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We examined the Department's Commissioning Strategy and the Flexible New Deal in 2009. This report looks at contracted employment programmes as a whole, and follows-up issues which came to light in the last report. It particularly focuses on the prevention of fraud, the treatment of subcontractors, and ensuring fair treatment of customers, including vulnerable groups
We note that levels of detected fraud in contracted employment programmes are low, and that we were told there is little evidence that there is a problem with undetected fraud. However we feel that there is no room for complacency; the frauds uncovered to date have highlighted the extent of the risk that could be exploited because of weaknesses in the system. The Department must ensure that processes for the detection of fraud are rigorous and robust. In addition, the financial penalties for providers who have fraud in their organization are not severe enough. We also recommend that reports by the Risk Assurance Division must be published where wrongdoing is found. We note that the Department is moving to a system combining greater use of "off-benefit" checks and random interrogation of claims with stringent deterrents and this may be an effective and cheaper alternative.
The ERSA Customer charter is currently voluntary for providers and unenforceable. We call for customer rights to be given a much higher status, and for a universal, monitored, and enforceable customer charter to be introduced. We also call for the Department to carry out a "Customer Survey" of customers of contracted employment programmes to enable standards of service to be compared between providers and with Jobcentre Plus. Advisers also need to talk to customers on contracted provision about their experiences and ensure these are fed back to providers and the Department.
The report also looks at the quality of provision offered to vulnerable groups, particularly those with disabilities. It notes that there is evidence of "parking" in Pathways to Work, where providers offer a limited service to those who they feel are unlikely to move into work. The Committee welcomes the Department's plan to pilot an "accelerator" model of payment, where providers receive increasingly large payments per customer as they move more people into work. The report also notes that the Work Capability Assessment is leading to more people with health problems on Jobseekers Allowance, and to a higher proportion of the severely disabled on Employment and Support Allowance. This will lead to providers needing to work with customers with more severe barriers than they had anticipated. We recommend that the evaluation of Flexible New Deal should include an assessment of the impact on different impairment groups, and that the new Work Choice programme for the severely disabled should include monitoring by impairment.
DWP sees itself as having a "market stewardship" role. We conclude that there is no evidence of this happening in practice. The report examines several examples of potentially unfair treatment of sub-contractors. Whilst we do not know how widespread this problem is, neither does the Department and we call on them to clarify what constitutes fair treatment of subcontractors and ensure that prime contractors meet these standards. Despite its rhetoric, the Department has shown no willingness to get involved with even the most serious cases.
The Report is sceptical about the new Merlin accreditation standard. We are very concerned that in cases where the prime contractor is in breach of contract with the Department the Department says it would not get involved. We also note that decisions made by Merlin will have implications for the viability of individual subcontractors and for service delivery, and conclude that it makes sense for the Department to make these decisions itself, allowing it to ensure the market develops in a way which is stable, robust and meets the needs of customers.
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