Make a million by helping the poor
I wonder how those on the left who yearned for Gordon Brown to replace Tony Blair would have felt if they'd known that he would adopt a policy recommended by a former investment banker which would invite multi-national companies to bid for a share of a £1bn market to help get the unemployed back to work? That was what James Purnell, Brown's new work and pensions secretary, confirmed today was his policy.
Today, on a visit to a job placement centre in Newham, I asked Purnell whether he was happy for people to get rich helping the unemployed. "Yes" he answered without so much as a blink.
Purnell, one of the young ministers promoted after Peter Hain left the cabinet, is a Blairite and a Freudian. I refer not to Sigmund - the father of psychoanalysis - but to his great grandson David. It was the report of this former banker which called for the provision of job search, placement and preparation to be privatised and incentivised so that private companies and voluntary organisations are rewarded for how successful they are both in getting the unemployed back into work and ensuring that they stay there.
David Freud recently told the "We can pay masses - I worked out that it is economically rational to spend up to £62,000 on getting the average person on Incapacity Benefit into work". He went on to say that "somebody will see a gap in the market and make their fortune''.
The today that many people have already made their fortunes this way including, intriguingly, the wife of the Australian Prime Minister Kevin Rudd whose former company now operates in the UK.
What has happened to Freud's report tells you a lot about how Gordon Brown has changed from the pretender to the throne to the occupier of it and even in the months since he's been in No 10. Freud was commissioned by Tony Blair and the minister he trusted to reform welfare, John Hutton. Gordon Brown, as chancellor, fought against its proposals. As prime minister he sidelined them to focus instead on the promotion of skills.
The Tories saw their opportunity and embraced Freud whole-heartedly promising that they would implement his reforms. No sooner had they done so than Gordon Brown discovered that no-one was a greater admirer of the ideas than he was.
Old Sigmund would have had a field day with Gordon's Freudian slip.
I'm 
Comments
Brown slurps up another policy the Tory's thought was worthwhile! Who would of thunk it!
If you keep stealing your opponents clothes the electorate will start to wonder why they need to vote for you. Are Labour going to keep trotting out the line about the "Tory's are evil, don't you remember what they did 10 years ago"? Could it be they are not quite so confident of their ideas or record?
Brown oscillates between aimless and shameless.
Dear Nick
£62,000 to get someone a job that will in all proability earn them around the REAL AVERAGE WAGE of £12,000?
Its the same New Labour story...jobs and riches for the middle class and private firms at the expense of the poor.
Tell you what, how about saving half of this and just give £30,000 to the unemployed and tell them its a lump sum now sod off and learn Polish because that will be the only way to get work...
Nick - how long did it take you to come up with the final gag?
You have brightened up an otherwise sober day in the British Library!
Genius.
No political party has a monopoly on good (or bad) ideas.
Usually, political parties cannot break out of the straightjacket of their percieved dogma.
So, I am fully in favour of proposed measures such as this, although it does sidestep the primary question of why there are so many people unemployed/'sick' in the first place.
"The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but always it was impossible to say which was which." - George Orwell
Mr Brown, meet Lady Thatcher. Lady Thatcher, Mr Brown.
Surely the problem here is one of how the policy sticks. Paying £60000 is maybe good value if you only ever do it once, but how long does the job have to last before its really worth it; and which private companies are going to wait 10 years before claiming their fee?
As for the politics of it all; compared to the amounts of money the DWP regularly hands out to private individuals who have a plan to get themselves back into work this is small potatoes.
I just dont see who these experts will be. We have experts already and they work in the job centre - a one stop shop for jobs AND benefits. If they arent good enough - maybe it is because we arent paying enough to attract the right calibre of applicant or the training is poor.
This is a scandal in the making. It will create even more revolving door jobs!
Whatever the target set - the private companies will meet them by cheating. just look at the NHS A&E targets and the large American IT company I work for!
