The guiding principle of the Government’s welfare reform agenda is that work is the surest route out of poverty. We champion this principle at the Centre for Social Justice (CSJ), and that is why we designed Universal Credit to make sure that work always pays. It is vital that people get the help they need when making that journey from welfare into work.
However, if we want people to make that transition, it is essential that government provides the right support. In our latest report, Up to the Job? we question whether Jobcentre Plus (JCP) is providing the service that claimants, businesses and taxpayers need.
One of the key problems with JCP is that it only measures how quickly a claim for benefits is closed. On the face of it, this seems sensible, but what this measure fails to grasp is whether people move into work, claim another benefit or just stop claiming benefits altogether. Based on this measure, the JCP does perform well (75 per cent stop claiming within six months and 90 per cent within a year) but it ignores the high levels of churn in the system with many claimants constantly cycling in and out of work.
Some 40 per of people who leave Jobseeker’s Allowance (JSA) will reclaim benefits within six months and 60 per cent will reclaim benefits within two years. Put simply, JCP fails to monitor how many people they are actually helping into work and it is also not particularly successful in finding people sustainable employment. This urgently needs to be reformed because it is bad for taxpayers (estimates show that £520m could be saved) and even worse for claimants.
We also heard that 25 per cent of referrals to the Work Programme, who by definition have been with JCP for 9-12 months, still lack an up-to-date CV. There were other examples of JCP not knowing that claimants were homeless despite ‘working’ with them for months. Indeed, this service has even led one charity to setup their own system of supported housing and employment support which bypasses JCP altogether.JCP needs to work with businesses and charities effectively so that they find as many vacancies as possible in their local area and match jobseekers with the right skills. Disappointingly, this was not what we saw. Small businesses are the lifeblood of the British economy and make up 80 per cent of UK employers.
According to the Federation of Small Businesses, however, only 20 per cent use JCP and only one in six rate the service as effective or very effective. It is crucial that JCP is fully engaged with local businesses and that it is providing training for unemployed people who with the right help, could move into work. Only 6 per cent of all JCP staff are tasked with engaging businesses and that needs to change.
The recommendations we have made to reform JCP would improve the service significantly. By adopting the internationally recognised Australian model, we believe Britain can reap the rewards in a similar way. In a major study, the OECD said that this system was one of the main factors in explaining why Australia has had the highest annual employment rate in the G7 and G20 since 2009.
It also has a lower unemployment rate than the UK, Germany and US. From day one of your claim in Australia, you are fully assessed to work out what support is required to get you back to work and then you receive assistance from the best providers in the private and voluntary sector. Providers are only paid on the results they achieve but the evidence is quite clear, these providers are delivering and helping people back to work. By implementing what we have proposed, the UK can help many more people find meaningful and sustainable work. That, surely, would be good for everyone.