Memorandum submitted by Shaw Trust (EP
04)
1. SUMMARY
1.1 Shaw Trust believes that aspects of
the manner in which contracted employment programmes are managed,
are unnecessarily burdensome.
1.2 Current safeguards are overly bureaucratic
and not as effective as some alternatives. Therefore, the question
of whether there are sufficient safeguards is less important than
the question of whether current safeguards are effective.
1.3 We see little evidence to suggest that
the centralised contract management structure has been of benefit
to the overall customer experience. However, it has impacted on
our ability to fix issues at a local level quickly.
1.4 We do not believe that current availability
of performance information is sufficient. We also believe that
performance against target information should be published in
order to ensure transparency and accountability in performance.
1.5 Although in principle Shaw Trust welcomes
the objective behind the introduction of the Star Rating System
as a useful measure of performance, it is concerned about the
application of the system. We can identify a number of problematic
areas with regards to its implementation.
1.6 It is the view of Shaw Trust that the
prime contractor model is delivering on its promise of transparency,
underpinned by the strict transparent practices which providers
are bound by contractually. However, we believe that DWP must
equally ensure that it adheres to transparent practices and its
own commissioning strategy at all times.
1.7 We believe that there are a number of
other emerging contract management issues which must be dealt
with urgently. Included among these are the issues of TUPE, zero
hours contracts, and the impact the global financial crisis has
had on targets.
1.8 Shaw Trust would welcome the opportunity
to provide further evidence to the Committee on the above matters
at the forthcoming hearings.
2. SHAW TRUST
2.1 Shaw Trust is a registered charity and
company limited by guarantee. We provide training and work opportunities
for people who are disadvantaged in the labour market due to disability,
ill health or other social circumstances. We are the largest third
sector provider of employment services for disabled people in
the UK and have been supporting disabled people to find employment
for more than 27 years.
2.2 Shaw Trust's delivery of employment
programmes on behalf of DWP includes:
— Workstep: Our contract is to provide
employment support for more than 3,200 severely disabled
people.
— New Deal for Disabled People (NDDP):
Shaw Trust is contracted to deliver services in 17 of the
19 districts.
— Pathways to Work: Shaw Trust holds five
Pathways to Work contracts.
3. RESPONSE TO
THE INQUIRY
3.1 DWP's contract management approach
3.1.1 Shaw Trust believes that there are
a number of different areas where the management and administration
of contracted employment programmes is overly bureaucratic and
burdensome towards providers. As a consequence, focus is often
lost from a system which seeks to deliver outcomes, to a system
which seeks to award process.
3.1.2 We believe that the Department of
Work and Pensions (DWP) needs to strike a balance between "over-managing"
aspects of outsourced employment contracts and under valuing the
soft outcomes and overall client experience.
3.1.3 Overall, Shaw Trust believes that
"common sense" should prevail in instances where bureaucratic
processes are interfering with the efficient delivery of services.
It is not acceptable to the care and support of our clients for
bureaucratic practices to stand in the way. To give an example,
claims have been rejected because the colour of the ink used to
fill out the form was different—causing unnecessary delays
in payment.
3.1.4 Contracts should ultimately give primacy
to the needs of clients and the viability of those providers who
seek to assist clients.
3.2 Safeguards
3.2.1 Perhaps the question of whether there
are sufficient safeguards is not as pertinent as the question
of whether the safeguards are effective.
3.2.2 An example of focus on process over
outcomes can be found in current safeguards, which are currently
overly bureaucratic. This can best be seen in the practice of
providers having to source paper-based records in order to prove
a job placement.
3.2.3 The extra workload and inefficiency
caused by this bureaucratic process does not necessarily provide
any additional safeguard against determined fraudulent claims.
It certainly does not provide any additional security to the alternative
of using Jobcentre Plus's own records. If anything, paper-based
systems are less secure and therefore, more vulnerable to fraudulent
practice.
