Is the Work Programme working?

School and welfare reform are the signature missions of David Cameron’s government – but is welfare going wrong? Labour is crowing that today’s figures from the Work and Pensions department on welfare-to-work show it’s a failure. I’ve just come back from a DWP briefing with Chris Grayling, the minister responsible, and thought Coffee Housers would be interested in his take.

It was Labour who first involved private companies into welfare-to-work, and the coalition has continued it – but pressed the reset button. Their scheme is called the Work Programme, the largest welfare-to-work programme on the planet with 750,000 clients. It means the government pays a £4,000 fee to a company that can place someone with a job for 18 months. This is paid in £400 at the start, £1,200 if the subject is still in a job in six months and the rest in 18 months.

The DWP has today released the figures 36 weeks in, and they show that 25 per cent of those who enrolled have dropped off welfare completely. But Grayling told me he was confident that it would hit 36 per cent in 24 months: this is the overall aim. He showed me a graph, below, indicating that things are heading in the right direction.



Now, is this impressive? Grayling says the above is a greater success than any previous labour market intervention the DWP has tried. Labour’s equivalent, he said, was called the Flexible New Deal. The verdict is here. With £770 million spent, it left 50,000 people still working after six months – at a cost of £15,400 each. This Work Programme is almost a quarter of the cost.

So does the Work Programme work? The horrible answer is that it’s hard to tell. It’s encouraging that 25 per cent of those enrolled were off benefits, but this could be because those who were doing cash-in-hand work as well as claiming dole decided that scamming the system wasn’t possible anymore. Either way, they’re off the public payroll.

What we don’t know is what percentage would have been expected to have drop off welfare without being on the Work Programme. The last analysis the DWP produced, on the work experience, was meaningful because it had a control group. It proved that 46 per cent found jobs after the work experience programme (costing the government £300 each) and that 40 per cent did so without work experience. So it makes a marked, if not seismic, difference. There is no such counterfactual with the Work Programme because everyone on long-term unemployment is on it.

I’m an enthusiastic advocate of welfare reform (of both the Labour version, and the Tory version now). But if UK welfare reform has taught us anything, it’s not to read too much into the early results of new programmes. Grayling is not claiming that his programme is a roaring success, just that early results are encouraging. From the studies released today, I’d say that’s a fair assessment.