HC 162 [Incorporating HC 835-i to -vi, Session 2012-13]
Published on 21 May 2013 by authority of the House of Commons London: The Stationery Office Limited
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House of Commons
Work and Pensions Committee
Can the Work
Programme work for all user groups?
First Report of Session 2013–14
Report, together with formal minutes, oral and written evidence
Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/workpencom
Ordered by the House of Commons
to be printed 15 May 2013
The Work and Pensions Committee
The Work and Pensions Committee is appointed by the House of Commons to examine the
expenditure, administration, and policy of the Department for Work and Pensions and its associated public bodies.
Current membership
Dame Anne Begg MP (Labour, Aberdeen South) (Chair) Debbie Abrahams MP (Labour, Oldham East and Saddleworth) Mr Aidan Burley MP (Conservative, Cannock Chase)
Jane Ellison MP (Conservative, Battersea) Graham Evans MP (Conservative, Weaver Vale) Sheila Gilmore MP (Labour, Edinburgh East)
Glenda Jackson MP (Labour, Hampstead and Kilburn) Stephen Lloyd MP (Liberal Democrat, Eastbourne) Nigel Mills MP (Conservative, Amber Valley)
Anne Marie Morris MP (Conservative, Newton Abbot) Teresa Pearce MP (Labour, Erith and Thamesmead)
The following Members were also members of the Committee during the Parliament:
Harriett Baldwin MP (Conservative, West Worcestershire), Andrew Bingham MP (Conservative, High Peak), Karen Bradley MP (Conservative, Staffordshire Moorlands), Ms Karen Buck MP (Labour, Westminster North), Alex Cunningham MP (Labour, Stockton North), Margaret Curran MP (Labour, Glasgow East), Richard Graham MP (Conservative, Gloucester), Kate Green MP (Labour, Stretford and Urmston), Oliver Heald MP (Conservative, North East Hertfordshire), Sajid Javid MP (Conservative, Bromsgrove), Brandon Lewis MP (Conservative, Great Yarmouth) and Shabana Mahmood MP (Labour, Birmingham, Ladywood).
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www.parliament.uk/workpencom.
The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume.
Committee staff
The current staff of the Committee are Carol Oxborough (Clerk), David Foster (Committee Media Adviser), James Clarke (Committee Specialist), Daniela Silcock (Committee Specialist), Emma Sawyer (Senior Committee Assistant), and Hannah Beattie (Committee Assistant).
Contacts
All correspondence should be addressed to the Clerk of the Work and Pensions Committee, House of
Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219
2839; the Committee's email address is workpencom@parliament.uk.
Contents
Report Page
Summary 5
1 Introduction 9
Background 9
Policy intentions 10
This inquiry 11
Structure of this report 12
2 The implications of lower than expected job outcome performance 13 Job outcome performance against Minimum Performance Levels 13 Options open to DWP in the event of continuing poor performance 17 The implications of lower than anticipated job outcome payments 19
Provision for unsuccessful participants 19
3 The role of JCP in the Work Programme 21
The aspiration towards “warm handovers” 21
Conditionality and sanctioning of Work Programme participants 22
4 Employer engagement 25
How willing are employers to recruit the long-term unemployed? 25 Work Programme providers’ approaches to employer engagement 26 5 Jobseeker segmentation and the differential pricing model 29
Work Programme payment groups 29
Accuracy of the Work Capability Assessment 30
Effectiveness of the current pricing model 32
Alternative models 35
Funding the Work Programme 36
6 Assuring service standards for all participants 38
The “black box” approach 38
Minimum Service Standards 39
The type of services currently being provided 41
Assuring service quality 43
7 Availability of specialist support and regulating the market 46
The prime provider model 46
Subcontracting models 46
Volume of referrals to specialist subcontractors 47
Use of alternative and external funding streams 48
Financial risk and the flow of funding to subcontractors 49 Regulating supply chain relationships: the Merlin Standard 51
8 Conclusion 54
List of conclusions and recommendations 55
Formal Minutes 62
Witnesses 63
List of printed written evidence 64
List of additional written evidence 64
List of Reports from the Committee during the current Parliament 66
Summary
The Work Programme, introduced by the coalition Government in June 2011, has simplified the welfare-to-work system by replacing a number of contracted employment schemes and consolidating support into a single mainstream programme. It is based on
“payment by results” and focused on sustained job outcomes, meaning that providers receive most of their fees only once they place long-term jobseekers into work for three or six months and continue to support them in work for up to a further 18 months. We were supportive of the policy objectives for the Work Programme in our first Report on it in 2011 and we remain so.
The Work Programme’s job outcome performance in the first 14 months of delivery was poor but there were some mitigating circumstances for this. Providers were operating in a worse than predicted economic situation. Furthermore, the Work Programme represents a wholesale reorganisation of the welfare-to-work market, with a number of providers setting up new operations in unfamiliar areas of the country. The fact that delivery began just over a year after the initial announcement of the policy, and only six months after the final Invitation to Tender was published in December 2010, was a significant achievement.
However, the rapid commissioning process inevitably led to implementation delays which may also have contributed to lower than expected job outcome performance.
The contractual Minimum Performance Levels (MPLs), set by DWP for sustained job outcomes relating to three of the nine claimant groups, have proved to be unrealistic in the circumstances—none of the 18 prime providers (primes) met the year one MPL. Primes remain hopeful that they will meet their contractual targets for jobseekers in the mainstream payment groups in subsequent years and there are some unverified data which suggest that the next set of official job outcome data—due to be published in June 2013—
may show a significant improvement.
DWP has contractual options to shift new referrals from poorly performing prime providers to the best performing prime in the same area, and ultimately to remove contracts altogether from primes. If some primes continue to under-perform in comparison to others in the same area, DWP should implement the “market share shift”
mechanism during 2013, but this must be done transparently and carefully to ensure that it does not further impair the services offered to jobseekers attached to poorly performing primes. DWP also needs to be clear about how market share shift will impact on subcontractors. DWP has asserted that it is prepared to use the ultimate sanction against poorly performing primes of terminating prime contracts. However, we are not convinced that this could be achieved without significant disruption to services. DWP needs to do more to explain how this sanction could be applied effectively, and any negative impacts mitigated.
The Work Programme’s effectiveness could be much improved by better relationships with
its external stakeholders. DWP must promote closer working relationships between
Jobcentre Plus staff and local Work Programme advisers. At a local level providers should
routinely make use of the expertise and knowledge of local authorities and local business
groups.
