DWP working-age benefits spending versus employment support in England’s mayoral areas, Digi Mart USA News (England, United Kingdom): The Department for Work and Pensions spends 50 times more on benefits in large city-regions than the Labour Party government does on helping people into work, according to a new report. Research published by Centre for Cities found that across England’s seven established mayoral areas, the government spends 50 times more on working-age benefits than on helping people into employment.
Just £76 per working-age resident is spent on employment support, compared with £3,754 on working-age DWP benefits. The disparity is greatest in the Liverpool City Region, where spending on working-age benefits is £4,569 per resident, compared with just £66 on employment support.
Centre for Cities has warned that ministers risk setting mayors up to fail unless devolution comes with sufficient funding and financial incentives to get more people into work. The think tank has recommended increasing UK spending on employment support from £3.7 billion to £4.6 billion annually, equivalent to 0.17 per cent of GDP, as a first step toward bringing Britain into line with comparable OECD countries.
The report also calls on the government to give mayors a share of the financial savings and additional tax revenues generated when employment programs successfully move people into work. The think tank says this would reward good outcomes and reduce incentives to shift costs onto nationally funded programs and benefits.
Anthony Breach, Director of Policy and Research at Centre for Cities, said: “Britain is not good at employment support. We spend too little helping people into work, and our unusually centralized system is a confusing mess for the jobseekers who need it.
“Milburn is right that mayors are well placed to change that. They understand their local labor markets and already have responsibility for many of the things that are relevant to job seeking, from transport to skills.
“But international experience shows that devolution is not a silver bullet. Evidence from Finland and Germany shows how poorly designed reforms can create perverse incentives, encouraging local authorities to shift costs onto national government or move people into less effective programs.
“Devolving employment support is the right prescription. But ministers cannot simply hand mayors responsibility for getting people into work without the money to make it happen.
“And if local leaders are expected to bear the costs, they should share in the financial rewards when they succeed.”
