House of Commons Work and Pensions Committee DWP's Commissioning Strategy and the Flexible New Deal: Government Response to the Committee's Second Report of Session 2008–09 Second Special Report of Session 2008–09 Ordered by The House of Commons to be printed 13 May 2009 HC 526 Published on 15 May 2009 by authority of the House of Commons London: The Stationery Office Limited £0.00 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 Terry Rooney MP (Labour, Bradford North) (Chairman) Anne Begg MP (Labour, Aberdeen South) Harry Cohen MP (Labour, Leyton and Wanstead) Michael Jabez Foster MP (Labour, Hastings and Rye) Oliver Heald MP (Conservative, North East Hertfordshire) John Howell MP (Conservative, Henley) Joan Humble MP (Labour, Blackpool North and Fleetwood) Tom Levitt MP (Labour, High Peak) Greg Mulholland MP (Liberal Democrat, Leeds North West) John Penrose MP (Conservative, Weston-Super-Mare) Jenny Willott MP (Liberal Democrat, Cardiff Central) 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. Committee staff The current staff of the Committee are James Rhys (Clerk), Emma Graham (Second Clerk), Amy Sweeney and Hanna Haas (Committee Specialists), Laura Humble (Committee Media Advisor), John-Paul Flaherty (Senior Committee Assistant), Hannah van Schijndel (Committee Assistant) and Jim Lawford (Committee Support 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 5833; the Committee’s email address is [email protected] Second Special Report The Work and Pensions Committee agreed its Second Report of Session 2008-09, DWP’s Commissioning Strategy and the Flexible New Deal, on 25 February 2009. The Report was published on 5 March 2009 as House of Commons Paper No. 59. We have now received the Government’s response to this Report in the form of a memorandum from the Minister of State, the Rt. Hon. Tony McNulty MP. This memorandum is printed as an Appendix to this Special Report. Appendix: Government response Introduction 1. The Government welcomes the Second Report of the Work and Pensions Select Committee on DWP’s Commissioning Strategy and the Flexible New Deal. The Government believes that work is the best route out of poverty. Over the past decade there has been clear progress in raising employment and tackling poverty. However, the Government believes that more can be done to unlock the talents of every individual and help them move into work. 2. In its recent paper No one written off: reforming welfare to reward responsibility the Department for Work and Pensions (DWP or ‘the Department’) set out the next steps in its ongoing programme of welfare reform. This programme is underpinned by the Department’s Commissioning Strategy. The strategy aims to devolve initiative and innovation; providing opportunities for providers in all sectors – private, third and public – to play a part in the delivery of services, based on their abilities. 3. While the current economic situation will have an impact on the Flexible New Deal the Government strongly believes that now is not the time to cut back on help for the long term unemployed. The recession makes it vital that we give rapid support for the newly unemployed and intensify our support for those furthest from the labour market. That’s why part of the £1.7bn funding allocation announced in the Budget 2009 - on top of the £1.3bn announced in the Pre-Budget Report - will be used to ensure that the Flexible New Deal can cater effectively for higher volumes of jobseekers during the economic downturn. Conclusions and recommendations 1. We welcome the significant role that Jobcentre Plus will play in delivering the new enhanced Jobseeker’s Allowance regime. Given the high level of knowledge and expertise amongst its staff, we agree that Jobcentre Plus is best placed to deliver employment support during the first 12 months of a person’s claim. (Paragraph 12) 2. The Committee visited Jobcentre Plus and were impressed by the preparation that managers and staff were undertaking in advance of the introduction of the new JSA 2 regime in April 2009. We will continue to monitor the progress towards implementation; in particular, we will examine the capacity of Jobcentre Plus to manage the introduction of the new regime. (Paragraph 13) 4. The Department agrees with the Committee that Jobcentre Plus should remain at the heart of the welfare to work system. The expertise and enthusiasm of Jobcentre Plus staff continues to be a key component in supporting the vast majority of Jobseekers to return to work within 12 months of becoming unemployed. 3. We ask DWP to clarify further details of how the extended, voluntary element of FND will work, particularly in terms of the payment structure it will operate. (Paragraph 20) 5. If, after completing 12 months of FND, the provider and jobseeker agree that they would like to continue working together then they can do so for up to a further six months, with the agreement of their Jobcentre Plus Personal Adviser. The provider will be required to supply a revised action plan which is agreed by the customer and that will be checked by Jobcentre Plus. The extension will last for 6 months but can be terminated earlier if both the provider and the customer agree that no further value can be gained from maintaining the relationship. 6. During the six month extension period the payment model will remain unchanged; with the provider able to secure outcome payments based on the individual entering sustained employment. 4. DWP’s own research has found that the “workfare” approach is least effective at getting people into work in weak labour markets and that it is not appropriate for those with the most barriers to finding work. We welcome the Secretary of State’s emphasis on the difference between “workfare” and the “Work For Your Benefit” pilots proposed in the Welfare Reform Bill and we urge the Government to ensure that the piloted approach does not negatively impact upon the employment opportunities of those on the programme. We ask the Government to publish a full evaluation of the pilot and we recommend that it only proceeds with the programme if this appraisal demonstrates convincing proof of success. (Paragraph 24) 7. The Work for Your Benefit programme is being designed specifically to improve participants’ ability to move into employment. The Work for Your Benefit model includes substantial employment support on top of work experience, and an individual approach to work experience placements. This will enable participants to capitalise on the experiences they gain through the programme and maintain their job search. 8. The pilot programme will be fully evaluated and results will be taken into account when any future decision on national implementation is made. 5. The Committee welcomes the establishment of personalised support as proposed in the Flexible New Deal. We support the use of longer contracts which should encourage providers to invest in staff and processes. We note DWP’s response to the wider 3 economic change and the impact this will have on the FND programme, further details of which we discuss later in this report. (Paragraph 27) 9. The Government believes that tailoring support to the needs of the individual is the best way forward in supporting the long-term unemployed. Longer contracts will provide more stability for providers, enabling them to build better relationships with clients and find innovative solutions to meet their needs. Jobcentre Plus will meet regularly with providers to monitor ongoing performance and to discuss the impact of external factors such as the wider economic situation. 6. There are international examples which demonstrate the value of marketisation in welfare to work provision but there is limited evidence from the UK. We reiterate the request we made to DWP in our report on the Government’s employment strategy, that it assess the relative performance of the public, private and voluntary sectors. We also support Professor Gregg’s recommendation that DWP use information from the adviser flexibility pilots to evaluate the benefits of public sector led provision compared to contracted out programmes. (Paragraph 36) 10. Since the introduction of the New Deal in 1997, DWP has developed a body of experience in the use of public, private and voluntary sectors in the delivery of employment services. It is widely recognised that Jobcentre Plus is a world class public service and the Commissioning Strategy sets out a set of principles whose aim to bring about a significant improvement in provider performance. 11. DWP will continue to evaluate the delivery of contracted employment provision, and will evaluate the adviser flexibility. The emerging evidence will inform future decisions on how best to deliver employment services through Jobcentre Plus and contracted provision to help as many people as possible to move into work. 7. The move towards longer and larger contracts has the potential to create a less complex, more manageable employment programme for DWP. However, the Committee has seen first hand on many occasions the value that local specialist provision can have in helping the long term unemployed back into work.