Welfare-to-Work

New Labour and the US Experience

Andreas Cebulla

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9780815398974
• eBook ISBN: 9781351143141
• Edition: 1
• Topic: Economics
• Subtopic: Political Economy
• Index: Economics

There has been a major transformation in labour market policy in the United Kingdom since the mid 1990s. The obligation of unemployed people to actively seek employment has been strengthened and the receipt of social security benefit has been tied to participation in active job search and job placement programmes. The experience of the United States in experimenting with and implementing welfare to work programmes, dating back to the early 1980s, has been pivotal in shaping labour market and welfare reform programmes in the UK. In this timely work the authors track the influence of US ideology and experience on New Labour's reforms. They present the results of their pioneering examination of over fifty policy experiments in the US, checking whether the correct lessons were learned. An interview-based study of what British policy makers actually used from US experience builds upon this analysis and the book draws US and UK experiences together to understand what kind of programmes work most effectively for which groups. Welfare-to-Work offers readers a unique combination of policy evaluation and the analysis of policy making.

Chapter 1
Welfare, Work and Welfare-to-Work in the UK

Andreas Cebulla and Robert Walker

Changing Welfare Policy in the UK

Welfare - defined to include social security and social assistance provision and its relationship to the labour market - and its reform have been recurrent themes in political and public debate in the United Kingdom since the early 1980s. After wholesale restructuring and ‘salami-cutting’ of provision under Conservative governments, welfare reform was at the heart of the electoral campaign of the rejuvenated New Labour Party elected to power in 1997. By championing a modernized political agenda, the Labour Party was able to shake off the public image of a party adhering to an outdated ‘Old Left’ ideology that had been a major obstacle to the party’s re-election into government. In particular, plans to modernize welfare were used in support of Labour’s claim that it could successfully manage the economy, a policy domain on which the Conservative Party had traditionally enjoyed a competitive advantage. The origins of these policies on welfare have fascinated political commentators and been the subject of largely inconclusive academic and journalistic study.

In 1979, when ousting the previous Labour Party government from power, the Conservative Party under Margaret Thatcher’s leadership had famously claimed that ‘Labour isn’t working’, depicting long and seemingly lengthening dole queues. By 1997, following a series of pre-election manifestos, the Labour Party had reversed the argument, highlighting what it saw as the Conservative government’s failures to address inefficiencies in the public services, and, importantly, continued high levels of unemployment, especially among young people. It proposed a series of ‘welfare-to-work’ programmes that were later branded as ‘the New Deals’, designed to encourage welfare recipients to engage in a range of activities to help them prepare for and find work. By reducing claimant numbers, Labour hoped to release public funds for investment in education and health provision.

Although the reforms sometimes appear less radical in hindsight, they were notable for involving varying degrees of compulsion that meant that certain groups of recipients stood to lose benefit if they failed to co-operate, anathema to generations of Labour Party activists. While the shift from so-called ‘passive’ to ‘active’ welfare had been trailed by the Commission on Social Justice (Commission on Social Justice, 1994), established when the Labour Party was briefly led by the late John Smith, it built on ideas, such as ‘Project Work’, that had been experimented with by the Conservatives, but previously ridiculed by the Labour opposition. The aim of this book is to understand the origins of Labour’s pre-election u-turn on welfare reform and to assess the evidence, if any, upon which it was based.

The Conservative Years

In the years between 1979 and 1997, employment policies under the Conservative government underwent several transformations. Policies initially aimed at restructuring an economy that was losing markets and becoming internationally uncompetitive. The Conservatives’ radical economic reforms included the calculated running-down of declining industries, most notably mining, the liberalization of trade relations, and the relaxation of restrictions on currency exchanges with a view to attracting international investment (Hutton, 1995; Middleton, 1999). In the process it both induced and reinforced a major cultural shift in society (Black, 2004). The demise of traditional, mainly manufacturing industries led to rising unemployment, but new service sector jobs emerged, albeit slowly and typically not in areas that had suffered industrial decline. In the period between 1983 and 1986 both employment and unemployment, in particular long-term unemployment, increased, although in different locations across the country, sharpening the North-South economic divide.

In the early years of the Conservative government, industrial policy, previously the Labour government’s favourite policy instrument, was replaced by an emphasis on monetary policy as the main principle of economic policy making. The aim was tightly to control the circulation of money in the economy in an attempt to reign in inflation and to keep it low so as to encourage private sector investment. In the mid-1980s, the economy was given a further boost as reductions in corporate and personal taxes unleashed, as intended, new consumer spending and commercial, often speculative, investment (the ‘Lawson Boom’). Shortly afterwards, the Government’s monetary policy changed with the decision to shadow the German Mark and to enter the European Exchange Rate Mechanism (ERM). While, on the one hand, new consumer and investor spending contributed to rising inflation, the Government’s efforts to tie the British economy in with that of Europe produced pressures to curtail inflation. As interest rates rose, so did personal debt. The Lawson Boom fizzled out and unemployment, which had temporarily stabilized, began to rise again.