For £62000, you can employ someone on minimum wage for 5 years. So if you set a target of employment for 18 months - you can afford to employ them yourself and make them redundant every 18 months = total cost £18K. So your profit will be £40k+.
I am unclear about what the underlying thrust of this blog is!
Is it that it is okay to make money by providing services to rich people but not to poor people?
Am i right in thinking that the point is that Nick is suggesting that it is immoral if people make money on the back of people being poor! Isn't that a fallcious argument - in this instance people wil make money if they help people to become better off not because they are poor.
So, let me get this straight...on the same day that getting the unemployed into work is turned over to the private sector by the Work and Pensions Dept, this same dept announces massive job losses among staff. Including Job Centre staff.
I have to say I'm less than surprised. Perhaps the unions will finally wake up, stop supporting this farce of a party in a kneejerk reaction just because it has Labour in its name and understand at last that they are dealing with a party that has as much intention and agenda to work for the interests of workers as Maggie did.
All that Gordon and his gang care about is cosying up to their pals in business and making them richer than they already are.
Fascinating Nick, know of any resources listing which companies are currently operating in this market? Or the relevant regulations/guidelines describing the industry?
An opportunity to quite innovative here methinks.
The government could make a start by reducing the tax that they take from people in work. It is a scandal that so many pay tax at such a low level of income. But then I suppose someone has to pay to keep the MP's in the luxury to which so many have become accustomed.
They could start by an undertaking by government to get value for money in everything they do. Last time they tried it they had to fiddle the figures to show they were succeeding.
Unfortunately politicians (that is to say leftist ones), have a vested interest in keeping people on welfare and that is why they never get them off benefits.The welfariat are their client group. We have had 3 million unemployed for years but they disguise it by calling them 'disabled'.
I bet when or if the tories ever get back in power the Â鶹¹ÙÍøÊ×Ò³Èë¿Ú will start referring to these 'disabled' as the 'unemployed' again!!!
There is a perfect system already in place... it's called a Jobcentre. Give the already existing civil servants the same cash incentives you want to pay private companies and they can put years of experince into getting them back to work.
Minister complains of "Whithall Diktat", but Whithall only carries out Minister's bidding. Dept for Work & Pensions is lauded by NAO for success in modernising and placing jobless, yet cuts 25% of its workforce and awards the survivors 1% payrise each year for the next three years. At same time Minister seeks to outsource the same work, saying he sees nothing wrong in people "getting rich to help the unemployed". So pay private sector loadsamoney for doing what cheap civil servants are currently doing well. Ugh?
I had a look at the "Freud report" when it came out and spotted a mysterious " black box" in one of the diagrams. All kinds of things can happen in "black boxes" it seems to me..good, bad or ugly. My main concern about black boxes with respect to those who end up feeling like they are being processed through one is that there are proper, open and transparent ways for any concerns to be accounted for fairly and with equal respect to all stakeholders.We should remember what John Hutton said in one of the Parliamentary Committees a while back.. something about us not being in the business of "forcing " people back into work.
P.S I do hope you get this one which I'm sending via our Foreign secretary's blog about Chine at the FCO.
Any reason for the slightly cynical tone, Nick? Check out "The Fortune at the Bottom of the Pyramid" by CK Prahalad.....
;-)
When will people realise that this capitalist structure cannot apply to EVERYTHING! Why not get the same people who would head up these/this company and pay them the same as they would be paid but just in a not for profit setup?!?! Everyone's a winner babe...
Cameron has been talking about getting private and voluntary organisations involved in welfare for months. Purnell is just jumping on the bandwagon and trying to steal some publicity for himself.
Different faces, same old Labour.
Politicians come and go but the welfare state endures. We have periodic hand wringing, a flurry of new policies -and nothing changes,except that we have yet more people dependent on welfare programmes.
You don't have to be a conspiracy theorist to work out that this is by design. Politicians need a client base and the unemployed or 'disabled' as they now call them are that base.They certainly know how to keep their customers satisfied..
