A new Prime Minister must tackle welfare immediately, say Adam Coutts, Matt Leach and Maria Pravda – here’s where to start
A mid-term transition creates disruption – but it also creates an opportunity to look again at government priorities and how they are being delivered. Any change now needs to be able to deliver real results quickly because time is inevitably limited.
With that in mind, this is the right moment to look at how we provide welfare, one of the most difficult policy areas for any government. The lesson from previous attempts at reform should not be that it is impossible – rather that attempting change without a clear plan or purpose will fail.
A system spending almost £300b a year, whilst failing on its own terms, cannot simply be left alone. It is not just bleeding money the state cannot afford to waste, it is also letting down the people it exists to help, and failing the economy it is meant to serve.
The front door of the state
The NHS and the Department for Work and Pensions (DWP) are the two great front doors of the state, the institutions through which almost everyone meets government at some point in their lives. Yet they could hardly feel more different. The NHS, for all its flaws, is the nation’s carer: trusted, there to look after all of us. The DWP is too often its polar opposite, seen by many as an arm of enforcement that treats people, often at their most vulnerable, as suspects and cheats. Its own disability assessments are wrong so often that around 70% of appeals against them succeed, many on evidence the department already held.
Nowhere is that felt more sharply than at the job centre. Ask the people who use it: there are never any jobs at the job centre, they say – just forms to sign in order to avoid a sanction and make a claim. They are perceived to be places built for surveillance rather than support, barely changed since the 1990s, offering little beyond referrals to expensive classroom courses from which jobseekers rarely gain much benefit.
Support works, hassle and punishment don’t
A persistent feature of the welfare debate is the extent to which the language that defines it – too often of “cracking down” and “idleness” – is divorced from the evidence. The sanctions regime that runs through the system rests on a belief that people must be threatened and hassled into work. This despite the government’s own research, backed up by a decade of independent studies, repeatedly finding that sanctions rarely move people into lasting employment and often push them further from it, deepening the hardship and ill-health that kept them out to begin with.
Because ill-health is the real story here. As is increasingly noted by commentators, the steep rise in the number of people outside of the workforce reflects, above all, a rise in poor health, much of it mental. And here the evidence, built across three decades and many countries, is unusually clear: well-designed employment support does two things at once, moving people into work and improving their mental health, with the largest gains for those who start with the least. Britain’s own trials bear it out. The Future Jobs Fund returned around £7,750 of net social benefit for every participant, largely through improved mental wellbeing; the JOBS II group-work programme, one of the largest of its kind run here, cut depression and anxiety as it helped people back toward work. Done properly, the health savings alone mean good support costs less than perpetuating an expensive and damaging status quo. The choice in welfare has never been between compassion and credibility, but rather between what works and what does not.
Which is why the person you meet when you step into a job centre matters more than any rule or regulation. It is where policy and politics meet the pavement. You change the whole nature of the encounter if you retrain and support the current box-ticking work coaches to allow them to act as properly trained advisers who have the time to understand someone and the skill to recognise the mental ill-health and chaotic lives that so often sits behind worklessness, in a place built to help rather than to process.
But getting there means being honest about what needs to stop. For more than a decade, governments have paid private providers huge sums of money to move people into jobs. Spurred on by the ill-considered notion of “payment by results”, over that time those providers have done exactly what the incentives reward: creaming off the easiest cases and cashing in on them, whilst parking the hardest cases, the very people the system needs to serve if people are to live better lives and the state be released from meeting the cost of that failure. The better part of a billion pounds a year would do more in the hands of skilled public servants working alongside jobseekers, local employers and the NHS than in another round of contracts for bums-on-seats in classrooms.
Hand it to the mayors
There is a strong case for devolving far more of this work than we do today because the support that gets someone into work in Durham is not necessarily what works in Manchester or in a London borough. Job markets differ, employers differ, even the transport options for getting to an interview or, if successful, a job differ. The buses to the rural outskirts of Cambridge or Bristol may finish at 6:30pm and not restart until 8:30am. How do you even get to and from work on time? Devolving the delivery of employment support to combined authorities, building on the learnings from the Greater Manchester model, would allow mayors to frame services around the local labour markets they know. Mayoral devolution has already reset what the public believes is possible on transport, growth and regeneration. Job support is an obvious next frontier.
Of course devolving job centres to combined authorities and winding up wasteful support provider contracts, when fully implemented, might call into question the role of DWP. One option could be to move pensions administration and policy to a new department of better aging. But that is a separate argument, and getting job support and back-to-work programmes right cannot wait.
Unlike some reforms, none of this requires a decade, or even much legislation. Changing the perceived punitive culture, changing how we provide job seeker support, using the savings to open the first mayor-led pilots to see what is possible: the early wins are there to be banked inside a year. What it takes is the will to begin and an acceptance that not all reform needs to be led by central government. There is now a window for a fresh start. If we take the opportunity to look again at this now we may be able to create a welfare state that treats people as citizens rather than suspects, and helps them into a working life rather than policing their failure to find one.
Sources and evidence: DWP Group Work / JOBS II trial evaluation (gov.uk); Welfare Conditionality project (Dwyer et al., 2018) and DWP sanctions research; A. Coutts et al., Work, Employment and Society, on the employment and mental-health effects of active labour market programmes; DWP Future Jobs Fund impacts and costs (2012); IFS analysis of the Universal Credit and PIP Bill (2025); the author’s DWP Work and Health Unit research.
Dr Adam P. Coutts is an academic at the Centre for Business Research, University of Cambridge.
Matt Leach is Chief Executive of the Built Environment Trust and Senior Advisor to PPL.
Maria Pravda is a psychotherapist in private practice whose work explores mental health, unemployment and the human impact of employment support systems.
