The DWP should also maintain, and ideally expand, a separate, specialist scheme for people with substantial disabilities, says the Work and Pensions Select Committee in its report.
The Rt Hon Frank Field MP DL, Chair of the Work and Pensions Committee, said:
"DWP deserves credit for implementing a programme which, in general, produces results at least as good as before, for a greatly reduced cost per participant. But we must not forget that nearly 70% of participants are completing the Work Programme without finding sustained employment. We must do much better. Our recommendations aim to create an employment support system which is equipped to help into work people facing serious problems who have been distant from the labour market, and inadequately supported, for far too long."
Characteristic-based assessment and simpler, more effective payment model
The Committee finds that the Work Programme's differential payments model - designed to incentivise contracted welfare-to-work providers to invest resources in helping unemployed people with more challenging problems - is unnecessarily complicated and has not had the desired impact on providers’ behaviour. The Committee recommends a more effective model, with more direct financial incentives and much simpler, clearer (and generally earlier) referral points from Jobcentre Plus to contracted providers.
The Committee concludes that the current categorisation of Work Programme participants based largely on benefit-type is a poor proxy for claimants' relative employability and level of employment support required. It calls for a new assessment to identify specific characteristics known to be strong indicators of likelihood of long-term unemployment, including illiteracy, innumeracy and poor educational attainment; weak employment history; alcohol and substance misuse; and housing problems.
The Report recommends that the new assessment be used to categorise claimants into one of three groups (work-ready; intermediate support; or intensive support group). Payments to providers should escalate as they help greater proportions - above average, good and exceptional performance thresholds - of claimants in the intermediate and intensive support groups into work.
Upfront service fee
To further address the current under-investment in people facing more difficult problems, and to facilitate more personalised support for those who need it most, an upfront service fee should be introduced in relation to participants in the intensive support group.
Frank Field MP said:
"DWP has so far under-invested in people with more complex barriers to making a swift return to work. This will be the key challenge for the Work Programme's replacement. A growing proportion of long-term unemployed people have serious barriers to employment and require more intensive and personalised help. The next programme needs to more consistently identify people facing very challenging problems, and provide the right type of help, delivered by the right type of adequately-resourced organisations, at the right time.
We strongly support a continued focus on payment-by-results in welfare-to-work but the evidence is clear: pure payment-by-results has not worked in relation to people who need a lot of help to return to work. Some upfront funding from the Government is needed to address this."
More effective integration of employment support with related services
The Committee concludes that effective employment support for people with complex needs relies on integration with related, often locally-run, services including health, housing, education and skills, and support for alcohol and drug addiction. This is well recognised by welfare-to-work providers, and by DWP, but in practice effective integration is patchy.
The Committee recommends that DWP take the lead in establishing effective integration of local services, and pooling of budgets, more widely by expanding the parameters of its current Universal Support Delivered Locally pilots.
Heidi Allen MP, Member of the Committee said:
"Our recommended approach to faster and more focused triage, coupled with changes to the Work Programme's payment model will help, but is not the complete answer.
The Government should also coordinate much more effective integration of employment support with related health, housing, education and skills and other locally-run services and employers.
Too often numerous local agencies spend money on the same individuals in a rather chaotic and overlapping way, with insufficient focus on providing the help people need to get back into work and become more self-sufficient.
Addressing this does not necessarily require more money, in fact we believe pooling of resources and joint-working across policy areas could lead to much better results while also producing efficiencies. This focus will also help with clients' self esteem. Being passed around for up to two years cannot have a positive effect on a person's aspirations."
A separate specialist programme for disabled people
The Committee notes the Government's aspiration to halve the gap between the employment rate of disabled people and that of the non-disabled population. If this is to be achieved over one million currently unemployed or economically inactive disabled people will need to enter paid work. To this end, the Committee urges the Government to maintain, or ideally expand, a separate, voluntary scheme, available to people with substantial disabilities regardless of whether they are claiming out-of-work benefits. The specialist programme should be delivered exclusively by specialist disability organisations with the expertise to support disabled people.
Some flaws in the current specialist programme, Work Choice, are identified, notably that it does not appear to be well-focused on people with higher levels of need. The Committee recommends that these flaws be addressed, and the strengths of Work Choice maintained, in a new programme to run from 2017.
Frank Field MP said:
"The Government's very ambitious aspiration to halve the disability employment gap must be reflected in the configuration of DWP's contracted employment programmes. Helping over one million more disabled people into work won't be achieved without an effective employment programme, delivered by specialists.
For reasons of cost, the Government may be tempted to consolidate mainstream and specialist disability employment support into a single new programme. We think this would potentially be a grave mistake."
Innovation and sharing of "What Works"
The Report urges DWP to do more to create the conditions for genuine innovation, learning and dissemination of best practice across the employment support sector. It recommends that the Government:
- Establishes an Employment Support Innovation Fund, which should be used to test and develop innovative and effective approaches to helping groups of people which have been poorly served to date
- Brings labour market policy into the remit of a What Works Centre, so that employment programmes can continue to evolve based on robust evidence of what is most likely to be effective for different types of people in different localities.