributed to this response, through input from Chief Executives of its member organisations at a national meeting of the Coalition. 7 Working Together: United Kingdom National Action Plan on Social Inclusion, DWP, September 2008 p.17 8 Work Skills, DWP and DIUS June 2008 p.19 9 No one written off: reforming welfare to reward responsibility, DWP, July 2008 p. 41 10 DWP Research Report No 533: Comparative Review of workfare programmes in the US, Canada and Australia, August 2008 6
"Response to Department of Work and Pensions Welfare Reform Green"