After immigration points, non-doms, inheritance tax, Norther Wreck (from Lib Dems) what will Gordon's next policy steal be? I'll open a book if Nick will allow!
* 5-4 Outlawing plastic bags
* 8-5 Committing to health spending rising
* 2-1 Withdrawing completely from Iraq
Others you'd like me to quote a price for?
Just more evidence that New Labour and the Tories are all but identical.
Do the maths Nick.
2million x £62,0000
124bn to be made if Mr Freud's calculations are correct.
I see people claiming that we already have job centres to do this, but if you go into a job centre, you'll find that most of the staff are there because they'd be unemployable anywhere else.
Use the money that these companies would get to improve the job centres we have. We need that expertise in-house, not contracted out.
I think we now know why the Government wants the Tories to spill the beans on all the detail of their policies well in advance of a general election: it's so they can pinch them. After all, Gordon adopted Ken Clarke's budget and Tony reversed virtually nothing of the Tories trade union reforms (if any, that is), so Labour has form in this. The major problem in this approach however is that without the philosophical underpinning that such policies require then they are bound to fail. Opportunistic Government isn't a great thing.
re: 10
PCS, one of the main unions for the DWP, has gone on strike twice over this issue, and pay (the government deal offering a 1% increase - over three years - to some of it's lower paid staff). It is going on strike again next month to attempt to ensure that no one will be no compulsive redundancies, an assurance the ministers concerned have repeatedly refused to give.
PCS has also spoken against putting these jobs into the hands of private companies. Unfortunately, people don't care if civil servants are made redundant, as long as they're not police, nurses or other front line staff.
OK, in cost-benefit terms we COULD spend £62k to create a job. However in budgetary terms we'd have to hypothecate the £62k per unemployed person before we got the 'job seeker' moved into employment. The result would be a massive real cash balance problem for the government.
Now I know Gordon, God bless him, thinks all these sort of problems can be solved by just upping taxes, but this won't wash. Shelling out £62k for every unemployed person is the equivalent of £99bn. Is this man seriously goling to hypothecate £99bn of tax take to line the pockets of 'get-rich-quick' wide boys?
I suppose it gives him someone else to blame, and in that sense is an easy option...
I worked for DWP for a number of years and am puzzled why James Purnell appears to be complaining that the department follows Whitehall 'diktat'. The department has no choice or control over the rules and methods it implements. Instead of encouraging new firms to try to profit from the unemployed, why not change the role of the DWP and use the real experts who already understand exactly what is required and are accustomed to applying it across the board, instead of the picking and choosing that will go on with private companies. The other point that James Purnell seems unable to grasp is that the real reason most people are unemployed again within 6 months is that the jobs are temporary. Has he never looked at the jobcentre website, job agencies or newspaper ads?
Dear Nick
I was made redundant 2 months ago, due to my job going overseas, when will this government realise that they cannot just create jobs for incentives, but should safe guard people’s jobs in the UK, I would rather see this money go to intensive retraining courses to allow people to fill jobs were there is a skill shortages, and give them the dignity they deserve.
The £62,000 comes from the NPV (net present value) of £9,000 at 3.5% over 8 years (a dubious assumption that once someone gets a job, this would be the average time they will stay in it). The £9,000 comes from the net benefit to the exchequer of getting tax revenue and paying less benefit.
I have modelled my situation using the same method. Returning me to work in IT at the rate I was on back before my career in IT was destroyed by the fraudulent use of work permits yield a NPV Benefit to the exchequer of over £500,000.
I am desperate to work, only need a relatively modest level of help, but I am refused it. When one is nearly 50, bankrupt, have spent time homeless and have mental health problems, there are no employers that will consider an application for any job when there are plenty of other candidates from home and abroad without such problems. I face being sentenced to a spell on a chain gang picking up dog mess because I am unwilling to take a training course for skills that I either already have or are at a level below that can demonstrate.
