£75bn private welfare contracts must not take away family security rights

Commenting on details that have been reported of a welfare reform announcement to be made tomorrow by Work and Pensions Secretary, James Purnell, the Chief Executive of Child Poverty Action Group, Kate Green, said:

“The major barriers to employment are low skills, lack of affordable childcare and employer prejudice towards disabled people and parents with caring responsibilities. The Freud reforms fail to address most of these problems.

“We are very worried about the increased use of sanctions as part of these proposals. There is not good evidence that sanctions work, but they take away long-held family security rights and can worsen child poverty.

“There are unanswered questions about giving private contractors up to £75 billion to deliver welfare services. Small and voluntary sector providers will be forced to sub-contract to large private companies, undermining their important role as independent advice providers and advocates. There have been corruption problems with private welfare providers in the United States and if a company goes bust claimants will be left in the lurch. But Freud has no plans for when things go wrong.”

Notes for editors

• Reported proposals are for 1.5 million of 3.5 million working age benefit claimants to be helped into work at a cost of up to £50,000 per person spent on private sector contracting – a total cost of up to £75 billion.
• This would mark a departure from the sensible caution over such a major transfer of public funds shown by previous Secretary of State, Peter Hain. In a Guardian interview 7 months ago he suggested that annual spend on private sector contracting of welfare services was unlikely to increase more than £200m (from £800m currently to £1bn). He downplayed David Freud’s report, saying “Freud is not the Secretary of State”.
• CPAG is one of over 100 member organisations of the Campaign to End Child Poverty, campaigning for public and political commitment to ensure the goals of halving child poverty by 2010 and ending child poverty by 2020 are met.

For further information please contact:
Tim Nichols
CPAG Press Officer
Tel. 020 7812 5216 or 07816 909302
tnichols@cpag.org.uk