3.2.4 To give further detail, under New
Deal for Disabled People (NDDP) there are two different types
of job evidence:
(a) E1 form which is completed by the client,
accompanied by a single payslip confirming that they had commenced
work and that it is "expected to last for at least 13 weeks",
and
(a) E2 form which is completed by an employer,
stating the job is "expected to last for at least 13 weeks"
with relevant details of the post.
3.2.5 Following a National Audit Office
(NAO) Review, DWP require additional evidence for the E1 form.
It is now to include either a contract of employment which must
state the job is "expected to last at least 13 weeks"
or wage slips covering the 13 week period. This subtly changes
the outcome definition to "has been in work for 13 weeks"
which is not appropriate under the contract terms.
3.2.6 For small businesses in particular,
this requirement is overly burdensome and has at numerous times
prevented us from claiming legitimate job outcomes.
3.2.7 The E1 form is used to evidence
30%-50% of NDDP jobs. The additional evidence requirements that
have prevented us from claiming job outcomes have a negative impact
on both our performance figures and our finances—potentially
compromising our ability to support future clients.
3.2.8 The situation is similar under the
Pathways to Work scheme, where providers are also finding it difficult
to meet this additional requirement, and where the mandatory nature
of the programme makes achieving outcomes even tougher.
3.2.9 Alarmingly, we also have anecdotal
evidence that some larger employers have started to charge providers
for this information, knowing that providers are dependent on
it in order to make a successful job outcome claim. Employers
are describing this charge as an "administrative fee".
3.2.10 We believe that the completion of
form E1 or E2, together with evidence from Jobcentre Plus's
own records that the client is no longer claiming benefit, should
be sufficient to determine whether a claim is genuine or fraudulent.
3.2.11 We also believe that the greatest
disincentive to fraudulent activity would be for DWP to impose
financial penalties upon providers who submit such claims, and
to remove their contracts.
3.2.12 In broad terms, we believe that the
sheer bureaucracy behind a paper-based system, is inefficient—for
both public bodies and providers—and does nothing to enhance
employment outcomes for clients. We believe that a move to an
electronic system is imperative in order to modernise the UK's
welfare system.
3.2.13 Shaw Trust would welcome the opportunity
to provide further evidence and examples to the Committee on this
matter—in either written or verbal form.
3.3 Centralisation of contract management
3.3.1 In our experience, the centralisation
of contract management in DWP has had a significant impact upon
the role of JCP and its relationship with providers.
3.3.2 Whilst we acknowledge that there may
be a cost benefit argument for DWP in having a centralised contract
management structure, there is little evidence to suggest that
it is of benefit to the overall customer experience. In addition,
it has affected our ability, as a provider, to manage performance
on a more localised level.
3.3.3 Previously, we built relationships
and dealt directly with JCP District Managers, as well as other
managers at other local/district levels. In our experience, local
and district managers are in a far better position to understand
issues which affect performance locally and they are in an even
better position to make changes quickly in order to fix any such
issues. As a result of centralisation, we now deal with a Supplier
Relationship Manager within DWP who is responsible for Shaw Trust
nationally. This means a loss of the ability to factor-in and
quickly fix local issues affecting performance.
3.3.4 In addition, as DWP now manage performance,
there appears to be a higher propensity for disconnect between
JCP and DWP. We believe that the local knowledge that JCP managers
bring to different programmes should be utilised to manage performance.
3.3.5 We believe it would be of benefit
to overall service delivery for local managers to be made more
aware of performance issues within their local areas and centres,
as well as giving them more flexibility in managing those issues.
3.4 Information and performance measurement
3.4.1 We do not believe that current availability
of performance information is sufficient, and therefore it is
difficult to judge whether accuracy is monitored effectively.
3.4.2 We believe that performance against
target information should be published in order to ensure transparency
and accountability in performance, including when existing providers
bid to run new programmes. In particular we are concerned that
the star rating system is implemented effectively.
3.4.3 In principle Shaw Trust welcomes the
objective behind the introduction of the Star Rating System as
a useful measure of performance. However, it is concerned about
the application of the system, which has been problematic across
a number of different areas.
3.4.4 We therefore believe that modifications
need to be made to the system in order to make it work more effectively.