Free lottery tickets are more likely to provide the help people need than anything that this government is going to do. Failing that, can we have the option of euthanasia? Let us escape suffering under this regime with a bit of dignity rather than a messy suicide. It would be the greatest benefit to the exchequer.
I often wish that I could drag back each voter one by one, and show them exactly why tony benn, dennis skinner, etc are conviction politicians.
Ive never voted labour, and after the last 10 years, probably never would.
but old labour, was honest, they werent afraid to reveal their plans and policies, and agree with them or not, they presented them with openess, and stood by them and their beliefs.
I thought blair was sneaky and underhand, untrustworthy, with nothing about him, but on a daily basis, gordon brown bounces around with his pinball government, creating policies that come from unelected advisors that only see the profit or the positive statistic that will arise from it.
Labour MPs dont even have the foresight to question what might happen once the policy has been brought in.
This negligence astounds me!
they open up the UK borders, then are totally lost as to why the nhs, education, housing, jobs market, benefits system, etc, are in complete disarray. did nobody in the labour party actually think about the effect of their policies?
Today's labour MPs dont have any convictions or scruples about them, they rightly have the tag of "yes" people.
they voted to close hospitals and post offices, then campaign with people locally to keep them open.
they appear to be more worried about losing their jobs and status, than changing things for the better, for the majority of people in the UK.
no wonder voters are disillusioned.
How about giving a £100 per week payment to small employers per employee. YTS worked very well in the past and was relatively extremely cheap.
A 5 year tax holiday day for low payed workers, would also help far more then just lining the pockets of Ron Cohen and his chums.
If this glorious stroke of genius works, why, we can try the same trick elsewhere! Mr Bin Laden, how much do you want to leave us alone? £679bn? Cheap at the price - and the taxpayer will fork out.
There is a malaise in British policy making which seems to make the rational, measured and detailed proposals to deal with our problems wholly less attractive to politicians than the novel, grand scheme doomed to failure.
In particular Labour seems to be wedded to the notion that we can bribe our way out of problems. Too many unemployed? Let's bribe employers to take them. Can it be too long before some dashing young policy wonk comes up with the idea of bribing recidivist criminals not to commit crimes? No, no...I didn't mean it - please forget it Mr Brown.
We all know how the government helps the poor. They remove the 10% income tax band which increases the tax burden by £223 per year. Thanks for nothing Gordon Gloom and your useless bunch of no hopers.
Its ok though to subsidise the life style of those who don't want to work and never made any contribution to the UK economy with generous handouts. They probably let the poor and the pensioners pay for it
Bring on the election and lets get rid of them.
Fact. Thatch put us working class back in our place. ... new 'LABOUR'.... Good grief. My Grandad is now spinning in his Grave. Blair/Brown, Hells teeth.
Its a great boon for private enterprise (but I wager most of the deal has already been "allocated" to friends in advance of the official "market opportunity" being announced (and just WHERE are the full regs and details?).....but the other side of this coin is why not dismantle the sad and sorry state attemtpt at job-placement altogether and privatise the lot!
I don't care how much he is paid - I just want a job. I am fit and healthy and I am having a lot of trouble finding one. The reason I am having trouble - I am 59.
Ok how often do you do this:-
Today, on a visit to a job placement centre in Newham, I asked Purnell whether he was happy for people to get rich
Don't patronise us like you're trying to do to him. It only takes one serious incident in your life to put you in the same position.
Make no mistake about it Nick you are right when you say that those of us on the left who expected more from a Brown administration than we ever got from ten years of Blair are feeling abused and amused.Gordon Brown when in opposition sounded like a left wing firebrand in the scottish tradition who if given the chance would introduce socialist policies to counteract the years of Thatcher and Major rule in this country.No chance , he like Blair before him is only interested in power and holding on to it.It is now the Lib Dems who are to the left in British politics and if I follow my own conscience I will vote for them in future even knowing they have no chance of winning outright.
