Moving people from welfare to work is going to be the first big test of the idea that public services should be paid for by the state but don’t have to be provided by the state. The coalition intends to task private sector and voluntary groups with moving the unemployed back into the labour force and then pay them by results. For every person they move back into stable employment, they will be paid a fee—based on how long the person has been out of the labour market—out of the saved welfare payments.
Tomorrow, the government intends to announce the groups that have successfully bid for these contracts. I understand that the voluntary sector has secured contracts with the potential to be worth north of £100 million. Private entrants into the market will also be putting in several hundred million of up front investment to try and make their schemes work.
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