Both the unemployment crisis of the early 1980s and of the early 1990s triggered fresh concerns about how the number of (long-term) unemployed benefit claimants could be reduced. Early thinking tended to be guided as much by ideology as by learning from policy and experience. There was little understanding of the workings of the labour market under unprecedented high levels of unemployment and only rudimentary appreciation of the social consequences of unemployment, the scale of which had last been experienced in the 1930s. The American author Charles Murray emerged as a key figure that would influence and perpetuate conservative thinking about the - allegedly - voluntary nature of long-term unemployment, induced by seemingly generous social security provisions. Murray was given the opportunity by the Sunday Times newspaper on a number of occasions to repeat his ideas of the adverse effects of the receipt of social security benefits, which he had already propagated to great acclaim in the US (Murray, 1989; Man and Roseneil, 1994). His warning of the ‘emergence of a British Underclass’ received much attention as politicians, policymakers and the public became increasingly concerned about unrelentingly high numbers of benefit claimants in the UK (Walker with Howard, 2000). If they were not already, Murray’s claims also ensured that British policy makers and analysts became keen observers of US welfare reform policies. From the mid-1980s, beginning with the Restart interviews (see Chapter 7), an increasing number of initiatives or reform pilots designed to reduce the number of benefit claimants were introduced informed by initiatives first tried in the US.

This phase of piecemeal experimentation with welfare reform measures designed to ‘activate’ the unemployed into jobseeking intensified in the 1990s, as unemployment remained high and more news about innovative and apparently successful endeavours in active labour market policy emerged, principally from the US. Whereas most of these early initiatives in the UK were subject to post-hoc evaluation, public scrutiny of the efficacy of policy innovation climaxed considerably later, coinciding with - and perhaps influenced by - New Labour’s electoral claim and promise that, if in government, it would base its policy on the collection and use of evidence: ‘evidence-based policy-making’.

Labour and the New Deal

The New Deal was one of the flagship policies of New Labour’s 1997 election campaign. Beside increased investment in education and the National Health Service, the party vociferously advocated a new programme to eradicate unemployment, in particular among young people, and help benefit claimants in their transition from welfare to work. This programme was more than just a policy. A new language of policymaking and promotion emerged, which argued that modern politics needed to be based on a new contract between the state as provider of services and facilitator of opportunities and the individual citizen as the user and beneficiary of these services and opportunities (Giddens, 1998, 2000, 2003). In other words, New Labour offered the nation a deal, a new deal, which later became the New Deal.

The notion of a contract between the state and her citizens was not simply conceptual. Legislation introduced by the Conservative government in 1996 to replace Unemployment Benefit by Jobseeker’s Allowance (JSA) already required benefit claimants to sign a Jobseeker’s Agreement, which detailed, amongst other things, what the claimant was expected to do in terms of job search and improving his or her chances of finding paid work. Under New Labour, certain categories of claimants were also obliged under contract to participate in a range of training and work experience options. Furthermore, over time, the number and range of claimants compelled to engage with work-related activities has continued to expand. In the process a new kind of social security official has been created, the personal adviser, whose job entails monitoring and liasing with claimants to speed their return to paid employment.

Eight New Deal programmes are currently in place,¹ although not all of them receive the same level of public and policy attention (Table 1). In two of these, the New Deal for Young People and the New Deal for 25 plus, participation is compulsory and for a third, New Deal for Lone Parents, attendance at an interview with a Personal Advisor is mandatory, although their subsequent participation in the job training and placement programme is voluntary. In all other instances, participation is voluntary, although work-focused interviews are gradually being made mandatory for all claimants of working age with the national roll-out of Jobcentre Plus offices.

In terms of annual expenditure, the New Deal for Young People remains, by far, the largest programme. The only other programme attracting significant amounts of programme expenditure as a result of the large number of participants is the New Deal for 25 plus. Programme expenditure includes allowances paid to programme participants, who do not receive a wage, and employer subsidies. Administrative expenditure tends to be lower than programme costs, with the exception of the New Deal for Lone Parents (NDLP) programme, which is primarily an advice based service.

True to its word, the Labour government implemented a programme of evaluation studies designed to monitor and assess the effectiveness of the New Deal programmes and their individually tailored contents, many conducted as pilots prior to full national implementation of policies. Most of these studies were commissioned by one of the two government departments that, prior to 2002, were responsible for education and employment policies, and for social security: the Department for Work and Pensions (previously the Department of Social Security) and the Department for Employment and Skills (previously the Department for Education and Employment). Policy debates have since focussed on reviewing the evidence that has been collected from the array of evaluation studies (DWP, 2004; Willetts, 2002).

Beyond the applied policy debates, academic research has sought to identify the ideological roots and to track the ultimate source of New Labour’s programme ideas, which represented a clear departure from traditional (or ‘Old’) Labour policies. To prepare their respective case, contributors to this debate have drawn on selective reviews of apparent parallels in welfare-to-work programmes, mostly in the US, but also in Australia and, to a much lesser extent, in New Zealand and the Netherlands. This book contributes to the debate in two ways. First, it explores the nature and origin of the New Deal in the UK, how New Labour developed and civil servants implemented a fine-tuned welfare-to-work programme. Secondly, it provides a comprehensive assessment of the

Table 1.1 Table New Deal Programmes in the United Kingdom

New Deal for	Target group	Compulsion	Programme Expenditure^1 (2001/02; £m)	Administrative Expenditure^1 (2001/02/ £m)
Young People (NDYP)	18- to 24-year olds who have been unemployed and claiming Jobseeker’s Allowance for 6 months or more	Yes	219	89
25 plus (ND25 plus)	Individuals aged 25 or over who have been claiming Jobseeker’s Allowance for 18 months or more	Yes	140	73
50plus	Individuals 50 or over in receipt of ...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of Figures
• List of Tables
• List of Contributors
• 1 Welfare, Work and Welfare-to-Work in the UK
• 2 The Road to Britain’s ‘New Deal’
• 3 The Use of Evidence in Designing the ‘New Deal’
• 4 Workfare Evaluations and Meta-Analysis
• 5 A Description of US Welfare-to-Work Programmes
• 6 Determining What Works and For How Long
• 7 Looking over the Fence: Findings from UK and US Programme Reviews
• 8 Lessons for Welfare Policy and Research
• Index