The Tories were right: workfare really works

Suddenly all the sums have changed - and it is Labour that will cash in

Workfare was always politically tempting. It touches every nerve - pleasingly punitive (shades of the chain gang), morally improving (getting them out of bed), good for the community (clean up that canal) and deterring fraud (they can't moonlight on the black economy when breaking rocks on workfare). Now the Tory manifesto will promise to make all the long-term unemployed work for their benefits. And so, under a different name, will Labour.

Why now? Because a startling new fact hangs in the air above both Labour and Conservatives. It embarrassess them both, in very different ways - but it is set to change the way we think about an important slice of the welfare state.

Latest figures for Project Work, the Government's pilot workfare scheme, suggest colossal fraud or deliberate idleness on a scale no one predicted. Since April, 6,800 people unemployed for over two years have been through schemes in Hull and the Medway. First they have 13 weeks' intensive Job Search with a dedicated worker chivvying and harrying them to apply for jobs as never before. (One of many embarrassing questions for the Government is, why never before? Answer: cheese-paring on staff, the unemployed never even had to sign on in person.) Next they face 13 weeks of compulsory work for "voluntary" organisations for an extra pounds 10 a week. Either the carrot (help to find a job) or the stick (the threat of compulsory work) has led to an astonishing number signing off and no longer drawing benefit - nearly half of them.

What became of the 3,100 who have signed off? Only 920 announced that they had got jobs. Where are the others? Did they find the prospect of three months' compulsory work so terrible that they chose to starve instead? Have they been frightened by bullying interrogators out of drawing the dole rightfully due to them? Opponents of workfare put these propositions forward, but rather sheepishly.

More likely, many were claiming falsely. Either they already had full- time jobs paying them above benefit levels (we are not talking here about earning a little extra on the side) or they were well able to get jobs once pushed. The Low Pay Unit complains that many have been pushed into unsuitable work, but after two years, is that so unreasonable?

Employment experts are astonished by the figures. Not surprisingly, it has been hard to trace those who have signed off to ask them why. But if Project Work permanently shakes half the claimants off benefit, then all calculations about the future change.

Michael Heseltine, an early workfare exponent, has been watching these figures hawklike week by week. When the history of this Conservative era comes to be written, how will they explain why they failed to do anything about the benefit culture they so deplore? Even Peter Lilley and his little list funked it. Only now, at the tail end of their time, have they realised what they might have done 15 years ago had they believed their own rhetoric. Workfare will be triumphantly showcased in their manifesto, but it will have a hollow ring.

It was stopped by political cowardice and by Treasury short-termism, afraid it would cost too much to provide make-work jobs for all. Now, though, we can see how the money saved in benefits will come pouring in. Labour's manifesto will also promise workfare, compelling all the young and long-term unemployed to work or train. But Labour's promise of high- quality training and proper jobs (Project Work does neither) gleams brighter in the light of this unexpectedly rich cash flow.

Until now Labour has been deeply uncomfortable with talk of benefit fraud, fearing for the rights of the other half of claimants who are honest and needy. So David Blunkett was predictably grudging about the Project Work figures: "The Government is simply trying to keep the dole figures down without making any real contribution to getting people into lasting work."

Unpopular for saying it, Frank Field has claimed for years that the whole system is designed to encourage drones or frauds. "The Tories forgot their own view of human nature," he says. "If you offer people easy money they will take it." He points to bogus claims for child benefit, prescriptions, dental charges, and myriad other badly-policed schemes ripe for Labour's plucking. He thinks a great many people prefer to sit in the benefit safety net than to work for just a little more - and they have been allowed to regard it as their right, which was certainly not Beveridge's intent.

Yesterday I talked to two Medway men who resented being forced into Project Work. Although it was an anti-workfare group that put me in touch with them, they both seemed to me to exemplify Frank Field's point.

First there was James, a plasterer, who went right through Project Work without finding a job. Articulate, unmarried, living on pounds 95 a fortnight dole, he ought to be highly employable. But he started by refusing to work for less than pounds 300 a week, six times more than his dole. He was angry when Project Work lowered his sights to pounds 150: "Why should I work for less than the rate for the job?" Like others, he found the work element in the project a farce: he and 70 others were sent to repair a Napoleonic fort, but there was nothing to do but light a fire to keep warm all day. With no training included, the work's only value is as a threat. After his 13 weeks, he is back on the dole and will only take a job that pays reasonably - entirely rational if he is allowed to get away with it.

Barry is a well-spoken china salesman, outraged at sitting beside an illiterate halfwit in a compulsory class on CVs delivered by an ex-car mechanic. "I've got a brain and I've travelled the world." He refuses to do Project Work. "I will not sift dirty clothes in a charity shop or anything below my calibre." What will he do? "I'll make my own way, thank you!" So he has rented his house, found a job and a place to stay in London and at his first Project Work interview he will sign off. Doesn't that prove it works? A long silence - and a huffy acknowledgement that it might have made a difference.