"Welfare to work" market will increase
By Nicholas Timmins, Public Policy Editor
Original Story: http://www.ft.com/cms/s/e1a7fcfe-e589-11dc-9334-0000779fd2ac.html

American and Dutch companies are following their Australian counterparts in targeting Britain's job
placement market as the government announces a significant expansion in the private sector's role
in welfare-to-work.

James Purnell, the work and pensions secretary, will on Thursday set out a near four-fold increase
in the market for private and voluntary organisations to get the long term unemployed off welfare
and into work.

He will announce bigger and longer contracts - for at least five years rather than the present three - expected to be worth around £360m a year for the "flexible New Deal". At present £100m or so is
spent on the independent sector contracts.

Some 80 per cent of a contract's payment will be dependent on actually getting people into work
and keeping them there. The biggest payment is likely to depend on people staying in work for six
months rather than the present 13 weeks.

In some parts of the country providers will compete within the same area in the hope that will
stimulate performance and give the unemployed - and increasingly lone parents - some choice
over who provides the personalised service aimed at getting them back to work.
The move is the first step towards implementing the recommendations of the Freud report that
envisaged a "multi-billion pound" welfare-to-work market for private and voluntary providers that
would attract "major players" from around the world.

In evidence this is beginning to happen, ResCare, one of the biggest US providers of welfare-towork
services has bought Biscom, a small UK provider of job training and placement services as
well as Maatwerk, a Dutch company in the same sector that already has some small contracts in
the UK.

Maximus, another big US provider, is also looking for a UK acquisition while it and America Works,
which operates in New York and California, have both been present at supplier meetings with the
Department for Work and Pensions.

Igneus, the Australian company, already owns Work Directions, the UK based welfare-to-work
provider, while Mission Australia, the charitable provider, has bought a stake in Working Links, the
public- private partnership owned by the government, Manpower and Capgemini.

The big UK services companies, Capita and Serco, are seeking to enter the business alongside
domestic providers of the existing programmes such as A4e and Reed-in-Partnership.

Calder, the Dutch company, recently bid unsuccessfully for a Pathways to Work contract, with
Lambert Verwijst, its sales director, saying "we would definitely like to be in the UK. It is an
interesting market and not so different to Holland".

Peter Cove, founder of America Works, says his company had agreed an outline contract to work
with lone parents with the outgoing Conservative government in 1997, only for Labour to cancel it
on taking office. Now, he said, he believes the market for private companies in the UK "really is at a
tipping point".

Mr Purnell is expected on Thrusday to underline his determination to implement the Freud report in
full, with the private sector's involvement "here to stay and set to grow" , although a big programme to tackle the 2.6m people on incapacity benefits has yet to be agreed.

Jobless multinationals: welfare-to-work is becoming a globalised business
Copyright The Financial Times Limited 2008