The Local Democracy think tank LGiU has proposed a radical devolution of responsibility for back-to-work services from central government to local councils.

 

In a report released this week, the LGiU will argue that, in order to tackle an expected benefits bill of nearly £170 billion, Whitehall needs to allow local government the flexibility to help people back into work. In return, councils should be rewarded for the savings they make to the national benefits bill.

 

The report, ‘Local Work: Empowering Local Government to Tackle Worklessness’ calls for a new way to deal with the UK’s 5 million out-of-work benefits claimants.

 

Report author Dr Andrew Jones commented:

 

“Centrally-driven, top down services have reached the limits of their effectiveness. With the total benefits bill forecast to rise to nearly £170bn in 2010-11 we need to approach the situation in a new way to halt this extra contribution to an already perilous level of public debt.

 

“Local councils have the benefit of local knowledge of the needs and make-up of the potential workforce in their communities, a knowledge proven by town hall’s decisive action to combat the effects of the recession. Every resource possible should be utilised to bring down the benefits bill – Whitehall should not be afraid to allow councils to lead from the front.”

 

The report takes into account the following factors:

 

    * In 2009, the total number of people claiming out-of-work benefits in Britain totalled just over 5 million – only about half a million below a peak of 5.5 million in 1993.

 

    * There has been a steady upward trend in the numbers of people claiming out-of-work benefits since the late 1970s.

 

    * Some limited success has been made in reversing this trend through the Government’s reforms, but this has been halted by the recession.

 

    * The total benefits bill has been forecast by the Treasury to rise to nearly £170bn in 2010-11 – contributing to an already perilous level of public debt.

 


The LGiU report bases its findings on the Dutch model which rewards local authorities for helping people into work by the savings they make in the benefits bill and the increase in tax payments. The think-tank says that the potential rewards would be much greater than under existing schemes such as the Working Neighbourhoods Fund.

 

The report argues that a large financial incentive would help mobilise all local authority services around the goal of helping people get jobs and keep them there. The money would be re-invested in local communities in ways that would further support opportunities for work, rather than at present under the Flexible New Deal, where it is absorbed by private profit. It is a self-financing scheme for local investment, aimed at both tackling the human tragedy of long-term worklessness and restoring public finances.