vallierojas: Iain Duncan Smith's Work Programme has one fatal flaw ? there isn't any work

There is much to be said for Iain Duncan Smith's proposals, but few new jobs are being created in the places where they are most needed

Iain Duncan Smith, in his new incarnation as champion of the poor and dispossessed, is promising that the government's radical new Work Programme ? an unprecedented expansion of the private sector's role in the welfare state ? will guide the long-term unemployed gently back to the workforce.

At a recent event at the Work Foundation, Duncan Smith sounded like a true believer, with all the right rhetoric. Unemployed people should not be put in a separate category from their working neighbours; they're just people who don't happen to have a job at the moment. Incentives need to be changed, through his new universal credit, so that it always pays to take a job. And the private sector providers who have won contracts under the Work Programme will only be paid if they successfully find people a long-term role.

There will be higher payments of up to �6,500 for helping hard-to-reach individuals, such as those with drug or alcohol problems, or those returning to work after long-term sickness.

In principle, there's nothing wrong with increased private sector involvement, and ? so long as the contracts are well drawn up, and the risk really does lie with the companies ? not much wrong with what Duncan Smith calls the "black box" approach, under which providers can use whatever method they choose to coax people back into work, so long as it's successful.

In fact, there's only one flaw in Duncan Smith's plan: in many areas of the country, there are just no jobs for the long-term unemployed to go to. Christina Beatty and Steve Fothergill of Sheffield Hallam University published an excellent but profoundly depressing piece of research last week, revealing the scale of the challenge in just one area, the Welsh valleys.

More than 25% of the working population in Merthyr Tydfil and Blaenau Gwent are claiming out-of-work benefits, either incapacity benefit or jobseeker's allowance. In another three areas, including the former steelmaking centre of Port Talbot, it's more than 20%.

Across Britain, the highest concentrations of sickness benefit claimants are in former industrial areas, where there are few new jobs.

The coalition is pressing ahead with Labour's plan to reassess incapacity benefit claimants, with those deemed fit for work to be shifted onto jobseeker's allowance and signed up for the Work Programme.

At a national level, new jobs are being created ? 113,000 over the past 12 months, according to the latest unemployment figures ? but few of them are in the blackspots where they are needed most, and the solution is much more complex than persuading people to get on their bikes.

Before the recession, the Welsh valleys were actually doing relatively well, with unemployment falling at a faster rate than the national average; but much of that resulted from public sector job creation. George Osborne is relying on a reinvigorated private sector to soak up the jobs lost from public sector spending cuts. But Beatty and Fothergill point out that between 1999 and 2008 ? Britain's boom years ? only 25,000 extra private sector jobs were created across the whole of Wales. Where jobs do spring up, the long-term unemployed of Merthyr may not be best-placed to snap them up, even with help from Rehab JobFit and Working Links Wales, the two "prime" contractors under the Work Programme.

As Beatty and Fothergill put it: "The 'queue for jobs' does not operate like, for example, a bus queue. The fit and well qualified stand at the front and fill the vacancies first, and are constantly replaced at the head of the queue by other fit and well qualified workers leaving or losing a job. The sick and poorly qualified stay at the back."

Meanwhile, economic growth is slowing, perhaps to only 0.1% in the past three months, if the National Institute for Economic and Social Research is right, increasing the risk that unemployment could start to rise again later in the year.

At the same time, the government has completely dismantled the infrastucture for local regeneration, killing off the regional development agencies and replacing them with toothless talking shops called "local economic partnerships".

Its plans for enterprise zones, with looser planning rules and tax breaks for businesses, look promising, but bids from local areas were only submitted last week and it will be some time before they are up and running. There's also a risk that, as with the previous generation of enterprise zones introduced by the Thatcher government, they just suck in jobs from surrounding areas.

A separate report from the Centre for Cities thinktank last week warned that there are fewer and fewer low-skilled, entry-level jobs in Britain's "knowledge economy", and many such jobs have been pushed to the periphery of our towns and cities, with higher-skilled work concentrated in city centres. Their analysis suggests that if the Work Programme is to succeed, it will have to be part of much wider efforts to ensure that, for example, transport links are improved and planning applications from promising businesses are treated favourably, to allow job creation.

In former industrial areas where there are few new sources of employment, providing a spot of job-coaching and tarting up CVs is just not going to be good enough. And if, as seems increasingly likely, the economy slides into a double dip by the end of this year, Duncan Smith's contractors will need a lot more than a "black box" ? they'll need a magic wand.

Heather Stewart

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