There appears to be a general lack of awareness of the Work Programme amongst employers; we had to proactively encourage their input to our inquiry. We found some excellent and innovative approaches, particularly Transport for London’s systematic engagement with the six primes operating in the capital. This is a model which DWP should promote. Providers should invest more in preparing jobseekers for specific vacancies and providing an effective recruitment solution, rather than playing the ineffective “numbers game” of deluging employers with poorly matched CVs and under- prepared candidates.
The Work Programme’s differential pricing structure was intended to reduce the risk of
“creaming” and “parking”—in which welfare-to-work providers prioritise relatively work- ready jobseekers ahead of those facing greater disadvantages—by offering greater financial rewards to providers which succeed in achieving sustained job outcomes for jobseekers whom DWP considers to be harder to help. However, there is growing evidence that differential pricing is not having its intended impact: the Work Programme appears not to be reaching the most disadvantaged jobseekers. The current pricing structure, based largely on the type of benefit jobseekers are claiming, is a very blunt instrument for identifying jobseekers’ needs. In the short term, DWP must improve its processes for identifying jobseekers’ barriers to work, including disability, homelessness and serious drug and alcohol issues. These jobseekers should be allocated to the JSA Early Access group, where appropriate. DWP should pilot additional pre-Work Programme support to prepare those with the severest barriers for effective engagement with the Work Programme.
DWP under-spent its 2012/13 Work Programme budget by some £248 million because of lower than expected job outcomes. In a period of low economic growth and relatively high unemployment it is important to keep disadvantaged jobseekers as close to the labour market as possible. DWP should use part of the unspent Work Programme budget to expand proven, alternative employment provision, such as the Work Choice programme;
to extend and continue to promote Access to Work to employers and welfare-to-work providers; and to provide support for individuals who have completed their two-year attachment without finding sustained work.
In the longer term, DWP should consider developing a much more thorough, needs-based assessment of jobseekers’ needs, which could determine the type of services required by each jobseeker and the appropriate level of up-front funding. Alternative funding models, which recognise the greater up-front costs associated with more intensive interventions, should be considered for jobseekers who are furthest from the labour market. DWP should also consider, for some jobseekers, whether it is appropriate to pay for outcomes which include milestones along the path to sustained employment.
The Work Programme currently has insufficient safeguards to ensure that all participants receive an appropriate service. We support the non-prescriptive “black box” approach to service delivery, which should give providers the freedom to determine the most effective interventions for each jobseeker. However, the black box must be balanced by clear, measurable minimum service standards, to better protect participants from being
“parked”. Ideally these should be encapsulated within a single set of standards applicable to
all primes, and to which all participants are entitled. DWP should also require all primes to
survey participants’ satisfaction with the programme and use the results as part of its
assessment of primes’ effectiveness.
One of the key aspects of successful welfare-to-work provision is one-to-one time with a qualified adviser. We were dismayed to learn that caseloads per adviser in the Work Programme are around 120–180 jobseekers. This ratio is simply far too high for an effective service and must be brought down. The industry must also work towards ensuring that all frontline advisers are professionally accredited and qualified, through the Institute of Employability Professionals and other specialist organisations.
The welfare-to-work sector lacks effective regulation; the suspicion remains that many smaller, specialist organisations with experience of supporting jobseekers with the severest barriers, were used by the primes as “bid candy”—to make their bids more appealing to DWP—and then subsequently not used in service delivery. A number of subcontractors also complain that primes have imposed unfair financial terms. The Merlin Standard was introduced by the Government to help regulate the quality of Work Programme supply chains. Its remit should be extended to include powers to impose financial sanctions on primes which treat subcontractors unfairly. The Merlin assessment should also be extended to assess the quality of primes’ services from the perspectives of Work Programme participants, local authorities and employers.
Our scrutiny of the Work Programme has been hampered by a lack of transparent official
data in the early months of service delivery. Official job outcome data—at prime contractor
level only—were not published until some 17 months after delivery of services began. We
were concerned that DWP proposed to publish official Work Programme data on a six-
monthly basis, which we believed was inadequate for a programme of this size and
importance. We therefore welcome DWP’s recent announcement, made after we had
heard evidence from the Minister for Employment, that it will publish official data on a
quarterly basis from 27 June 2013. However, we remain concerned that the data will be
published at prime contractor level only. We recommend that official data on referrals and
job outcomes are published at both prime contractor and subcontractor level. This would
allow more effective scrutiny of the programme and help the market to develop.
1 Introduction
1. In the text of this report, our conclusions are set out in bold type and our recommendations, to which the Government is required to respond, are set out in bold italic type.
Background
2. The Work Programme is the latest government-contracted employment programme, which aims to support long-term jobseekers into work and off unemployment benefits.
Launched in June 2011, the Work Programme replaced a number of existing schemes, including the remaining New Deals for young people, adults, disabled people and lone parents, the Flexible New Deal and Pathways to Work, the previous scheme for Incapacity Benefits (IB) claimants. It therefore consolidates employment support for a very wide range of jobseekers, including many with health problems and disabilities, into a single mainstream programme. 1 Participation is mandatory for most of the jobseekers referred to the Work Programme; failure to engage with the programme can result in benefit sanctions being applied.
3. Jobseekers are referred to externally contracted Work Programme providers if they remain unemployed and on benefit after receiving the support offered to them through Jobcentre Plus (JCP) in the early months of their claim. Work Programme providers take responsibility for offering the interventions long-term jobseekers require, which might include help with building CVs, interview techniques, confidence-building, mentoring, work experience and skills training, for example. Participants are attached to Work Programme providers for two years. They remain on unemployment benefits until they find work and typically continue to report to JCP every two weeks to “sign on”.
4. The table below sets out the nine separate groups of participants in the Work Programme, the point at which jobseekers in each group are referred from JCP to Work Programme providers and whether their referral is on a mandatory or voluntary basis.
1
The Government decided to retain Work Choice, a voluntary welfare-to-work programme, specifically designed to
support benefit claimants with severe disability-related barriers to employment.
