Response to Department of Work and Pensions Welfare Reform Green

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					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



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            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


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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


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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


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           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


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        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



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Description: Response to Department of Work and Pensions Welfare Reform Green