09.05.11

Select Committee Voices Concerns over the Work Programme

There is a risk that providers of the Government’s new Work Programme might focus their attention on jobseekers who are easier to place in work, at the expense of those who face greater challenges to finding jobs, according to a new report from the House of Commons Work and Pensions Select Committee.

The programme will be implemented nationwide from June 2011, and will replace the range of existing programmes to help benefit claimants find jobs. It will be delivered on a regional basis by a framework of prime contractors, the majority of which will come from the private sector. These prime contractors will be paid by the Government based on their results in achieving sustainable employment for jobseekers. Prime contractors are expected to subcontract service provision to specialist local organisations, including voluntary sector providers.

The report welcomes many of the Work Programme’s design principles, which continue the direction of the previous Government’s employment programmes, however, it warns that the £5 billion programme presents significant financial risks for the Government and its service providers. 

The Chair of the Work and Pensions Committee, Dame Anne Begg, commented:

“We welcome the fact that the Work Programme will offer financial incentives to encourage service providers to support jobseekers who are harder to place in work. However, we remain concerned that these providers may still focus their efforts on the jobseekers who are easiest to help at the expense of those who face greater challenges, such as those with long-term health conditions. We also believe that the programme does not address the risk that there may be discrepancies in the quality of service offered within different regions.

“The financial stakes within the Work Programme are very high. Service providers, including many voluntary sector organisations, may find it challenging to remain financially viable under the payment model, and the Government could face significant costs if delivery were to collapse in a particular region. There are many uncertainties around the programme, and our report makes a series of recommendations which would help to ensure that the Government can adapt to the reality of the programme once it is up and running.”

Included in the report’s recommendations are that: 

  • The Government keeps the payment model under review and assesses the outcomes for all participants because even under the payment-by-results model, there is a risk that Work Programme providers might focus on the clients they assess as being easier to help. 
  • Because the Work Programme creates a significant financial challenge for prime contractors, it might lead to some clients receiving lower quality support and to significant costs to the Government in responding to service failures. The Government should put contingency arrangements in place to ensure the continuity of provision for clients. 
  • Government payments to prime contractors should not be capped in the current economic conditions, but should be kept under review to ensure that prime contractors do not make excessive profits if circumstances change. 
  • The Department for Work and Pensions (DWP) should remind prime contractors that a key aspect of their role is to bear financial risk, rather than passing it on to subcontractors disproportionately. 
  • Contracting arrangements need to ensure that subcontractors are fairly managed and that prime contractors are able to hold subcontractors to account for poor performance. The DWP must establish robust and independent arbitration and sanctioning arrangements through the Merlin Standard. 
  • The Government must ensure that transparent performance data is publicly available and should commission a full independent evaluation of the programme.
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