Hutton says charities must take bigger role in welfare provision

Charities, voluntary groups and private firms should take on a bigger role in the provision of welfare, the Work and Pensions Secretary John Hutton will say today.

During a five-day fact-finding visit to America and Canada, he will hail a community-based scheme that he visited in Harlem, New York, as a model for a locally-run welfare state in Britain. Mr Hutton will argue the public sector alone cannot solve the problems of poverty and a one-million strong underclass.

His comments will worry some Labour MPs but he insists he is not trying to privatise the wefare state or return to the "poor law" of Victorian times. As spending on benefits is gradually reduced, he hopes to share the savings with community groups as they take on more responsibilities such as helping the sick and disabled back to work. He insists the Government will provide "pump-priming" finance and set national standards.

In Harlem, Mr Hutton was impressed by a "bottom-up" approach in the area in which more than three-quarters of children are born to families living below the poverty line. The independently-run Harlem Children's Zone, a network of social service, education and community-building programmes, has transformed school results, cut school absences and reduced illnesses such as asthma.

In a speech to the Centre for American Progress in Washington today, Mr Hutton will say: "Anyone who believes it is the public sector alone that will have the answer to tackling social exclusion in the years ahead should come out and see what is going on in Harlem.

"Harnessing the spirit of local involvement being pioneered in Harlem will be crucial to us in the UK if we are to succeed in tackling poverty and deprivation.

"Because it is now primarily pockets of poverty and worklessness that stand in our way - localised areas of deprivation that are especially prevalent within some of our major towns and cities."

Mr Hutton will argue that the priority for modern welfare systems is to ensure that everyone who can work should have the help and support needed to be able to do so.

"I increasingly believe the key to making this happen in the years ahead will be to give local communities the chance to be the drivers of change. There is a wealth of initiatives at local level here in the US from which I believe the UK can learn," he will say.

His visit will help to shape a new UK anti-poverty strategy in the autumn aimed at ensuring the Government hits its target of halving child poverty by 2010 and eliminating it by 2020. It missed its interim goal earlier this year despite lifting 700,000 children out of poverty since coming to power in 1997.

Mr Hutton believes his "go local" strategy is natural territory for Labour. But his move will be seen as an attempt to prevent the Conservative Party winning plaudits for a new anti-poverty programme that avoids "big state" solutions and gives a bigger role to voluntary groups and charities. David Cameron is keen on that approach and a policy review group chaired by Iain Duncan Smith, the former Tory leader, is drawing up a set of draft proposals.

The Work and Pensions Secretary hopes that employers will join forces with local authorities to help deliver new local welfare services. He believes that Britain, unlike America, has already made a heavy investment of public money in welfare but that other sources of finance and non-state providers are now needed.