Resource constraints?
67. We heard evidence that financial reasons might
lie behind the apparently indefinite suspension of BoND. Dave
Simmonds of Inclusion told us that "we have to see
it as a direct casualty of the tough settlements for DWP and Jobcentre
Plus as part of the CSR [Comprehensive Spending Review]."[65]
Patrick Grattan of TAEN/Help the Aged agreed that "resource
constraints" might lie behind the demise of the programme.[66]
68. Witnesses told us that, if successful, BOND would
not be more costly, and would eventually save the exchequer money.
Dave Simmonds of Inclusion told us, "[w]e still dispute
the fact that it [BOND] would actually cost more money; we have
not seen any conclusive evidence from the department as to why
it should cost more money."[67]
Professor Paul Gregg told us that flexible provision need not
cost more: "if it is successful in the sense of meeting individual
needs, and the caseworker is incentivised in order to move that
person to work effectively, I would see absolutely no reason why
it should be more costly."[68]
69. DWP expenditure falls into two categories:
- Departmental Expenditure Limit
(DEL) spending, which is planned and controlled on a three year
basis in Spending Reviews.[69]
DEL includes spending on employment programmes such as the New
Deals; and
- Annually Managed Expenditure (AME), which is
"expenditure which cannot reasonably be subject to firm,
multi-year limits in the same way as DEL." AME includes
expenditure on social security benefits.[70]
70. If spending on social security benefits falls,
for example, because of a reduction in the claimant count, this
money is not available to DWP to spend on its employment programmes,
expenditure for which is set in the spending review process. The
HM Treasury website explains that:
"Departments have certainty over the budgetary
allocation over the medium term and these multi-year DEL plans
are strictly enforced. Departments are expected to prioritise
competing pressures and fund these within their overall annual
limits, as set in Spending Reviews. So the DEL system provides
a strong incentive to control costs and maximise value for money."[71]
71. We asked Jim Murphy whether there had been any
progress in persuading the Treasury to allow savings from benefits
to be recycled to pay for programmes. He told us:
"On incapacity benefit customers we have got
an agreement in principle from the Treasury to use the success
that we see through Pathways, with the opportunity and the legal
framework that the Welfare Reform Bill provides, to support a
million people off incapacity benefit over a decade. There is
the agreement in principle now in place to enable that recycling
of benefit savings so that that can be invested in further success.
That is a real shift in terms of how we fund and incentivise
the welfare system and the welfare market. If we establish that
on a successful basis there is no reason why in theory it could
not be extended to other customer groups."[72]
72. He also told us that he hoped a similar agreement
could be reached about the Cities Strategy programme:
"Quite reasonably, the Treasury - to argue their
case for a moment - hears ten proposals a week, I suspect, which
say, 'Honestly, this will save you money' and we have got to prove
through the Pathways success and the recycling of benefits and
reinvesting that money from the success of Pathways that can then
be taken across to reinvest in the savings of the Cities Strategy
consortia."[73]
73. The
Committee is concerned that, apparently, no progress has been
made in piloting BoND and concludes that there is a lack of clarity
in the information the DWP has provided on what has happened to
the programme and the extent to which delays were the result of
resource constraints. We ask for an explanation in response to
this report.
74. We welcome
the agreement to pilot re-using benefit savings as part of Pathways,
and recommend that the DWP continue to press the Treasury to allow
further pilots of this in the Cities Strategy. We consider that
the ability to re-use benefit savings will encourage the DWP to
innovate, and consider that, if successful, it should be introduced
across the DWP's employment programmes in future.
Taking forward the principles
behind BoND
75. Witnesses told us that the DWP still seemed to
be committed to the principles that lay behind the BoND proposals.
Dave Simmonds of Inclusion told us:
"I do not think that the department, from what
I have heard, has actually rowed back on the fundamental principles
on which BoND is based, and that is introducing far more flexibility
into the system, introducing the menu-based approach so that individuals
and personal advisers together can pick and choose. [
] How
they are introduced in the future, whether or not it is called
BoND or something else, we do not particularly care, as long as
the system as a whole is progressively freed up in one way or
another [
] let us look at in 2007 the best way for strengthening
the New Deals and introducing more flexibility and ending the
one-size fits all."[74]
76. There were also suggestions that the Cities Strategy
would be a good opportunity to take forward the principles behind
BoND. Paul Gregg told us that "the idea of the City Strategies
running that personalised welfare service makes a lot of sense,
as long as the funding rules can be sorted out [
] We should
try it in certain places in order to get it moving, and city strategies
could be one of those."[75]
Cities Strategies are looked at in more detail later in the report.
77. Evidence
to this inquiry has led us to conclude that there would be clear
advantages in allowing greater flexibility in employment programmes
to respond to individual needs and local labour market conditions.
We recommend that the DWP pilot BoND, or a programme based on
the same principles, as soon as possible, and also incorporate
those principles into the Cities Strategy.
38 Ev 242 Back
39
See, for example, Ev 179, Q 4, Q 114. Back
40
HM Treasury and Department for Work and Pensions, Full employment
in every region, TSO, December 2003, p 24 Back
41
See for example Qq 4, 6, Q 224 [Mr Simmonds], Q 272 [Ms Oppenheim,
Mr Gaffney], Back
42
Ev 179 Back
43
Q 4 Back
44
Q 114 Back
45
HM Treasury, Full employment in every region, p 23 Back
46
Ev 330 Back
47
Department for Work and Pensions, Building on the New Deal:
Local solutions meeting individual needs, June 2004, p 5 Back
48
Department for Work and Pensions, Building on the New Deal,
page 8 Back
49
Department for Work and Pensions, Building on the New Deal,
page 7 Back
50
www.jobcentreplus.gov.uk, New Deal 50 Plus Back
51
Q 224 Back
52
Q 306 Back
53
Q 306 Back
54
Work and Pensions Select Committee, Third Report of Session 2001-2,
The Government's Employment Strategy, HC 815, para 84 Back
55
"Minister unveils new deal evolution plans", DWP Press
Release, 17 June 2004 Back
56
Department for Work and Pensions, Building on the New Deal:
Local solutions meeting individual needs, page 15 Back
57
"Jobcentre Plus contracting/Building on the New Deal - Announcement
Update", DWP Notice to Partner Organisations, September 2005 Back
58
Work and Pensions Select Committee, Second Report of Session 2005-06,
The Efficiency Savings Programme in Jobcentre Plus, HC
834, para 287 Back
59
Work and Pensions Select Committee, Second Special Report of Session
2005-06, The Efficiency Savings Programme in Jobcentre Plus:
Government Response to the Committee's Second Report of Session
2005-06 , HC 1187, p 20 Back
60
HC Deb, 6 June 2006, col 1686W Back
61
Q 129 Back
62
Q 129 Back
63
Q 226 Back
64
Q 444 Back
65
Q 226 Back
66
Q 129 Back
67
Q 226 Back
68
Q 308 Back
69
http://www.hm-treasury.gov.uk, Spending Review. Back
70
http://www.hm-treasury.gov.uk, Spending Review. Back
71
http://www.hm-treasury.gov.uk, Spending Review. Back
72
Q 447 Back
73
Q 486 Back
74
Q 226 Back
75
Qq 311, 313 Back