Paul Spicker : Welfare reform has the makings of a nightmare as jobs disappear

The recent white paper Raising expectations and increasing support signals three main changes in the UK benefits system. First, there is going to be more "conditionality". This means benefits will be subject to certain expectations, and if people do not comply with them there will be penalties.

Those with long-term illness or disability will be expected to satisfy work tests, and many more lone parents will be expected to be available for work.

Professor Paul Gregg's recent report – Realising potential, proposes a distinction between those who are "work ready" and those marked for "progression to work". A relatively small group – such as people with severe disabilities or terminal illnesses – will be exempt.

The second major change is the commitment to "personalisation" – the idea that everyone should receive support tailored to their needs. The white paper argues such programmes provide "the support that we know helps people to overcome barriers to work".

The track record of personalised welfare services has not been good. The outcome of test programmes, such as Pathways to Work or the Working Neighbourhoods pilot, has been disappointing. Projects dealing with the most difficult circumstances, such as the New Futures Fund, have been staggeringly expensive. They are inefficient, suffering from "deadweight", where people are included who do not need the service, and "spillovers", where people continue to receive the service after they no longer need it. Faith, however, has triumphed over experience, and "virtually everyone" will have to go through such programmes.

The third major change is in the way benefits are to be delivered. There will, I believe, have to be a huge increase in the resources and organisations devoted to offering individualised support and job training. The 2007 Freud review called for this to be privatised, and since then the Department for Work and Pensions (DWP) has developed its relationships with commercial and voluntary organisations through its "commissioning strategy".

This policy does not suit Scotland well. It should be possible to provide training and opportunities in towns with enough people and employers to justify dedicated services, but it may not be practical in remote, rural and isolated parts of the country. Last year, I wrote to ask the Scottish Government whether it was content that the DWP should negotiate employment support at local level. It replied that the DWP could not do it without it , and that it was co-operating in the process. The Scottish Government's Anti-Poverty Framework, like the white paper, puts emphasis on getting people to work, via "removing barriers" and "offering support".

Helping people into work calls for much more: we need to emphasise labour market development and job creation. The unemployed are trapped in a game of musical chairs. The quickest will get to sit and others will not. We can make everyone run faster, but whoever wins there will still not be enough places. There have to be jobs to go to.

But an emphasis on employment can only take us so far. Work is not the cure-all that the UK government believes it to be. According to recent research from the Rowntree Foundation, half of all poor children are in families where someone is working. The problem is not so much low pay – though that is a problem – as precarious living. Surprisingly few people have been poor constantly for ten years or more; surprisingly many have been poor for at least a year in that time.

People who move off benefits often find themselves in insecure, unpredictable circumstances. The Scottish Council Foundation made the distinction some years ago between three Scotlands: Settled Scotland is comfortable, middle-class and secure. Excluded Scotland is the Scotland of poor people, urban wastelands and deprivation. In between, there is the largely uncharted area of Insecure Scotland: people who do not know what their position will be in a few weeks. There is a pattern of frequent movement from job to job, or between permanent, temporary jobs and unemployment.The benefits system has always relied on people having a clear idea of what their position is, but people don't fit the boxes the benefits system asks them to tick.

The most successful services for social protection are those that do not try to keep pace with every change in circumstances, but instead offer some stability – services such as pensions, child benefit, education and medical care. Social security is about many kinds of need – for example, offering security when circumstances change during sickness and divorce; making it possible to take up opportunities such as education, rehabilitation or early retirement; or meeting needs such as disability or caring for others. The Freud review assumed benefits were at root about work or poverty. If benefits are going to protect people's lifestyles effectively, this can't be accepted.

The proposed reforms might try to force people into uniform categories. More likely, they will lump different circumstances together within the same system, which is what happened to "unified" housing benefit, described as "the greatest administrative fiasco in the history of the welfare state".

Thirty years ago, the Department of Health and Social Security published a controversial review of its basic means-tested benefit at the time – supplementary benefit. That report, Social Assistance, argued it was impossible to run a benefit system on the basis there would be an individualised response to people's needs.

There were already more than four million claimants, and the scheme had to be adapted to its "mass role". This would mean some "rough justice", but the review did not think the scheme could continue to pretend it could deal with people one at a time.

This is what the government now claims it can do. The difference between now and then is the number of people we have to deal with. There are about 1.9 million people on jobseekers' allowance, 2.5 million on incapacity benefits, including the new employment and support allowance, and just over a million more on income support. That makes 5.4 million and if current predictions are right, there will be well over six million by this time next year.

Managing personalised programmes for so many people in unstable, fluctuating conditions is way beyond our capacity. The government wants to introduce this system, and to impose greater "conditionality", at a time when there are few jobs, and nowhere for people to exit the programmes. This is a nightmare in the making.

Professor Paul Spicker is Grampian chair of public policy at Robert Gordon University, Aberdeen.

What the reforms will mean for those on benefits

THE Gregg report was commissioned in July 2008 by James Purnell, right, the Work and Pensions Secretary, and written by Paul Gregg, a professor of economics at Bristol University.

The report formed the basis of the government's welfare reforms announced in last month's Queen's Speech. These reforms seek to reduce the number of people living on benefits as well as the cost of the welfare system – estimated at 20 billion per year.

As well as expecting more claimants to actively look for work, the changes would see those on Jobseekers' Allowance for two years compelled to take part in "full-time activity" to form working habits. They would also be expected to stick to an agreed route back to work. People on incapacity benefit – except the seriously disabled or ill – would be expected to take part in programmes to help them into work. Those with drug problems would be forced into counselling.

The bill is expected before parliament this month and, if passed, should be enacted in 2010-11.