Deprived regions found at risk from cuts

By Daniel Pimlott

Published: January 31 2011 19:44

The parts of the country with the highest rates of benefit dependency relied on the public sector for almost 80 per cent of their jobs growth during the decade leading up to the financial crisis, according to research from Sheffield Hallam University.

The reliance on public sector jobs to support employment during the long boom underlines the damage that spending cuts could inflict on deprived areas.

The data also suggest that the government’s ambitions to entice many more people back to work through its welfare reform package founder on the lack of opportunities.

In the 100 local authorities outside London with the highest out-of-work benefit claimant rates, 460,000 out of the 590,000 jobs added between 1999 and 2008 were in public administration, defence, education and health, or 78 per cent.

By contrast, in the 142 authorities with the lowest benefit rates, 340,000 out of the 670,000 jobs added, or 51 per cent, were in the public sector.
The government’s welfare reforms aim to get more people into job-finding schemes and off long-term unemployment benefits from this summer, initially through reassessing the health of all sickness benefit claimants.

Across the country no fewer than 5m people live on benefits nationwide – one in six of all adults. Of these, 1.5m are on jobseeker’s allowance (JSA), and 2.6m are on sickness benefits. Some estimates suggest that as much as 1m of these long-term sickness benefit claimants are actually “hidden” unemployment.

In the future, tougher tests for sickness are likely to mean fewer people flow on to sickness benefits and more on to jobseeker’s allowance. JSA claimants will be expected to look harder for work or face losing their benefits.

Under the new so-called Work Programme, providers will receive a maximum fee of £14,000 if they get a former incapacity benefit claimant into work for more than two years. On Labour’s smaller Pathways to Work programme, providers received just £1,500 for getting the long-term unemployed into a job for six months.
However, companies must now bear more of the costs of training and supporting clients.

Many of the most deprived parts of the country were “losing jobs in the private sector anyway”, says Steve Fothergill, one of the authors of the Sheffield research. “They were hit hard by the recession, and will be hit hard again by the contraction in the public sector.” He advocates a job-creation programme along the lines of the now-cancelled Future Jobs Fund, which the government says wasted money on short-term jobs.

“If the government is so minded to find ways of pump-priming growth in the private sector, that would be very welcome,” says Sally Burton, chief executive of the Shaw Trust, the largest charity bidding to be a provider in the Work Programme.

Chris Grayling, employment minister, says he is hopeful the private sector can be stimulated in areas where it has previously struggled.
“I’m an optimist in believing it is perfectly possible for the north-east, for Merseyside, for south Wales, for those other areas that have got a high level of welfare dependency to grow the businesses of the future and create jobs,” he says.

But the situation looks tough for parts of the country dependent on government investment. For instance in Barnsley, South Yorkshire, a former coal-mining town where more than a fifth of working-age adults claimed benefits even during the boom years, public sector jobs offset only half of the decline in private sector employment in the 10 years before the recession.

As the cuts hit the council and local public services, the Yorkshire regional development agency is forecasting that Barnsley will add just 400 jobs in the private sector by 2015, an increase of 1 per cent, well short of the 1,600 jobs lost – an 11 per cent reduction – in the public sector.

A survey of incapacity benefit claimants by researchers at Sheffield Hallam university suggests only a quarter think they cannot do any work, writes Daniel Pimlott. Such findings suggest there is a huge opportunity to get some of the 2.6m claiming sickness benefits into employment, to enhance their lives and those of their families and reduce some of the problems facing the communities in which they live.

“There is very strong evidence that people are healthier and happier in work,” said Sally Burton, chief executive of the Shaw Trust, Britain’s largest employment charity.

The Shaw Trust is trying to codify best-practice for those working in the employment field. It has also studied how banks and retailers such as Tesco work to retain customers, for inspiration on how to build good relationships with the people that employment bodies are seeking to help.

About 40 per cent of incapacity benefit claimants suffer from mental health problems, with many also having substance abuse issues. “If someone has drug or alcohol problems you need to deal with that before you can do anything else,” says Debbie Scott, who runs the Tomorrow’s People employment charity.

Those who have been on employment programmes are often positive about the help they got to gain in confidence, improve their attractiveness to employers and consider alternative careers.
Mark Prince, a 28-year-old former worker in a Barnsley glassworks, spent nearly two years out of work. Remploy, the jobs-finding company, helped him rebuild his CV and he has had an offer of a job in a recruitment company. He said the experience gave him “the confidence to try something new and a better idea of how to get about it”.

 

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