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14 August 2007

Peter Hain claims that he wants to 'maximise the voluntary sector and local government' involvement in getting disabled claimants back to work and distanced himself from the recent Freud report, which urged the creation of huge market for the private sector.

David Freud, a big City banker, produced a report for Tony Blair on ways to get disabled claimants and single parents off benefits and into work. Freud's preferred option was to get the private sector to take over the role of welfare-to-work providers on a payment by results basis. Freud saw this as an opportunity for the private sector to make many millions in profits in what he considered would be a 'multi-billion market'. The report was warmly received by Mr Blair and John Hutton, the former Work and Pensions secretary

However, Peter Hain, who replaced Blairite John Hutton as Work and Pensions secretary, has now voiced fears that such a market would lead to a few private providers having a monopoly of schemes such as Pathways to Work. When it was pointed out that Hain's plans for just £200 million of additional investment fell well short of the enormous market opportunities envisaged by Freud, Hain responded 'Freud is not the secretary of state'.

However, whatever Mr Hain may be saying publicly, Benefits and Work understands that private sector providers did very well in the first round of contracts for Pathways to Work whilst some major voluntary sector agencies did very poorly. An official announcement of the successful bidders has yet to be made.

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