by René Lavanchy
PRIVATE companies contracted to run the benefits system could profit as the Government attempts to help them through the recession, under measures proposed by Work and Pensions Secretary James Purnell this week.
Ministers are implementing plans drawn up by David Freud to pay companies and charities to help benefit claimants find work. They will receive an initial lump sum payment and a fee for each claimant who finds a job.
But Mr Purnell said this week that in the light of the economic downturn, his department was considering increasing the unconditional part of the payment.
As the Government’s welfare reform bill was debated by MPs for the first time, Liberal Democrat MP Steve Webb asked him if he intended to change the contracts “so that more of what the providers get is a lump sum and less is related to performance?”
Mr Purnell replied: “We are happy to consider whether we can ‘front-load’ the payments for taking people on,” and added that there had been “very good interest” among companies for him to do just that.
The Department for Work and Pensions has already received bids from companies seeking the contracts, and is preparing to choose the successful bidders.
Mr Purnell also said he was working with TUC general secretary Brendan Barber to discuss how to use the TUC’s ten-point “emergency plan” to tackle unemployment.
Unions are asking for the maximum limit on statutory redundancy pay to be raised from £330 to £500, help for redundant apprentices to complete their training and forcing administrators to consult with unions when a company is forced into administration.