Table 1: Work Programme payment groups
Payment Group Point of referral Basis for referral
JSA aged 18-24 At 9 months on JSA Mandatory
JSA aged 25+ At 12 months on JSA Mandatory
JSA Early Access
2From 3 months on JSA Mandatory or voluntary depending on circumstance
JSA Ex-IB At 3 months on JSA Mandatory
ESA Volunteers At any time from point of Work
Capability Assessment Voluntary New ESA claimants Mandatory when expected to
be fit for work within 3-6 months, otherwise voluntary from point of WCA
Mandatory or voluntary depending on circumstance
ESA Ex-IB Mandatory when expected to
be fit for work within 3-6 months, otherwise voluntary from point of WCA
Mandatory or voluntary depending on circumstance
IB/IS (England only) From benefit entitlement Voluntary JSA Prison leavers Day one of release from prison Mandatory
Policy intentions
5. One of the key objectives of establishing a single mainstream contracted employment programme was to create a simpler and more cost-effective welfare-to-work system through a single commissioning process, benefitting from economies of scale and reduced transaction costs, with consequent savings to the Exchequer.
6. The Work Programme has a number of innovative design features, which aim to address some well-established deficiencies of predecessor programmes. It operates a more results- based model by linking a greater proportion of providers’ payments to sustained job outcomes and paying a smaller proportion in up-front fees than has previously been the case. Three types of fees are available to providers:
• Attachment fees—relatively small initial payments made when contact is first made between provider and participant. DWP plans to withdraw attachment fees altogether from April 2014;
• Job outcome fees—larger payments made when the participant finds work, comes off unemployment benefit and remains in work for a total of up to 26 weeks within a 104-week window; and
• Sustainment fees—monthly fees paid to providers for up to 80 subsequent weeks as long as the participant stays off benefit and in work.
7. The Work Programme operates through DWP contracts with large prime contractors (primes), predominantly commercial companies, deemed to have the capacity to bear the financial risk of operating on a results-based model and sufficient cash-flow (at least £20 million annual turnover) to finance interventions with reduced up-front funding. There are 18 primes delivering 40 separate contracts in 18 regional Contract Package Areas
2
The JSA Early Access group includes: ex-offenders and offenders (has or is serving a custodial or community service);
disabled people (as defined under the Equality Act); people with mild to moderate mental health issues; care-
leavers; carers on JSA; ex-carers; homeless people; ex-Armed Forces personnel; Armed Forces reservists; partners of
current or former Armed Forces personnel; people for whom a drug/alcohol dependency (including a history of)
presents a significant barrier to employment. See DWP, Work Programme Provider Guidance, para 13.
(CPAs) across Great Britain: 16 CPAs cover the whole of England; Scotland and Wales each count as one CPA. There are two or three primes operating in each CPA, with the intention that competition between primes will drive up performance. Primes were encouraged by DWP to deliver services through supply chains of subcontractors from the private, public and voluntary sectors, including niche providers with experience of supporting jobseekers with more complex barriers to employment.
8. The Work Programme is designed to allow providers greater freedom to choose how best to support unemployed people, without prescription from government—an extension of the so-called “black box” approach.
9. The Work Programme has an innovative differential pricing model, in which providers can claim higher payments for placing jobseekers into sustained work, according to the payment group they are in. The policy intention of differential pricing is to address the previously observed problems of “creaming” and “parking”, in which welfare-to-work providers have prioritised relatively work-ready jobseekers in order to maximise their financial rewards. “Creaming” occurs where easier to place claimants are identified by providers and given greater support while claimants who face greater challenges are
“parked” and given very limited support.
This inquiry
10. Our first report on the Work Programme was published in May 2011, just before the programme was implemented, and considered its design and commissioning. 3 We were and remain supportive of the Work Programme’s key policy intentions, in particular the obvious benefits of consolidating the large majority of support into a single scheme with resulting economies of scale and reductions in transaction costs. We also welcomed the Work Programme’s more outcome-based model, particularly its focus on sustainable job outcomes, and the extended two-year attachment period. Broadly, we recognised that the Work Programme’s design represented a significant evolution in welfare-to-work and an improvement on some previous schemes. However, our 2011 Report highlighted some concerns about how the Work Programme might operate in practice, notably about the management and regulation of supply chains and whether the proposed differential pricing model would be sufficient to incentivise providers to support those furthest from the labour market.
11. We therefore made clear our intention to conduct a second inquiry into the Work Programme, to consider its effectiveness for different groups of jobseekers, with a particular focus on those who may be considered harder to help. We announced this second inquiry in October 2012. We received 51 written submissions from a range of organisations and individuals. We heard oral evidence from academics and expert commentators; groups representing particularly disadvantaged jobseekers; subcontractors;
emqc Ltd, the company contracted to assess the quality of supply chain relationships;
primes and the industry body, the Employment Related Services Association; employers
3
Work and Pensions Committee, Fourth Report of Session 2010–12, Work Programme: providers and contracting
arrangements, HC 718 [hereafter, “Committee’s 2011 Report”]
and employers’ organisations; and the DWP Minister for Employment, Mr Mark Hoban MP, and DWP officials. A full list of witnesses is set out at the end of this report.
12. We also visited St Mungo’s, a homelessness charity and provider of employment services to homeless people; and Willesden JCP in the London Borough of Brent, for a meeting with Work Programme participants followed by a roundtable discussion with Brent Council, JCP staff, local primes, subcontractors, training providers and the Hilton Hotel, a local employer. We are very grateful to all those we met and to everyone who has contributed to the inquiry.
13. We would also like to thank Richard Johnson, a former Director of Welfare to Work at Serco, for his assistance as Specialist Adviser to the Committee for this inquiry. 4 His deep knowledge and understanding of the welfare-to-work market was invaluable to us and we very much appreciate the contribution he made to our work.
Structure of this report
14. Our Report begins by considering the implications of the well-publicised low job- outcome performance of the Work Programme in the first 12–14 months of delivery. In chapter 3 we examine the role of JCP in referring and handing over claimants to the Work Programme and its role in the application of conditionality and sanctioning. We consider Work Programme providers’ approaches to engaging employers in the programme, and highlight some examples of best practice, in chapter 4. Chapter 5 examines the current differential pricing model; considers its effectiveness in addressing “creaming and parking”; and looks at how the pricing model might evolve in the future. In Chapter 6 we consider whether there are sufficient safeguards to ensure that all types of jobseekers receive an appropriate service within the “black box”. The availability of specialist support within Work Programme supply chains and regulation of the welfare-to-work market are examined in chapter 7. Our key conclusions are set out in chapter 8.
