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Can the Work Programme Work for All User Groups?

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Can the Work Programme Work for All User Groups? Distribution by TSO (The Stationery Office) and available from: Online www.tsoshop.co.uk FIRST REPORT FROM THE WORK AND PENSIONS COMMITTEE: SESSION 2013–14: HC 162 FIRST REPORT Mail, Telephone, Fax & E-mail TSO PO Box 29, Norwich NR3 1GN General enquiries: 0870 600 5522 Order through the Parliamentary Hotline Lo-call 0845 7 023474 Fax orders: 0870 600 5533 E-mail: [email protected] Textphone: 0870 240 3701 House of Commons The Houses of Parliament Shop 12 Bridge Street, Parliament Square London SW1A 2JX Work and Pensions Committee Telephone orders: 020 7219 3890 General enquiries: 020 7219 3890 Fax orders: 020 7219 3866 Email: [email protected] Internet: http://www.shop.parliament.uk Can the Work TSO@Blackwell and other Accredited Agents © Parliamentary Copyright House of Commons 2013 Programme work for This publication may be reproduced under the terms of the Open Parliament Licence, which is published at www.parliament.uk/site-information/copyright/ all user groups? ISBN 978 0 215 05760 0 First Report of Session 2013–14 HC 162 28832 HC 162 Cover / sig1 / plateA 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 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 £23.00 1 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). Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at 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 [email protected]. 2 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 3 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 5 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. 6 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
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