The Freud Report

The Freud Report was published in March 2007 and starts from the premise that both achieving an 80% employment rate and reducing the numbers on key benefits will be difficult and require significant resources.  Freud's implicit assumptions are that the level of these resources will be beyond the capacity of government and that government is not as efficient in the use of the resources it deploys in this area as alternatives.

This leads to a view that the private sector needs to be involved both because Freud believes it is more efficient than the public sector and because it alone can raise the capital required to cash flow the size of programmes required.  The implication of private sector involvement is that in order to make participating in the delivery of welfare to work services attractive then there must be both an acceptable level of return and an acceptable level of risk. 

The former point will be dealt with by creating both a scale of contract and a pricing structure that allows for a reasonable profit margin for good performance (and allows for the cost of borrowing large amounts of money to be recovered in the final price). 

The latter point will be dealt with by offering long-term contracts (five years or more with the possibility of non-competitive renewal subject to performance) to encourage investment, as part of the department for Work and Pensions Commissioning Strategy.