4
Relevant interests of the Specialist Adviser were made known to the Committee. The Committee formally noted that
Richard Johnson declared the following interests: adviser to Brent Council on how to coordinate its services with the
Work Programme.
2 The implications of lower than expected job outcome performance
15. Official Work Programme job outcome performance data, covering the period from June 2011 to the end of July 2012, were published for the first time in November 2012;
some 17 months after delivery began in June 2011. DWP had planned to publish official job outcome data, together with referral data, on a six-monthly basis thereafter. The Minister informed us that lack of data was an issue for him: “I do wish that we had more data from the outset. That is something that we are tackling now [...] I am very keen that we use data to talk about the benefits of the scheme, and also to enable us to manage the scheme and drive through continued performance improvements.” 5 DWP informed us, after we had finishing taking evidence, that it now plans to publish the next set of data on 27 June 2013 and on a quarterly basis thereafter. 6
16. As was much publicised at the time, the November 2012 data showed that job outcome performance in the first 12–14 months of delivery was significantly lower than had been anticipated by DWP. This chapter examines the reasons for low performance in year one of the programme; the implications for subsequent years of the contracts; and the options open to DWP in the event of continuing poor performance.
Job outcome performance against Minimum Performance Levels 17. Job outcome performance is measured as the percentage of participants referred to the Work Programme who achieve a 13 or 26 week job outcome in a 12-month period.
Participants can achieve a job outcome in a single job or in a series of short-term jobs which together satisfy the definition.
18. DWP imposed contractual job outcome Minimum Performance Levels (MPLs) on primes for three of the nine payment groups in the Work Programme: Jobseekers Allowance (JSA) claimants aged 18–24 years old; JSA claimants aged 25 and over; and new Employment and Support Allowance (ESA) claimants. MPLs were not set for the remaining payment groups, which include ex-Incapacity Benefit (IB) claimants, Income Support claimants, JSA claimants with severe barriers to work and prison leavers. DWP set out indicative performance targets for these groups rather than a contractual MPL, as it was thought that job outcome performance amongst these groups was too unpredictable. 7 19. The contractual MPL for the three mainstream payment groups were set as follows: 8
5
Q 554
6
Ev 123
7
Committee’s 2011 Report, para 109
8
See Committee’s 2011 Report, chapter 5
Table 2: Work Programme Minimum Performance Levels (MPLs)
Payment Group Job
outcome MPL
year 1 MPL
year 2 MPL
year 3 MPL
year 4 MPL
year 5 MPL
year 6 MPL year 7 JSA 25+ 26 weeks 5.5% 33% 33% 33% 33% 28% 6%
JSA 18–
24 26 weeks 5.5% 44% 44% 44% 44% 33% 11%
ESA new
claimants 13 weeks 5.5% 17% 17% 17% 17% 11% 6%
The first official release of job outcome data in November 2012 showed that: there were 31,000 job outcome payments paid to providers from 1 June 2011 to 31 July 2012, from 878,000 referrals, representing job outcome performance of 3.5% across all payment groups and job outcome performance of 3.2% in relation to the three mainstream groups during the first 14 months of the Work Programme. The overall performance is lower when calculated for the 12-month period from 1 June 2011 to 31 May 2012: 18,000 job outcome payments from 785,000 referrals, representing overall job outcome performance of 2.3% and job outcome performance of 2.1% in relation to the three mainstream groups. 9 Job outcome performance was therefore significantly below DWP’s expectations.
None of the 18 primes reached the contractual year one MPL of 5.5% in the first 12–14 months of delivery—they were all technically in breach of contract.
20. As we highlighted in 2011, the MPLs were considered by experts to be extremely challenging. For example, Dave Simmonds, Chief Executive of the Centre for Economic and Social Inclusion (Inclusion) and a leading commentator on welfare-to-work programmes, told us in 2011 that the performance challenge for Work Programme providers was “very severe indeed”. 10
21. Expert witnesses to this inquiry agreed that MPLs had been set at unrealistic levels. Ian Mulheirn of the Social Market Foundation was “baffled” by how DWP had calculated the performance targets. His view was that the MPLs set for the Work Programme were
“macho” targets, designed to show that DWP was being tough on private sector providers.
He believed, drawing on the analysis of the National Audit Office (NAO), that a large margin was added to the MPLs on the basis of “pure faith that the Work Programme was brilliantly designed”. His view was that this was a “huge dose of wishful thinking”. He noted that DWP’s record on setting welfare-to-work performance targets was poor, arguing that targets set for previous programmes, such as the Flexible New Deal, had been
“even more absurd”. 11
22. A number of witnesses highlighted that the Work Programme MPLs had been set when forecasts for the economy were more positive. 12 Inclusion’s analysis was that the
9
DWP, Work Programme Statistical Release, November 2012, p 1; see also Centre for Social and Economic Inclusion, Work Programme performance statistics: Inclusion analysis, November 2012, p 1
10
Committee’s 2011 Report, para 100
11
Q 5; See also, National Audit Office, The Introduction of the Work Programme, HC 1701, January 2012
12
See, for example, Q 5 [Ian Mulheirn]; Wheatsheaf Trust, Ev 164
MPLs should be revised down by around 15% to reflect the worse than expected economy.