No democracy, just corporatocracy
Parliament the biggest gag in town still.
Initiatives from the hollow democracy of the states - corrupt , self serving unaccountable swines in the trough - working the old system saddling up with business for short term and selling our futures...
Presumably the £62 takes into account al the extra VAT a person will pay over a lifetime in work.
Can an unemployed person sue these service providers if they are harmed by their failure to provide safe employment?
Has anyone looked across the water at the Fosse scheme in Ireland? not sure of the details but both near retirement friends and young family members have had various training opportunities through this. and most of the admin. is done by course members. Getting involved in a scheme is considered a feather in your cap. i think you have a minimum of six months, and you have to attend to get your benefits.
as a parent i wish you had given me some of that cash, to prop up the family coffers whilst my highly principled (no worry Mum, i'll get something in a week or two, i won't sign on) children found their feet.
It is wonderful to see the young, and not so young people of all nations come here (Greece) in the summer and work hard for little money and long hours.
so perhaps the government needs to buy an island in the sun, staff it with the unemployed and allow all the elderly free two week holiday a year. well, one can only suggest ... j.k.
It is Tories.
Apostrophes aren't for plurals!!!!!!!!!!!!!!!!!!
The unemployed should all start employing each other for 18 months.
The £62,000 per benefit jockey would be far better spent getting Britain,s industries back up to speed. "Trade and Industry" is not on the list of Government Departments right now. Maybe if the Mandarins in Whitehall would deign to sully their hands with this part of their resonsibilities we would have less factories closing down, loes jobs being exported to low /slave wage economies, less people haveing to live lives without any real hope of meaningfull employment.
If anyone wants my wheelchair and conditions in exchange for the £60 a week I get from the state.
If they would like to be fed via a tube into their stomach as I an for 10 hours a day I will throw in my blue parking badge.
We are not disabled by our impairments but by the built environment; there are laws such as Part M of the building regulations to make our built environment accessible but a large number of contractors ignore this legislation to make more profit.
Profit sadly wins every time? Some 500 new housing developments [£180 to £250] were visited the other week but only 7% complied with Part M of the building regulations.
HIPS
The title is 'Getting people back to work'; I was made redundant in November 2006 at the age of 57. At that age no company wants to know, so I decided to become a Home Inspector. This cost me most of my meagre redundancy (the government minimum) so I also had to downsize on my home to enable me to support my wife and myself. The sales pitch at the interview was overwhelming, so in I jumped trusting this government to to the right thing (I wish to add, I've been a labour supporter all my life). They now appear to have dropped the most important part of the HIP; the Home Condition Report. I have trained for a year now, passed all the exams plus the ABBE exam but it seems to be a waste of time. This government is 'all talk and no trousers'. Mind you the other lot will probably scrap it anyway, if they get into power (god forbid).
There's no doubt that the welfare system needs to be reformed but the side-lining of a public service (or socially driven) ethos in favour of private sector companies becoming extremely wealthy on the back of public money just won't wash any longer. Incentive-based payments are bound to produce this outcome. The public have had enough of it. They feel fleeced already. The political mood music is changing and we (Labour) seem to be out of step. I write as somebody who has actually worked in the private sector for good and poor companies (unlike Mr Purnell). I am not anti-business but neither do I think the private sector has all the answers.
£62k is worth spending on getting someone into work, when the person going back to work will be paid about £11-12k per year?
Why not top up the workers wage so that they are earning arounf £15-16k per year and then I'm sure more people would willingly go back to work anyway - and stay there.
