More reasons why the Tories should release a second Freud Review
Peter Hoskin 2:32pm
One of the more under-the-radar, but most significant, news stories of the day is Theresa May's suggestion that the Tories may change the terms of contracts currently being hammered out between the government and welfare-to-work providers:
The FT adds that one of the changes might be "smaller upfront payments" for the welfare providers."'If contracts have not been signed one of the things I’m looking at is making the changes we want to those contracts quickly, so that we would be operating on our welfare reform proposals rather than the government’s,' she said."
Why so significant? Well, because it highlights perhaps the main dilemma that the Tories face on welfare reform. On the one hand, it's perfectly understandable why they want to cut costs. This is the Age of Austerity, after all, and earlier welfare contracts seriously overestimated the ability of welfare-to-work providers to get claimants back into work during an economic downturn. On the other hand, welfare-to-work providers are already losing money on existing contracts and are worried about the willingness of banks to extend their overdrafts, so a cut in upfront payments could dissuade them from getting involved at all.
One option, of course, is to say to hell with the welfare-to-work providers: if they can't abide smaller payments, then they should just get out of the game. But that risks stopping the welfare reform agenda in its tracks; an agenda which - while it hasn't been as successful as many would have hoped during the recession - is still superior to more centralised alternatives and will become even more crucial in the post-recession years. A balance clearly needs to be struck.
To my mind, all this just increases the necessity for a second Freud Review. Not only is one needed to reframe Freud's original proposals for the new economic landscape, but it would also reassure welfare-to-work providers about the Tories' direction of travel. In view of Michael Gove’s comments earlier, welfare reform is actually one of the two areas (along with schools reform) where the Tories have already put "flesh on the bones". Now they need to coat that flesh with some skin.
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Rhoda Klapp
August 3rd, 2009 3:12pm Report this commentOne of the evils of the modern day is the presence of commercial enterprises created solely to get monopolistic government contracts.
It occurs to me that quite often the use of revolving-door well-connected civil servants or council employees is instrumental in getting the contract, combined with an ability to fill in those oh-so-well-meant forms about equal opportunities and all that stuff which act to disqualify any firm which doesn't answer in the right tone.
If you've ever gone for a council or govt contract and been deterred by a requirement to write at length about how you have policies for this that and the other (most of which are legal requirements in any case) you'll know what I mean.
Anyway, it stinks.
JR
August 3rd, 2009 4:02pm Report this commentI couldn't agree more. The market, at least in the face of an economic downturn, has rejected Freud's model of welfare provision. I've always advocated letting these companies go to the wall if and when they failed but that has consequences of its own.
The Conservative welfare plans aren't worth the paper they're written on at the moment because they and Freud assumed the boom times for ever model and all the costings were based on that.
And to those who I'm sure will be calling for "tough measures" on this thread - these are the elements (compelling people to voluntary service, community work) that companies both here and in the US demand most money to administer.
John Page
August 3rd, 2009 10:34pm Report this commentBut this is only one corner of the benefits morass. See today's Centre for policy Studies report on Simplifying the Benefits System. Now *that's* a challenge - and could go some way to cutting the £2bn+ lost in benefits fraud every year.
ukbix
August 4th, 2009 10:03am Report this commentthinking about it, I think the best move freud could make would be to announce he made a total mistake, and that the reforms should be scrapped, as he had no idea what he was talking about.
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