While overall employment levels have held up remarkably well in the economic downturn since 2008, recent research by Inclusion found a strong correlation between economic growth, measured in Gross Domestic Product (GDP), and the employment prospects of long-term jobseekers. 13 Tony Wilson of Inclusion argued that future Work Programme performance targets need to be more responsive to changing economic forecasts, and perhaps even recognise actual economic conditions retrospectively. 14
23. Sean Williams of G4S, a prime operating in three CPAs, believed that the Work Programme’s failure to meet the contractual MPLs in year one of the contracts highlighted the inadequacy of DWP’s targets, rather than a deficiency in the programme itself:
If the Work Programme is not measuring up against the minimum performance levels, there is clearly either a problem with the Work Programme or there is a problem with the minimum performance levels. I would suggest that the minimum performance levels are completely inadequate for the task that they have been set to do. They were set in completely different macroeconomic conditions and, even at the time, leading figures in the industry said that those minimum performance levels were just not realistic. 15
24. Beyond the worse than expected economic situation, a number of other reasons have been put forward for low performance in the early months of the Work Programme. The Work Programme was commissioned very quickly; delivery began just over a year after the announcement of the policy and within six months of the publication of the final Invitation to Tender. The NAO has highlighted that, in contrast, the procurement phase of the Flexible New Deal took some 15 months and that some previous welfare-to-work programmes were introduced over a four-year period. 16
25. It should also be noted that the Work Programme represents a wholesale restructuring of the sector; some 230 existing welfare-to-work contracts were either terminated or not renewed. 17 A number of primes had to set up operations in areas of the country in which they had never worked before. This involved moving offices and personnel and inevitably led to some delays in service delivery. 18
26. The Minister for Employment has acknowledged that Work Programme performance was poorer than expected, citing in mitigation the difficulties providers were facing in achieving sustained job outcomes for participants and problems in tracking, and claiming payment for, the outcomes which they did achieve. However, he has stated that the Government’s “aspiration” for the job outcomes to be achieved in future years of the contracts “remains the same”. 19
13
Centre for Economic and Social Inclusion, Long-term unemployment in 2012, November 2012
14
Q 37
15
Q 273
16
National Audit Office, The Introduction of the Work Programme, HC 1701, January 2012, p 6; para 2.2
17
Ibid., para 2.12
18
Ev 128
19
HC Deb, 3 December 2012, col 652W
27. Primes told us that they still expected to achieve, or get very close to, the MPLs for the three mainstream payment groups in subsequent years of the contracts. 20 Kirsty McHugh, Chief Executive of the industry body, the Employment Related Services Association (ERSA), agreed that this was likely, although she noted that the unpredictability of economic circumstances made it uncertain. 21
28. We are concerned about the appropriateness of the Work Programme Minimum Performance Levels (MPLs) and how they were calculated by DWP. They do not appear to be sufficiently responsive to the actual economic conditions in which providers are operating. The lack of realistic MPLs results in realistic assessments of performance being difficult and makes sanctioning primes, and therefore delivering and incentivising improved performance, harder to achieve. For the next round of Work Programme contracts, we recommend that DWP devise, in collaboration with independent experts, a new method of calculating and setting MPLs which are more responsive to the state of the economy; can be more transparently calculated and applied; and can be reviewed periodically during delivery.
29. On the day before the release of the official job outcome statistics, ERSA published its own unofficial and unverified Work Programme performance data, based on internal information collected from each of the 18 primes. ERSA’s data related to “job starts”—the number of Work Programme participants who had achieved at least one day in work—in the 16-month period from June 2011 to the end of September 2012. ERSA’s unofficial data showed that 207,381 Work Programme participants had achieved a job during the period.
Although there are no official referral data covering the entire period, ERSA’s data suggest that around 20% of participants referred to the programme had achieved at least one day in work by the end of September 2012. The data are broken down to show the percentage of each monthly cohort of referrals which had achieved a job start by the end of the period.
Some 29% of participants referred to the Work Programme in June 2011, the first month of delivery, had achieved a job start by the end of September 2012. ERSA estimates that 65–
85% of job starts will convert into sustained 13 or 26-week job outcomes. Some witnesses were cautious about the reliability of unverified data produced by the industry, but ERSA believes that its figures indicate a reasonably positive picture of performance “building in the pipeline”, at least within the mainstream JSA payment groups. 22
30. Our scrutiny of the Work Programme in the early months of service delivery has been hampered by a lack of transparent official data. Official job outcome data were not made available until some 17 months after service delivery began. After many months of being unable to provide figures, because DWP claimed they would be unverified and therefore unreliable, the publication of the first official figures was accompanied by the publication of unofficial figures by the Employment Related Services Association (ERSA). Although unofficial, these were frequently referred to by Ministers as an alternative to the official figures. Such an approach to statistics is unhelpful.
20
Q 277 [Sean Williams]; Q 278 [Richard Clifton]
21
Q 270
22
Q 43 [Ian Mulheirn]; Employment Related Services Association (ERSA), Job start data, November 2012, pp 2 and 9
31. We were concerned that DWP had planned to release official Work Programme referral and job outcome data on a six-monthly basis, which we believed would have been inadequate for a programme of this size and importance. We therefore welcome DWP’s recent decision to move from six-monthly to quarterly reporting of Work Programme referral and performance data.
32. At the beginning of May 2013, after we had finished taking evidence, the UK Statistics Authority published a report on official statistics relating to DWP employment programmes, including statistical releases on the range of pre-Work Programme provision and the official Work Programme job outcome data published in November 2012. The main findings of the report were that:
• There may be scope to extend the published statistics to allow comparisons by claimant and provider characteristics
• The presentation of the official statistics on job outcomes in the November 2012 Work Programme statistical release “could have been clearer”
• There is scope for greater coherence across statistical releases and research
• There is scope to improve compliance with the Code of Practice for Official Statistics, including by reviewing how statistical releases meet the needs of users. 23
33. The UK Statistics Authority has recently made a number of recommendations about improvements it would like to see DWP make to the statistics it publishes on the Work Programme and pre-Work Programme employment provision. We support the Authority’s recommendations. We accept that it may not be possible for DWP to take all of the recommendations into account in publishing the next tranche of official Work Programme statistics in June 2013. However, we expect the clarity, interpretation and usefulness of subsequent releases to improve in response to the Authority’s report and our own recommendations.
