The Work Programme is the Coalition Government’s flagship welfare-to-work policy, replacing thirteen back-to-work schemes with a national initiative that is led by private and third sector providers. The radical overhaul of the social security system resulting from the introduction of Universal Credit, and the increase in the long-term unemployed resulting from the financial crisis, means that getting the next iteration of the Work Programme right, ‘Work Programme 2.0’, is very important.

The danger is that any new design of the Work Programme will continue to lack financial incentives to help the hardest to help back into work, and that it will not be fully integrated with Universal Credit, which could mean incompatible objectives of two key planks of the welfare system for years to come.

This report provides a blueprint for how the Work Programme should be improved, including ideas on how to better assess jobseeker needs, how to integrate the Programme into the structures of Universal Credit, and how to better recognise local labour market conditions. Some specific proposals are:

• Use a two-stage approach for the roll-out of Work Programme 2.0. This would mean a short-term contract model during Universal Credit roll-out, followed by a long-term contract model that begins after roll-out has completed.
• Develop a new model of employment support contracts based around the claimants’ distance from the labour market, rather than primary benefit type and length of claim. This should be based on the Job Seeker Classification Instrument developed in Australia, to be administered by Jobcentre Plus.
• Explore alternatives to the ‘16 hours rule’ at national minimum wage for job outcomes, with a view to focusing incentives on additional monies earned. This should incentivise providers to place some claimants in lower earning or ‘mini-jobs’ where this is a more appropriate goal.
• Explore allowing variations in pricing by inter-regional geography to reflect the cost of capitalisation, level of risk and local labour market conditions within each contract package area.