Flexible New Deal at risk

Soaring unemployment has put a flagship programme to get the region’s long-term jobless back to work at serious risk of ‘failure’, a committee of MPs has warned.

The budget for the Flexible New Deal — which will employ multinational companies, paid by results — is “inadequate”, because the recession means it will be swamped by claimants, its report says.

Funding for the scheme, to be introduced in Greater Manchester and 14 other areas in October, has not been increased - despite the Government admitting the number of jobless it must target has trebled.

The Commons work and pensions committee also criticises the way local councils and charities have been shut out of back-to-work schemes, with contracts handed to big companies instead.

And it raises fears that the payment system will encourage the private firms to cream off easier claimants, while leaving the less able and less qualified parked on benefits.

The conclusions are a serious blow to the Government’s controversial “privatisation‚ of welfare-to-work” forcing many jobless to do community work in return for benefits.

Terry Rooney, the committee’s Labour chairman, said: “Unless the budget is increased, there is a real danger that providers will not be able to cope with the numbers of customers coming through their doors.

“The potential consequences of this should give the Department for Work and Pensions real cause for concern.”

Under the “Flexible New Deal”, the unemployed — including most single mothers — will be required to do a 9-5 day actively looking for work, or be stripped of benefits for up to four weeks.

After one year, the jobless will be handed over to private firms and required to undertake unpaid community work for four weeks. After two years, they will be required to work full-time for their benefit.

In October next year, the scheme will be extended to 16 other areas, when existing incapacity benefit (IB) claimants will be put through a tough new disability test.