Options open to DWP in the event of continuing poor performance Market share shift
34. The official data released in November 2012 showed that primes’ job outcome performance in the first 14 months of delivery varied between 2.2% and 5%. 24 Currently primes operating in the same CPA receive an equal number of randomly referred jobseekers. Where there are significant differences in job outcome performance between primes in the same CPA, DWP has the option to shift 5% of new referrals from the worst performing prime to the best performing. The trigger for a potential shift of referrals is a 3 percentage points or greater difference in job outcome performance. The market share shift can be applied from two years into the programme (i.e. June 2013) and subsequently every 12 months. 25
23
UK Statistics Authority, Statistics relating to DWP Work Programme and pre-Work Programme, May 2013, Monitoring Review 2/13, pp 2-3
24
Centre for Economic and Social Inclusion, Work Programme performance statistics: Inclusion analysis, November 2012, table 1
25
Committee’s 2011 Report, para 56
35. Sean Williams of G4S, a relatively highly-performing prime, argued that shifting market share would bring about swift performance improvements, as G4S had demonstrated in relation to its own subcontractors. He believed that the market share shift mechanism should be implemented by DWP as soon and as “boldly” as possible. 26
36. However, expert witnesses urged caution in the application of market share shift. Tony Wilson of Inclusion believed, based on international evidence, that it was likely to bring about short-term improvements in performance but that there were also a “huge host of risks”. Principal among these were risks associated with moving towards monopoly provision, which could damage competition and service innovation in the longer term. Ian Mulheirn also highlighted that shifting market share would result in a diminishing proportion of referrals going to the relatively poorly performing provider, which could further impact on that provider’s performance. His view was that this would “condemn”
some jobseekers to an underperforming provider faced with an increasingly severe performance challenge and reduced funding. 27
37. Any shift of market share will be applied on the basis of job outcome performance at prime level. Subcontractors expressed concern about how shifting market share might impact on them. Wheatsheaf Trust, a subcontractor operating in Hampshire, told us that DWP had not made clear whether subcontractors—which could be performing relatively well despite being attached to a poorly performing prime—will be protected by DWP from potential adverse impacts of actions taken against primes for poor performance. 28
Termination of prime contracts
38. The then Minister for Employment told the Committee in 2011 that primes would not be allowed to “just sink down and cruise along at a very low level. They will be in breach of contract then and we will remove them.” 29 The current Minister reiterated this point, stating that he was “absolutely serious” about contract termination. He told us that DWP had “looked at this scenario” and was confident that, if a prime was consistently underperforming in breach of contract, it was feasible for its contract to be terminated and for a replacement prime to take over its caseload of jobseekers. 30
39. We believe that shifting market share from the lowest performing to the highest performing prime in the same Contract Package Area could boost provider performance and should be implemented during 2013. However, the “market share shift” mechanism will need to be actively, carefully and transparently managed and applied by DWP. We recommend that, in response to this Report, DWP provide further information about the scenario modelling it has undertaken to assess the likely impacts on provider performance and service quality of shifting market share between primes. We also remain unconvinced that the early termination of a prime contract could be achieved without significant disruption to services and request further details about the research DWP has conducted to assess the feasibility of contract termination and its impacts on service delivery.
26
Q 295
27
Q 39
28
Ev 163
29
Committee’s 2011 Report, paras 56–57
30
Q 472
40. We are concerned that relatively highly-performing subcontractors may suffer as an unintended consequence of market share shift between primes or in the event of prime contract termination. We recommend that, in its response to this Report, DWP make clear how it will protect highly-performing subcontractors attached to poorly-performing primes in the event that the latter lose market share or have their contract terminated.
The implications of lower than anticipated job outcome payments 41. Expert witnesses were concerned that, in a largely outcome-based payment model, low job outcome performance in the early months of the programme would impact on investment in future services. Ian Mulheirn believed that, with limited up-front funding, providers would inevitably reduce investment in resources at the frontline. He believed that funding was being reduced at the wrong time and that more funding, not less, was required during a period of low economic growth and relatively high unemployment. 31 42. It should be noted that funding for the Work Programme will be further reduced by the planned withdrawal of attachment fees from April 2014. Professor Roy Sainsbury, of the Social Policy Research Unit at the University of York and co-author of the official DWP evaluation of the Work Programme, argued that attachment fees had thus far been a
“buffer” that had “kept the whole thing going”. His view was that DWP should carefully consider the implications of the withdrawal of attachment fees. 32
43. Funding within the Work Programme has been considerably diminished by lower than anticipated levels of job outcome payments to providers in the first 14 months of delivery. Attachment fees are due to end in April 2014. We recommend that DWP review the balance between attachment fees and outcome fees, and consider retaining attachment fees, to protect delivery of services, including by subcontractors.
Provision for unsuccessful participants
44. Even if primes meet their contractual targets, a large proportion of Work Programme participants will reach the end of their two-year attachment period without finding sustained work. Primes accepted that the proportion was likely to be 60–70% of participants. 33 The first cohorts of participants will begin to come to the end of their attachment to the programme from June 2013. Some witnesses noted with concern that DWP did not appear to have plans in place to further support them. 34 JCP staff in Willesden were aware that DWP was formulating arrangements but were not aware of what form further support might take.
45. We wanted to know what plans the Government had put in place to support unsuccessful participants. The Minister told us that DWP had piloted separate options for those who had made significant progress towards sustained employment—who had undertaken work experience or started a job which had not been sustained, for example—
and for those who were still some way from the labour market. Those who had made
31
Q 38
32
Q 72
33
Q 297
34
Q 53 [Tony Wilson]; Q 302 [Kirsty McHugh]
progress would be supported in their job-searching by JCP and possibly undertake a
“community activity placement”. JCP would provide “more intensive” support for those with greater barriers to employment who were still some distance from the labour market. 35
46. The first cohort of Work Programme participants will reach the end of their attachment period from June 2013. DWP must set out as a matter of urgency the support that will be in place for participants who are unsuccessful in finding sustained work during their two years on the Programme. We recommend that all unsuccessful participants should have an end of Work Programme assessment. Specialist support must be put in place for those who have made little progress. Those who have made significant progress towards sustained employment should be permitted to voluntarily extend their attachment to the Work Programme. The period in which providers are able to claim job outcome fees in relation to these participants should likewise be extended. We also recommend that DWP consider the practicalities of assigning participants who have completed the programme without success, but are close to work, to one of the other primes covering their area.
35
Qq 485–487
3 The role of JCP in the Work Programme
47. This chapter considers the relationship between JCP staff and Work Programme advisers and whether effective processes are in place to ensure a smooth handover of jobseekers, including whether sufficient and accurate information about the jobseeker is passed on to Work Programme providers. We also consider the relationship in the context of the processes for the application of conditionality and sanctions, which are intended to promote participants’ effective engagement with the Work Programme.