Hard on the heels of 30,000 job losses comes the news that in the next 3 years, a further 12,000 DWP jobs are to go - mostly from Jobcentre Plus. Year on year 5% cuts in budget are expected and output is expected to increase by 20%. Work focussed interviews initially for those on Incapacity Benefit are going to the private sector, no doubt to be closely followed by those on New Deal as well. The public are going to have to face the fact that if they become unemployed, there will be little a jobcentre can offer them. As the ageing workers from Jobcentre Plus either retire or fall over under the ever increasing burden of targets they can't possibly meet, a once fine service will morph into a shadow of its former self. For years ministers have tried to involve the private sector in areas of DWP work. They always end up as costly debacles, but of course never feature on DWP accounts.And by the way, year on year DWP accounts are always qualified, so who knows what is true and what is false? The reality is you get what you pay for - either civil servants, generally low paid but with high standards of values, fairness and probity or the private sector motivated by profit. If you were unemployed which would YOU chose?
Andy @ No 2 has it. Well put.
See Labour has now adopted a version of the Toires immigration plan which at the last election
new Labour has no policies and never did have any..they just stole the Tory's and are still at it.
Doesn't say much about the public's appetite for a real Labour government that this quasi Tory one has to keep changing policy back to Tory policy just to keep the pollsters happy.
Dither, dither I'm all a-quiver at the vascillations of the great leader and his non-party.
There is talk recently about poverty here in Britain, are we sure we know what poverty is ? Real poverty is, no home, no food, no clothes, as experienced by peoples around the world, poverty is not the lack of a plasma TV, expensive training shoes or other gadgets. If there is poverty in Britain then it is purely relative and a wider issue than the acquisition of goods; poverty of direction; hope and future are all rampant. Fundamental changes have robbed us of the certainty of a life plan that was available to many (but never all). Unless we are able as a nation to realise that we have to know what we want, who we are, and how we are going to move towards a rebuild of society, we will remain a failing nation. There is little point in people in ivory towers (who are often not the experts that they think they are, and that the establishment holds them to be) ranting about the situation unless they are prepared to work on the solution, we need education, and employment and a life plan for everybody at every level, not ignorance dressed in long words.
We need a modern workable future not a return to some point in the past that probably never existed.
There remain about 5 million unemployed people in this country who need real work (not schemes, part time work and 0 hours agency work). We could open factories and start to produce the things that we need rather than import so much. A sense of pride comes from a sense of belonging, which requires a model of society with which to engage and belong to. We have squandered our inheritance and we are failing our children via the delusion of a sophisticated society, provided by the systematic removal of the social framework over the last 30 years. We have a soporific horror story that can only be rewritten if we admit that what we have is not working and that key changes to law and of decision makers (at all levels) are required. We have difficult choices to make if the patient is to live. Our children need a future to aspire to, not yet another new pair of training shoes, often made by children who know the real meaning of poverty.
This model for utopia gifted to us by the Americans is bankrupt.
I have a good idea, when someone says they cant work, why dont we invent a scheme whereby they dont have to work, just get the employed to pay them to sit on their backside all day smoking and drinking?
They wouldn't have to work for the money at all.
Oh, I forgot, we already have this policy.
Perhaps then we should have companies which are formed by the government and run privately to do the sort of work that no one else in the country appears to want to tackle, like rubbish picking from our countryside, and removal of graffiti and chewing gum from our streets.
The people on the dole or incapacity benefit but can actually work, should not get a cent unless they opt into one of the affiliated schemes.
They would only be paid their dole money and they would have to meet targets while performing their 'temporary' job.
There should be career possibilities on these schemes to allow people to benefit from their experience while working in these schemes. If they work hard, they could be promoted to more senior positions and paid more, but there should be a basic position in all schemes that 'anyone' can do for the basic wage.
If this removed 99% of claimants from the dole due to them finding better jobs, it would still leave us with at least 1/2 million dole claimants but they would be benefiting society and themselves.
Anyone not opting into these schemes would be taken off the dole and incapacity benefit.
Um ... I'd be a lot more confident of David Freud's judgement on what's 'economically rational' if he hadn't just told every potential bidder for the tender the *maximum* amount the government is willing to pay.