The risk of industrial action by civil servants was highlighted by marketing guru Mike Sommers who joined the departmental board of the Department for Work and Pensions (DWP) as a non executive director back in 2002.
Speaking at the Institute of Risk Management’s Risk Leaders Conference on 19 November,[1] he pointed out that the DWP costs around £7bn to run and is staring at cuts to the tune of 40%. With Ian Duncan Smith’s plans for welfare reform looking ambitious at best, there will be huge amounts of pressure on a reduced workforce to deliver the promised simplification of the benefits system along with the incentives to ‘make work pay.’
The DWP’s welfare white paper published on 12 November can now be viewed, along with a useful summary on the DWP website.[2] The report states that Comprehensive Spending Review set aside £2bn to fund the implementation over the spending review period and that the greater simiplicity of Universal Credit will lead to administrative savings of more than £0.5bn per annum in the longer term.[3]
The government expects 2.5 million people to be better off under the new Universal Credit because the financial rewards for entering work will improve, especially for those on low earnings.
Nigel Meager, director of the Institute for Employment Studies observed:
“The paper makes clear that more will be expected from those who are out of work, including lone parents with young children as well as some of those out of work due to ill-health. A central proposal is the new ‘claimant commitment’ with tough sanctions for those who refuse to engage with activity to prepare for work, or who refuse the offer of a job or placement.
“The paper trails the introduction of Mandatory Work Activity, four weeks of full-time work activity for some claimants. The principle of providing useful work-related activity to those long-term unemployed who have not yet been able to find a 'real job' is a well-established part of UK welfare policy, going back at least as far as the Community Programme in the 1980s. Evidence from similar initiatives in the UK and elsewhere do, however, suggest that there are some risks to such an approach: in particular, to be of real benefit to the unemployed, and to add credibility to their CVs in the eyes of employers, the activities need to be as similar as possible to 'real jobs'. However, if they are too similar, there is a risk that they will displace real jobs, undercutting with free or cheap labour, activities which would otherwise be undertaken by employees of public or private sector organisations. It is easy to imagine that, in the current climate of financial stringency, local authorities and others will be tempted to substitute 'volunteers' to cover the activities of redundant public servants.”
Meager goes on to point out that the private sector might not be able to generate enough jobs to absorb this additional influx into the workforce:
"The real test of the policy will be how it functions on the ground, and its impact will not be fully clear for at least another decade. It is clear, however, that these reforms rely entirely on supply-side interventions; encouraging or compelling those out of work to take the available jobs. As the country slowly emerges from the deepest recession in living memory, and job losses in the public sector begin to bite, the main challenge will be whether sufficient numbers of new jobs can be created in the private sector to provide opportunities for the workless groups targeted by the welfare reform.”
[1] ‘Snakes in Suits, are there psychopaths in your boardroom?’ by Holly Andrew in The People Bulletin, 10 November 2010
[2] www.dwp.gov.uk/newsroom/press-releases/2010/nov-2010/dwp153-10-111110.shtml
[3] ‘Long-term benefit claimants face forced internships’ in The People Bulletin, 10 November 2010.