Investing in our People – learning from the New Zealand ‘Investment Approach to Welfare’

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Investing in our People – learning from the New Zealand ‘Investment Approach to Welfare’

The evolution of Work Programme (and its devolution to Scottish Government), reducing public budgets, and the increasing welfare element in City Deals provide an opportunity to think radically about the way that we view welfare to work support in the UK. Our conversations with policy makers and providers about this opportunity has revealed a growing interest in the New Zealand ‘Investment Approach to Welfare’.

I arrived at the New Zealand Treasury around the same time the challenge to overhaul the way New Zealand thought about welfare to work support was set by the Minister of Finance. ‘I want to invest in people the same way I invest in capital assets – upfront with benefits flowing later’ appeared to be the mantra from the Cabinet table’s second in command. Nearly five years later, and after much work by Ministers and officials, New Zealand has its ‘Investment Approach to Welfare’ up and running.

…‘I want to invest in people the same way I invest in capital assets – upfront with benefits flowing later’…

The core principle underpinning the ‘Investment Approach’ is that the Government should invest now, to save later. The future cost to the Government of different welfare recipients in expected benefits and other support is estimated to create a ‘life time liability’ value. Any investment now in the individual that reduces their future liability by more than the estimate is encouraged. Here in Scotland, the ‘Investment Approach’ is consistent with the objectives of the Scottish Government Prevention Agenda.

…the ‘Investment Approach’ is consistent with the objectives of the Scottish Government Prevention Agenda…

Rocket Science spent most of 2015 working with the Dundee Local Employability Partnership in order to identify ways to increase the use of preventation in their employability services to reduce the risk of long term unemployment. To see more about our work in Dundee click here.

In the context of static or decreasing public budgets, the ‘Investment Approach’ is also used to focus and prioritise resources within the welfare budget. Those that have the highest expected future liability receive the most support, as this is where the largest future savings from intervening early are available. Those on the New Zealand equivalent of the JSA represent about 5% of the future cost to the Government, but in the past, received most of the support to help them move into work. New Zealand’s analysis confirms something that definitely rings true here in the UK:  that the real gains are to be made by investing in ESA recipients.

… the real gains are to be made by investing in ESA recipients…

The ‘Investment Approach’ is a powerful prevention communication tool and has been incredibly useful in creating a common language and objective for the New Zealand Welfare to Work agenda. With Work Programme Two and more City Deals on the horizon, the UK has a real opportunity to reconceptualise how Welfare to Work support is designed and targeted. The devolution from Westminster to Scotland for designing and delivering employability services that will succeed the current Work Programme and Work Choice support, provides the Scottish Government an opportunity to start the process of developing a distinctly Scottish Apporach to employability support. You can read more on our analysis of the public consultation responses commissioned by Scottish Government here.

New Zealand’s ‘Investment Approach’ and Rocket Science’s understanding of the approach can provide robust insights into how to better invest in our people.  Please get in touch if you want to know more!

By Clare Hammond

Clare is a Senior Consultant at Rocket Science. With a background in economics and public policy, Clare came to us from the New Zealand Treasury where she had exposure to the development and implementation of the ‘Investment Approach to Welfare’ which was spearheaded by a joint working group from the Treasury and the Ministry for Social Development.