The Committee concludes that the Work Programme’s differential pricing structure, which is designed to financially incentivise contracted providers to support those with more challenging barriers to employment, is not having its intended impact on providers’ behaviour. The hardest to help jobseekers remain at risk of being "parked"—given little or no support by providers who assess them as being unlikely to find sustained work.
Commenting on the Report, Dame Anne Begg MP, Chair of the Work and Pensions Committee, said:
"The performance of the Work Programme in its first 14 months was poor. There are signs that it is now improving significantly for mainstream jobseekers. We hope the next job outcome statistics to be published in June will bear this out – we will be very concerned if they don’t. However, the Work Programme has proved much less successful to date in addressing the problems faced by jobseekers who face more serious obstacles to finding a job – people with disabilities, homeless people, and those with a history of drug or alcohol abuse. It is clear that the differential pricing structure is not a panacea for tackling creaming and parking. The Government must do more to ensure that the Work Programme provides effective support for all jobseekers, not just the ones who are easiest to help".
The Report notes that the Government spent some £248 million less on the Work Programme than anticipated in 2012/13, due to providers’ under-performance in a "payment-by-results" programme. In the short term, the Committee urges the Government to use the unspent Work Programme budget to: extend proven, alternative provision for disadvantaged jobseekers, such as the Work Choice programme for disabled people; extend and continue to promote Access to Work to help disabled people overcome the practical difficulties of starting a job; and provide further support for individuals who complete their two-year attachment to the Work Programme without finding sustained employment.
The Committee also highlights that people with the severest barriers to work, such as homelessness and serious drug and alcohol problems are often not ready for the Work Programme and need support first to prepare for it. It recommends that DWP pilots ways of providing this additional support to prepare these groups for effective engagement with the Work Programme before they are referred.
Commenting, Dame Anne Begg MP said:
"At a time of low growth and high unemployment it is important that disadvantaged jobseekers are kept as close to the labour market as possible. We therefore think it would be inappropriate for the Government to retain the savings they have made as a result of the Work Programme’s under-performance in the early months of delivery. The Government should be using the unspent Work Programme budget to fund a range of measures designed to tackle the long-term unemployment problem."
In the longer-term, the Committee calls on DWP to consider moving away from the current differential pricing model, which is based on the type of benefit a participant is claiming, to a much more individualised, needs-based model. The Report recommends that DWP should assess how a needs-based pricing structure could determine the appropriate level of up-front funding and the types of services required to support individual jobseekers.
Commenting, Dame Anne Begg MP said:
"There is consensus that the type of benefit a jobseeker is claiming does not provide an accurate assessment of their level of need. A more individualised assessment of the person’s obstacles to finding a job would help determine the level of upfront funding required to support them and would reflect the fact that the help that some jobseekers need is more intensive and costly. It could also help to ensure that the types of services disadvantaged jobseekers really need are available within the Work Programme."
Other key conclusions and recommendations include:
On assuring service standards for all participants
The Committee concludes that there are insufficient safeguards to ensure that all participants receive an appropriate service from the Work Programme. It supports the "black box" approach to service delivery, in which providers have freedom to choose how best to support jobseekers without prescription from the Government. However, it argues that the black box must be balanced by appropriate Minimum Service Standards so that every participant knows the level of service to which they are entitled and are protected from being "parked".
Dame Anne Begg MP said:
"The ‘black box’ is the right approach but there need to be safeguards to ensure that all jobseekers receive an appropriate service. Currently each of the 18 prime contractors has its own set of Minimum Service Standards, some of which are so vague as to allow providers to virtually ignore some jobseekers if they so choose. We urge DWP and the providers to establish a single set of core minimum service standards, applicable to all providers, so that all participants know the level of service to which they are entitled."
On the level of specialist support available
The Committee could not assess with any certainty the level of specialist subcontractors’ involvement in the Work Programme, because of a lack of transparent referral data. However, it is clear from the evidence that many specialist providers are not involved in the Work Programme to anywhere near the extent they anticipated. This suggests that the specialist support some disadvantaged jobseekers need is not currently available.
Dame Anne Begg MP said:
"Our scrutiny of the Work Programme was hampered by a lack of transparent referral and performance data below prime contractor level—we simply do not know how many referrals are going to specialist subcontractors with the expertise to help the most disadvantaged jobseekers, or how well individual subcontractors are performing. But it is clear that these specialist providers are not involved to anywhere near the extent they had expected. We believe it is fundamentally important for information to be publicly available about which organisations are delivering the Work Programme and which are the most effective. This would facilitate proper scrutiny, and help the industry to establish effective supply chains."
On the Work Programme’s key external relationships: Jobcentre Plus (JCP) and employers
The Report urges DWP to promote closer working relationships between JCP staff and Work Programme advisers, noting that poor working relationships are at times hampering participants’ effective engagement with the Programme and leading to the inappropriate use, or threat, of benefit sanctions. The Committee calls on DWP to conduct a review of Work Programme sanctioning activity as a matter of urgency and publish its findings by the end of 2013.
The Committee found much room for improvement in the way providers engage with employers and the recruitment services they offer.
Dame Anne Begg MP said:
"Too often, the reality seems to be Work Programme advisers swamped by caseloads of 120-180 jobseekers and employers deluged with poorly matched CVs and under-prepared candidates. Work Programme providers need to focus on preparing jobseekers for real vacancies and offering an effective recruitment solution to employers. Excellent examples of employer engagement with the Work Programme exist, notably Transport for London’s very effective engagement with the 6 prime contractors operating in London. Approaches such as this should be encouraged."
The Report makes a number of other recommendations, including:
- DWP must improve the way it calculates and sets providers’ contractual Minimum Performance Levels [Paragraph 28].
- If under-performance continues, DWP should implement the ‘market share shift’ mechanism, transferring a proportion of new referrals from poorly performing prime contractors to the best performing prime contractor in the same area. However, this must be done in a way that protects highly performing subcontractors [Paragraphs 34-39].
- There should be much more focus on the participant experience. Providers should be required to conduct standardised participant satisfaction surveys, the results of which should form part of DWP’s assessment of providers’ effectiveness [Paragraph 137].
- Regulation of the welfare-to-work market needs to improve. The Merlin Standard, which governs supply chain relationships, should be given more ‘teeth’, including the power to impose financial penalties on prime contractors which treat subcontractors unfairly. The Merlin accreditation process should also include an assessment of the levels of satisfaction of participants, local authorities and employers [Paragraph 167].