The aspiration towards “warm handovers”
48. JCP manages the handover of claimants to the Work Programme. All jobseekers will have been supported by JCP in the early months of their unemployment benefit claim. All will have signed up to a Jobseeker’s Agreement, in which the claimant agrees to undertake particular job-searching activities and attend mandatory “work-focused interviews”. Work Programme participants continue to receive out-of-work benefits as long as they meet the conditions of their Jobseeker’s Agreement, and usually continue to report to JCP to “sign on”, typically every two weeks. All other contact related to employment support is with the Work Programme provider for the duration of the two-year attachment period. 36
49. The initial report of the official DWP evaluation of the Work Programme highlights the aspiration set out in most Work Programme contracts for “warm handovers” of jobseekers from JCP to Work Programme providers. These would typically involve a three- way meeting between the JCP adviser, Work Programme adviser and the participant. The aim of warm handovers is to ensure that information about the participant’s specific needs and barriers to work are effectively communicated to the Work Programme provider and that the participant understands why they are being referred, what they can expect from the programme and what is expected of them in return. 37
50. Professor Sainsbury, co-author of the evaluation report, highlighted evidence from the evaluation that warm handovers did not appear to be commonplace. A key issue which may impact on effective handovers is the quality of working relationships between JCP and Work Programme staff. One JCP manager told the evaluation team that “there has always been a level of hostility from Jobcentre Plus staff towards private providers”. 38 Professor Sainsbury explained in oral evidence why some JCP staff may have a hostile attitude towards the Work Programme:
They see it as a threat to their jobs and their livelihoods. They do not trust it and they do not think that the Work Programme providers are going to do as good a job as they did. That is another reason why they do not sell it—“Why should I sit here in my Jobcentre office selling an organisation, pumping them up, when they are effectively the people that could do me out of a job in future?” 39
36
Committee’s 2011 Report, para 171
37
DWP, Work Programme evaluation: Findings from the first phase of qualitative research on programme delivery, November 2012, chapter 5
38
Ibid., para 5.2.3
39
Q 6
The evaluation report noted variable quality in relationships between JCP and Work Programme staff; there was evidence of close relationships in some localities but in others Work Programme advisers had not even been able to establish telephone contact with their local JCP as they had not been given a direct telephone number. 40
51. Providers painted a picture of improving relationships with JCP. Sean Williams of G4S told us that warm handovers occurred for the majority of jobseekers referred to its Work Programme provision, although there were variations between CPAs. 41 Rehab Group aimed to ensure that all ESA claimants received a warm handover. One of its supply chain partners had decided to co-locate with a local JCP for one day per week, so that warm handovers for ESA claimants could take place at the Jobcentre. 42 Warm handovers were more problematic for Shaw Trust and CDG, which operates in east London, due to the volume of participants in their area and logistical difficulties within local JCP offices. It was piloting different approaches, such as locating JCP staff in its own Lewisham office and appointing outreach advisers to liaise with JCP about harder-to-help clients. 43
52. The Minister assured us that improving JCP/Work Programme relationships was a priority for DWP. As well as encouraging warm handovers, DWP was also promoting the co-location of offices. He believed that JCP staff “now see the merits of a very strong relationship with Work Programme providers.” 44 We gained a similar impression from our visit to Brent, in which JCP staff and providers told us of a problematic relationship in the early days of the Work Programme but reported recent improvements. JCP staff had initially seen referring claimants to the Work Programme as a failure, which was a source of competitive tension and some hostility, but there was a growing understanding amongst frontline JCP staff in Willesden that the Work Programme was needed and local relationships were starting to mature.
Conditionality and sanctioning of Work Programme participants 53. Work Programme providers can require participants to undertake specific work- related activities, such as appointments with advisers and training courses. Failure to participate in these activities has “sanctionable consequences” i.e. payment of benefit can be stopped for a period of time. The sanction is four weeks for a first failure to comply, followed by 13 weeks for any second or subsequent failure within a 52-week period.
54. DWP guidance to providers states that conditionality can be applied on a case by case basis. It states that if “it is apparent that a participant has failed to participate [...] in a non- mandated activity, you should consider mandating them to their next activity to help ensure they effectively engage with you.” Alternatively, providers can decide to take a
“blanket approach”, applying conditionality to all participants every time they want them to attend an appointment or complete a particular activity.
40
DWP, Work Programme evaluation: Findings from the first phase of qualitative research on programme delivery, November 2012, para 5.2.3
41
Qq 310–311
42
Q 311 [Andrew Conlan-Trant]
43
Q 311 [Richard Clifton]
44
Q 546
55. The guidance sets out a number of steps providers must follow before mandating a participant to undertake a particular activity, including:
• Ensuring that the activity is reasonable in the participant’s circumstances;
• Ensuring that the participant is fully aware of the sanctionable consequences of failure to comply;
• Making the participant aware of the specific action they are required to undertake and by when; and
• Notifying the participant in writing.
Decisions on whether to sanction participants for failure to undertake a mandated activity rest with JCP Labour Market Decision Makers. 45
56. Organisations representing particular groups of jobseekers reported that a lack of coordination and communication between JCP and Work Programme staff was leading to the inappropriate application, or threat, of benefit sanctions. The Single Parent Action Network (SPAN) conducted a survey of 16 single parent Work Programme participants, which found that in some cases the Work Programme provider had not been aware of, or not followed, the terms of the participant’s Jobseeker’s Agreement drawn up with JCP:
For instance, [two single parent participants] were told by the Work Programme to apply for jobs that went against their Jobseekers’ Agreement. [...][One] had been told to apply for jobs where she would have to work Saturday and Sunday even though her Agreement specified work between Monday and Friday. 46
Cymorth Cymru, a charitable organisation which works with a range of disadvantaged people, reported that in Wales JCP staff “are not providing Work Programme providers with relevant information such as action plans.” 47 The UK Council on Deafness stated that it was not clear that JCP staff routinely pass on information, through their Disability Employment Advisers, to ensure that Work Programme advisers understand the specific support needs of deaf and other disabled people. 48
57. Research by homelessness charities found that some 22% of homeless participants in the Work Programme had been sanctioned. Respondents to its survey claimed that sanctions related to “appointments they hadn’t been informed of, clerical error, or appointments they had had to move due to other commitments, e.g. a meeting with probation.” 49 The charities’ report also argues that it is likely that many of the homeless people who have been sanctioned, particularly those with severe barriers such as learning disabilities, may not have understood the reasons for sanctions being applied. 50
58. Evidence from the official evaluation found that most sanctions resulted from participants’ failure to attend their initial meeting with an adviser, rather than any
45
See DWP, Work Programme Provider Guidance, Chapter 3a
46
Ev 153
47
Ev w31
48
Ev w86
49
See DrugScope and Homeless Link, Ev 126
50
Crisis/Homeless Link/St. Mungo’s, The Programme’s Not Working, November 2012
subsequent failure to engage in Work Programme activity. Furthermore the evaluation found that:
Providers report that some of these failures to attend result from poor quality information passed to them by Jobcentre Plus. There is little evidence of effective communication on this question between providers and Jobcentre Plus local offices. 51
The evaluation report concluded that communication between JCP and the Work Programme, in both directions, was “a critical factor affecting the effectiveness of the sanctions process”. Overall, the evaluation’s initial analysis suggests that “while conditionality and sanctioning are an accepted and acceptable part of the Work Programme there is some way to go in ensuring that the processes work effectively.” 52 59. Improving local relationships between JCP and Work Programme staff is rightly considered a priority by DWP. We observed an improving relationship in Brent but the evidence from the official evaluation suggests a varied picture across JCP Districts and clearly more progress needs to be made. Local JCP managers must take responsibility for ensuring that the message gets through to frontline staff that good working relationships with their Work Programme counterparts are essential.
