House of Commons - Public Accounts

Select Committee on Public Accounts Sixth Report

3 Assessing value for money

18. Defining value for money in the provision of services for disabled people can be problematic. The Department is dealing with people who, in some cases, may need a lot of assistance to become ready for work.[36] In addition, some of the wider benefits of gaining and retaining a job, such as health and social benefits, are difficult to capture and measure.

19. The Department has an inadequate understanding of the return it is getting for its expenditure on work programmes. Disabled people have access to specialist provision but can also access mainstream services offered by Jobcentre Plus. The Department does not know how much of the mainstream provision is used in helping disabled people find work, nor how effective it is. In addition, it holds limited or patchy information about Workstep providers and the full nature of the support they offer. For example there is little or no information on how many people are on the programme, what services are being provided, or on the effectiveness of the programme. As a result it cannot easily assess the effectiveness of the programme or profile clients to ensure their needs are being met.[37]

20. There are large variations between different programmes, both in terms of total expenditure (Figure 1, page 3) and unit costs, as well as in costs for similar elements on the same programme.[38] Comparisons of simple costs are misleading since they refer to very different activities, and involve people with very different disabilities, barriers and needs.[39] Outputs also vary, from advice on getting a job, to the actual provision of a job as with Remploy. The initial cost benefit analysis work included in the Comptroller and Auditor General's Report is a useful starting point and has stimulated a degree of interest in determining the value and impact of the programmes. Such estimates should be a feature of all programmes, wherever possible.[40]

21. The Department cannot adequately manage its programmes if it does not have sufficient, reliable management information. The Department acknowledged the deficiencies in information about older programmes. Recent data cleansing and verification exercises are expected to improve substantially the understanding of the older programmes within the next 12 months. The Department said it saw no point in conducting a full-scale overhaul of data collection and IT systems if the programmes they relate to are no longer in existence following the current review.[41]

22. At the time of the Comptroller and Auditor General's Report only the New Deal for Disabled People had been the subject of robust evaluation, although the Department has subsequently published a review of Workstep. Neither of these set out specific criteria for success against which the programmes can be measured. The whole suite of programmes suffers from some vagueness about the criteria for success which makes determination of value for money and proper accountability problematic.

23. The Department aspires to get 1 million Incapacity Benefit recipients into work, and the roll-out of Pathways to Work is seen as the main vehicle for delivering results. It considers a reasonable measure of success will be whether people have actually moved from an "inactive benefit" (such as Incapacity Benefit) into the labour market as active participants. The Department also agreed that two years is a reasonable length of time in which to be able to measure the programme's success but was unwilling to commit to a specific criterion for success or date by when it would be achieved.[42]

24. Whilst many Remploy businesses are not sustainable in purely commercial terms,[43] Remploy may still be doing a good job in a difficult environment. Sales numbers and margins are improving, though Remploy businesses as a whole continue to make increasing losses.[44] This situation may be a feature of the manufacturing sector generally and may not necessarily reflect badly on Remploy.

25. Remploy is split into two main delivery arms. These are the Remploy businesses, including a number of factories that directly employ disabled people, and Remploy Interwork, which supports disabled people in placements, primarily with mainstream employers. Remploy is funded by a block grant of more than £115 million a year from the Department, which covers the running of all services and any losses made by the businesses.

26. Remploy Interwork, the job placement arm of Remploy, is particularly successful in progressing people to unsupported employment, accounting for around 75% of all such progressions.[45] In part, Remploy Interwork's success may arise by virtue of its long association with the factory businesses which enables it to have a better understanding of the issues around employing disabled people directly and to work more effectively with other employers.[46] Remploy should take care to preserve this vital understanding and disseminate this expertise more widely.

27. In the light of the recommendations in the Comptroller and Auditor General's Report,[47] the Department commissioned a review of Remploy from PricewaterhouseCoopers which reported in July 2006.[48] The outcome of the review will inform advice to Ministers. The Department said that it is looking at the profile of Remploy's business and assessing how to make the businesses more viable, whilst continuing to cater for those who need help in a supported environment.[49]

28. Some disabled people have been working in Remploy factories for a long time and realistically this type of environment may be the only one in which they could thrive. The Department recognised that work in an unsupported environment was not an option for some people.[50] Nevertheless, the consideration of Remploy's future options provides the opportunity to take a careful look at the regimes currently in place in order to revitalise valuable provision for an increasing number of disabled people. Any decisions should be take account of all aspects of Remploy's businesses, including any mitigating factors such as entry to a new business area, such as the recycling of used computers, and the associated start up costs.[51] There may also be scope to improve managerial efficiency given that Remploy appears to have a substantial number of managers (220 first line managers/professionals, 187 middle managers and 16 senior managers) relative to the size of the organisation.[52]

36 Q 5 Back

37 Qq 41-44, C&AG's Report, para 4.7-4.10 Back

38 C&AG's Report, paras 10-12 Back

39 Qq 74-75, 79 Back

40 C&AG's Report, paras 4.21-4.27; Qq 6, 45-49, 51-53 Back

41 Qq 61, 91-96 Back

42 Qq 65-69 Back

43 C&AG's Report, para 14 Back

44 ibid, para 4.18 Back

45 C&AG's Report, para 4.15 Back

46 Qq 81, 107-108 Back

47 C&AG's Report, Figure 2, para 31 Back