Address to welfare providers

A speech by the Rt Hon Chris Grayling MP, Minister for Employment.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
The Rt Hon Chris Grayling MP

Ladies and Gentlemen, thank you for coming. David Freud and I are looking forward to working with you and wanted to take an early opportunity to talk to you and share our early thoughts.

It is a great pleasure to be talking to you all again this morning. Many of you will remember my commitment when we were in opposition to transforming the welfare to work landscape in this country.

And I want to start with is a message to you and all of your teams. There is a massive amount of expertise in this country that we want to capture. What we plan to do over the next few months should provide greater incentives for more groups to work together with the common goal of getting more people back into work. And it should allow us to free up all the expertise that exists within the sector so we can start to make a real difference to the lives of people trapped in poverty and welfare dependency.

We’ve got a simple mission.

To end the debilitating cycle of worklessness and give people back control of their lives to aspire for something better for their families.

There are too many places in this country, I’ve been to some of them, with some of the people in this audience, where there is long-term, endemic welfare dependency sitting only a short distance, sometimes literally only a short walk from areas of employment, prosperity and opportunity.

The benefits system that was set up to support those worst off is too often preventing them from finding their own route out of poverty. Instead of helping people take their opportunities, too often the system creates more barriers to prevent people from making the most of their lives.

For example, the complex system of rules around voluntary work and part-time jobs can actually be a major hindrance to those who want to gain skills and experience. While the instantaneous loss of benefits when someone does find a job often makes moving into work more difficult, and not less.

My job, our job, is to try to change that.

The election has ushered in a new world, not just in political terms with the formation of a new coalition government, but in financial terms as we seek to bring the huge public sector deficit under control, and in social terms as we recognise and encourage those who work hard for the good of their communities, and in employment terms as we tackle the jobs crisis and help millions of unemployed people get back into work. I want to see, as we begin to see the economy recover, far, far more people this time coming off benefits and into work.

A new government brings a new approach to this challenge, a renewed enthusiasm for helping the most vulnerable and a new set of policies and ideas to take this forward.

An election always brings change, and this new form of coalition government has been a big change for all of us, but it does not have to mean uncertainty. When it comes to welfare reform, our plans have been visible and are long established.

This is a new world, and whilst these plans are radical they should come as no surprise.

I already know many of you, I’ve visited your premises, and I’ve witnessed first hand the excellent work you do with some of the hardest to help. Indeed, your successes have fed into much of our thinking around welfare policy.

Indeed Lord Freud has worked on this brief far longer than I have. He knows this sector better than most and he has set out time and again how he believes we can do more to help those who need it.

And Iain Duncan Smith has also been at the heart of this agenda, his Centre for Social Justice has challenged us all to think differently about poverty, and challenged us all to think about its causes and its solutions.

The policies are radical, and there will be some changes to make over the next few months, but many of the plans we want to implement are the very changes you have said we should make. For example, greater freedom to give people the support they need rather than prescribing one-size-fits-all programmes from the centre. We have seen all of that and we don’t think it worked.

You will, I am sure, have seen in the coalition agreement the commitment to create a single Work Programme, to re-assess all the people on Incapacity Benefits, and to carry out root and branch reform of the benefits system.

They are the priorities laid out in the Conservative manifesto, but we have been talking about these changes for years.

In January 2008 we published a Welfare to Work paper setting out plans to create a simplified system, setting out plans to deal with some of the challenges in the welfare environment.

We set out our intentions to pursue a payment by results welfare policy with higher payments for the hardest to help.

And right at the top of our priority list is transformational change in this sector over the next few years: the desire to push ahead with plans to help the 2.6m on ESA and incapacity benefits. Just over a quarter have been on this benefit for the last 12 years, which is a personal tragedy for them and a personal tragedy for the community they live in butthat’s why we need to work in partnership to ensure we do all we can to improve the lives of those that are able to work and to make sure we provide programmes that help them enough so that they are able to return to work.

I do understand the anxiety as we change Government and you wait for the detail to emerge, but there should be no uncertainty about our plans, and no uncertainty about our direction of travel.  

My first task in my new job, with the new Secretary of State’s blessing, has been to work out how we can make those plans a reality.

This is not change for the sake of it and it’s not a re-branding of the failures of the past. The changes we want to make are a radical overhaul of the way we support some of the most vulnerable people in society, how we tackle poverty by getting people jobs, how we stop the cycle of worklessness in some of our most deprived communities - how we make our society better.

What I want to say to you today is what I have said to you all along - private and voluntary sector organisations are essential providers of back to work support for those who are struggling to make the most of their lives that is why we are holding this event, that is why we wanted to talk to you as soon as possible.

Our plans will continue to use your expertise and knowledge to support people back into work. Specialist intensive provision is not a job for government, it never has been, and it will not be under this Government.

Government’s role must be to deliver the support people need and to do that we will be making rapid changes to the way we contract this work, putting in place a bigger, more ambitious, longer term contract structure for the industry.

We are working through the details of the new contracting approach, and want to use today to involve you in that work. We will then publish those details as quickly as possible so we can get things moving and on the back of this event we will be talking to you individually.

For me there are four key elements to that approach which I want to set out for you this morning.

First of all, to reiterate, there will be a radical simplification of the back to work system. We will end the complexity of what has been on offer over the past decade, and we will leave it to you to take the best possible approach for each claimant. No more centrally designed welfare to work programmes.

Secondly, we understand the need to balance risk and reward - and we will follow a route that reflects this. We will have a pricing system that reflects the differing nature of the challenges you face. But if we are to get rid of the micromanagement of programmes that has dogged progress over the past decade, then we need to maximise the likelihood of success. So our approach will be heavily based around the principle of payment by results - not just to place people in work, but to keep them there.

Thirdly, we will contract with you over periods of time that allow you to invest and secure a proper return for that investment.

Finally, those organisations that play a leading role in this sector in the future will have to be able to demonstrate the capital strength to take on the risks inherent in a heavily outcome-based approach where we seek to deal with the cases of millions of people on out of work benefits. In particular that means being able to deal with the work we plan to address the issue of the 2.6 million people on incapacity benefits.

We know there will be challenges, we know this kind of radical change is never going to be easy and I am well aware that this will mean some disruption for you as we move rapidly to this new world. But it is a real opportunity, what will be there will be much bigger than what has been there in the past.

But we will do our best to minimise the downsides - and I hope that you will all be willing to adapt and change to maximise the potential that lies ahead.

I also want to reassure you today that, so long as you deliver successfully, there will always be a place for private and voluntary sector organisations in the provision of welfare in the UK. We see the presence of the voluntary sector and small local groups as central to what we do and the structures we put in place encourage small providers.

I know from the time I spent in opposition, visiting some of the most deprived areas in the country, that it is often the very small, specialist groups that are doing some of the most difficult and important work.

And it does make a difference, I have seen it, I have visited small community based support groups in the Welsh Valleys, or the work football clubs are doing with the unemployed in Liverpool and Glasgow.

This new approach will mean more opportunities at every level and with a payment by results system that recognises the intensive work needed to help those who have the greatest barriers.

We want to design a contracting system that encourages the big firms to contract out, that recognises the incredible work organisations like yours do, whether big players like Tomorrow’s People or those smaller providers with those who need intensive support.

There is much work to do to make these changes happen.

But also an incredible opportunity for you, for us, to be at the forefront of reshaping this sector.

Today, is about setting out first principles, it’s about starting the discussion, it’s about making things happen.

It’s a tremendous opportunity and it is an exciting time for change. This is the moment to grasp the dawn of a new way of working for a better world - and I hope that you will all be joining us on the journey.

Published 2 June 2010