Is welfare-to-work the "third way"?

It is over 2 years since the Blair administration was elected. Yet people still routinely call it the "new" Government. This feeling of newness comes from its strikingly different approach to social and economic policy.

The Prime Minister's personal project is to give his concept of a "third way" some substance. It now looks like "welfare-to-work" will become that distinctive defining theme for Blair - just as privatisation proved to be the policy that marked-out the ghastly Thatcher experiment.

New Labour has taken social justice as one of its founding beliefs. It regards poverty and unemployment as being amongst the causes of Britain's comparative economic under-performance and not an inevitable, cost of achieving international success - which was the Tories' alibi for rising unemployment. According to the Treasury, 12 million are now poor - 25% of the population.

But Britain suffers from more than just poverty and unemployment. For many people, lost jobs and lost incomes have caused total disconnection from family or community life - even from the basics of citizenship. Tackling this deeper problem of alienation and social exclusion - mainly using economic levers - seems to be at the heart of what the new Government is doing.

So, work is the primary mechanism for combatting poverty - by recreating individual economic self-sufficiency. This means that welfare-to-work is more than just a pledge card commitment "get 250,000 young people off welfare and into work". It has to be a coherent political and economic strategy that simultaneously applies several strands of labour market and social action.

So far, much Government attention has been lavished on "making work pay". The last 2 Budgets have sought to help people retain jobs and improve their earnings by increasing the entry thresholds for income tax and national insurance. Alongside Tax Credits and increased Child Benefit these deliver a minimum income guarantee for families with a full-time earner of 200 per week. Next, this approach needs to be extended to single earners and couples without children.

Reform to benefit administration is also smoothing away some of the disincentives contained in the benefit system itself. There is a 12-month "linking" rule protecting disability benefit and a 2 week Income Support run-on for lone parents. But the corrosive effects of means-testing are still deep in the system - and if the Government gets its legislation through the Commons - means testing will be extended to Incapacity Benefit Recipients. Meanwhile, the Employment Service has gone through a cultural revolution so that claimants are now required to undertake less pointless jobsearch or experience punitive activity testing.

The strategy also recognises that people without skills are getting left behind - stuck in jobs that offer little prospect of advancement out of poverty. A high premium is now placed on workers who can adapt to advancing technology and to new working patterns. All individuals need an investment in skills that can improve their employability throughout their working life - and avoid becoming sucked back into unemployment or stuck in low prospect jobs. After all, those with NVQ3+ earn 25% more on average than those without.

In particular, the Government's approach recognises that young people need to be engaged in learning. A "Learning Gateway" will be launched in September to give better occupational and educational guidance to re-engage those who might otherwise quit learning at the age of 16. Sadly, the Government has not worked out how to make participants more secure financially, the pilot Education Maintenance Allowances and a statutory entitlement to train or study are a fair start.

Lower down the age range, early intervention is needed to drive up education attainment - not least because 40% of young people lack basic numeracy and literacy. Hence the 1bn IT investment in schools, the 6,000 after school study centres, smaller class sizes, 20 million extra books, new "beacon" and specialist schools, followed on by an 800,000 increase in further and higher education places.

And to turn around a generation of disadvantage and dissafection, more support is needed for families and children. Hence half billion of "Sure Start" helping disadvantaged families with parenting skills, primary healthcare and education. Likewise the plan to reduce school truancy and exclusions. And a half billion National Childcare Strategy with a goal - by 2002 - of creating a cool 1 million places in nurseries, after school clubs and holiday schemes combined with a guaranteed early years education for all 4 year olds and two thirds of 3 year olds.

If a flexible and adaptable labour market is important, so too is a framework of minimum safeguards that give individuals new rights in the workplace - the minimum wage, a maximum working week, new unfair dismissal laws, the right to join a trade union, equal rights for part-time workers, an extension to maternity leave and the introduction of parental leave.

The last item in the mix is the programmes that target specific help to the unemployed and others who are disadvantaged - like the New Deal.

This multi-strand approach is necessary. Nothing can be taken a la carte. All elements have to be pursued simultaneosuly to address the multiple barriers faced by people disadvantaged in the labour market.