60. We are in favour of conditionality where it supports the policy intention of encouraging participants’ effective engagement with the Work Programme. However, we are deeply concerned by evidence of the inappropriate use, or threat, of benefit sanctions against Work Programme participants and the initial findings of the official evaluation, which suggest that the processes for the application of conditionality and sanctions do not yet work effectively. We recommend that DWP conduct a review of Work Programme conditionality and sanctioning activity as a matter of urgency, with a view to ensuring that the processes are clearly understood by participants and consistently applied by both Work Programme and JCP staff, and that it publishes its findings by the end of 2013.
51
DWP, Work Programme evaluation: Findings from the first phase of qualitative research on programme delivery, November 2012, para 11.4
52
Ibid.
4 Employer engagement
61. Encouraging employers to recruit long-term unemployed people will be a key factor in improving the job outcome performance of the Work Programme. We initially received no written submissions from employers but we were very keen to hear their views on the Work Programme as a potential recruitment partner. We approached a number of employers and employers’ organisations which have a track-record of promoting the employment of long-term and disadvantaged jobseekers. This chapter examines the Work Programme’s effectiveness in engaging with employers and sets out some examples of best practice.
How willing are employers to recruit the long-term unemployed?
62. Some witnesses believed that few employers are willing to consider recruiting long- term jobseekers who may face challenges in adapting to the workplace. 53 Papworth Trust, a Work Programme subcontractor in the east of England, wrote:
A major barrier for our clients is that employers often seek “ready-made” employees who are proficient in their role with minimum training, support, cost or perceived risk to the employer. Extra support or training is viewed as inconvenient, time consuming and costly. 54
Similarly, the UK Council on Deafness believed that deaf and other disabled people face
“attitudinal barriers at work” and mental health organisations highlighted research by Shaw Trust which found that 40% of employers view employees with mental health problems as a “significant risk”. 55 Cymorth Cymru also raised concerns about employers’
perceptions of some groups of unemployed people, particularly ex-offenders. 56 Providers we spoke to in Brent believed that negative media coverage may have dissuaded some employers from engaging with the Work Programme.
“Repositioning” employers
63. We sought evidence from the Business Disability Forum (BDF), an employers’
membership organisation, one of whose aims is to facilitate the recruitment of disabled people. BDF believes that two key changes are required if the Work Programme is to effectively support large numbers of long-term unemployed disabled people into sustained employment. Firstly, employers must be repositioned from “problem”—people whose attitudes must be changed—to “valued end user, customer and potential partner”.
Secondly the “disability-to-work supply chain” needs to be streamlined, equipping and supporting employers and making it easier for them to recruit disabled people on the basis of their capabilities. 57
53
See, for example, Ms M J Canning, Ev w18, para 2
54
Ev w64
55
Ev w18; Ev 137
56
Ev w30
57
Ev 115
64. Susan Scott-Parker, BDF’s Chief Executive Officer, felt that Work Programme providers were not sufficiently aware of initiatives such as Access to Work, a DWP-funded scheme which supports disabled people in work by providing practical support to overcome work-related obstacles resulting from their disability. The scheme contributes to costs which go beyond the “reasonable adjustments” which employers are obliged to provide under the Equality Act. Access to Work supported 30,780 disabled people in 2011/12, of whom 10,000 were new recipients. 58 The Government recently announced its intention to “strengthen and improve” the scheme. 59
65. BDF argued that it was fundamentally important that providers understood employers’
recruitment processes in order to facilitate the employment of disadvantaged jobseekers such as disabled people. Susan Scott-Parker highlighted work BDF had done with the National Autistic Society, for example:
[...] they brought us 50 CVs, so that we could see the talent and the qualifications and what they were interested in, and then we brought a group of companies together that we knew in the next year or two were likely to have jobs to match. [...] We learned that the job interview disadvantaged many of these individuals, and so the members agreed to do work trials. We have had hundreds of people with Asperger’s find work as a result of bringing the demand from the employer together with the supply of candidates in a structured and systematic way [...]. 60
66. We also heard evidence from Timpson, the well-known high street shoe repairing and key-cutting company. For eight years, Timpson has been running a scheme offering work experience and jobs to prison-leavers. It works with around 80 prisons, interviewing prisoners with a view to employing them or offering work experience placements on release. In recent years the scheme has been supplemented by prison-based Timpson
“academies”, in which prisoners can learn the skills required to work in Timpson’s branches. Timpson’s charitable foundation also funds pre-release support, helping prisoners make plans for housing, family support and a job on release. Timpson currently has 235 prison leavers in its organisation, 142 of whom are in full-time paid jobs. 61 Gouy Hamilton-Fisher, Timpson’s Head of People Services (HR), told us that there was a strong business case, as well as a corporate responsibility case, for recruiting ex-offenders. After he had helped set up Timpson’s prison-leavers scheme, he “could not believe how blind we had been to a wider recruitment pool.” 62
Work Programme providers’ approaches to employer engagement 67. During our visit to St Mungo’s, its employment services staff told us that establishing good relationships with employers was sometimes problematic. However, they emphasised that they had managed to establish effective partnerships with a number of sympathetic employers. In St Mungo’s experience it was often more productive to approach small and
58
DWP, Access to Work: Official Statistics, April 2013; See also, A review to Government by Liz Sayce, Getting in, staying in and getting on: Disability employment support fit for the future, June 2011, p 14
59
HC Deb, 19 November 2012, cols 23–26WS
60
Q 407
61
Ev 161
62
