Work programme: Grand claims and fine print

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Media captionEmployment Minister Chris Grayling described the Work Programme as revolutionary

Never knowingly undersold, coalition policies often come with a claim for epochal significance.

So it is with the Work Programme, described as: the centrepiece of the most sweeping welfare reform for 60 years; restoring the system to its founding principles; the most ambitious back to work programme this country has ever seen.

Schemes to help people move off benefits and into employment have been delivered through government contracts with the public, private and voluntary sectors since the 1990s, of course.

What the coalition government has done is scrap all those and create a single programme with a new badge, a new funding model and new ambition.

Clearly, ministers haven't got any spare cash to spend on employment schemes right now so they have changed Whitehall spending rules so they can effectively move money from welfare into work, taking cash from the Treasury's welfare pot and moving it into the Department of Work and Pensions coffers.

The Labour government had started experimenting with this idea but the coalition has gambled that, even in the current economic climate, the Work Programme will save enough from the benefits bill in the future to justify agreeing deals now.

So, it is full steam ahead with seven-year contracts which could be worth three to five billion pounds. Companies have been falling over each other for a slice of the action and big winners include familiar private sector employment firms like A4E and Ingeus as well as outsourcing giants G4S and Serco.

Announcing the contracts, the government headlined it as a "massive boost for the Big Society"; emphasising how 300 voluntary groups will be involved.

But the Work and Pensions Select Committee recently noted that out of the prime contracts, 88% went to profit-making companies and reported concerns that charities were being used as "bid candy", private sector bids being 'window dressed' with a touch of voluntary sector involvement.

It was also pointed out that requiring prime contractors to have an annual turnover in excess of £20m excluded many charities which had successfully delivered programmes under Labour's New Deal scheme.

The contracts are run not only on a payment-by-results basis but also on what's called the black box approach. This means government won't tell suppliers what kind of support they need to give, promising not to interfere in the running of schemes.

Ministers say they are interested in "outcomes" - believing that, left to its own devices, the scheme can support a million people from welfare dependency into work in the next two years with at least a million more to follow.

They stress that only a tenth of the contract money is paid up front with the suppliers taking much of the early risk. Additional payments are based on actually getting the unemployed into jobs and maintaining them for up to two years. There is extra cash for successfully finding employment for 'hard-to-reach' groups.

Nevertheless, the laissez-faire philosophy has added to concerns that suppliers might pressurise vulnerable individuals into taking unsuitable jobs or simply ignore people who need the most support.

The scheme does amount to a step-change in the way employment schemes operate, but also represents a gamble. It will be in the fine print of the contracts that the grand claims for the Work Programme will be decided.