As an example, the Star Rating System must include client volumes,
so as to ensure that organisations which help few clients are
not rewarded disproportionately.
3.4.5 We are also concerned that in its
current format, the Star Rating System may not necessarily be
helpful in driving quality. We believe that providers should be
measured against a set, best-practice standard rather than being
measured against one another.
3.5 Transparency in the prime contractor model
3.5.1 It is the view of Shaw Trust that
providers already adhere to strict transparent practices, as per
their contractual obligations. We have no reason to believe that
practices within the prime contractor model are anything other
than transparent and sound.
3.5.2 Shaw Trust recognise the importance
of probity for the establishment of a sound cooperative relationship.
In order to facilitate this aim we support the contractual obligations
which bind us to reporting on performance and which subject our
business to random audits for probity.
3.5.3 Equally, we believe that DWP must
ensure that it adheres to transparent practices and its own commissioning
strategy at all times. DWP processes at the commissioning stage
must be made clearer and more transparent. For instance, deadlines
for tenders need to be clear and absolute and DWP must make every
effort to honour its deadlines. DWP must also make every effort
to communicate any changes clearly to all providers.
3.5.4 Shaw Trust believes that in order
to allow providers to appropriately plan for tenders and for the
delivery of work, DWP must ensure that it adheres to its own commissioning
strategy at all times, without variation.
3.6 Other emerging contract management issues
3.6.1 TUPE
3.6.1.1 A major contract management issue
is emerging on the transition between the Workstep and Work Choice
programmes with regards to TUPE. Data provided by DWP shows that
37% of programme administrators and 58% of participants are on
public sector terms and conditions (mainly with local authorities),
which are typically more generous than those offered in the private
or third sectors.
3.6.1.2 Where TUPE applies, the Trust would
be required to provide equivalent terms and conditions to the
transferring staff and participants. This would include meeting:
— any salary shortfall (likely to be small),
— pension contributions (likely to be high
in the case of participants transferring from the public sector),
— any pension fund shortfall, and
— redundancy costs in the event that a
person's job becomes redundant.
3.6.1.3 Two tier work force principles would
also apply, whereby new entrants to jobs that transferred under
TUPE would receive the equivalent of the new terms and conditions.
3.6.1.4 It is likely that this level of
cost and liability will make some of the Work Choice bids unviable.
On this basis, DWP should be asked to underwrite any legal costs
associated with a challenge around the status of Group 3b and
the additional costs and liabilities affecting Group 3b in the
event that TUPE is deemed to apply.
3.6.1.5 We are concerned about the lack
of direction that DWP gives within its Invitations to Tender around
whether TUPE applies. We have seen evidence that other government
departments are more directive about the application of TUPE.
We are, at present, particularly concerned about the lack of either
direction or provision that DWP is giving in relation to transfer
of undertakings for several hundred severely disabled Workstep
clients. These people are employed directly by current Workstep
contract holders and whose employment is hosted by other companies.
We believe DWP should be pro-active in protecting the employment
rights of these people, providing funds to cover this if TUPE
obligation renders the new contracts unviable.
3.6.2 Zero hours contracts
3.6.2.1 We are increasingly concerned by
the growing practice amongst some providers of claiming "zero
hours contracts" as suitable job outcomes under all circumstances.
These contracts, which are particularly common in the nursing
and care industries, are offered for positions in which staff
are not necessarily guaranteed a certain number of hours per week.
3.6.2.2 We acknowledge that there may be
some circumstances—particularly within certain industries—where
such contracts are preferable to a client not being offered a
job at all. However, we strongly believe that this is unacceptable
as a standard outcome under normal circumstances, and we regret
to see this practice being used widely by some providers.
3.6.2.3 Zero hours contracts are not in
the best interests of the client or DWP and in our opinion certainly
not commensurate with the level of service required under DWP's
contract terms. We believe that consideration must be given to
containing, and where possible, eliminating the practice, and
that appropriate systems are developed to ensure that this is
a feature of DWPs management approach.
3.6.3 The global financial crisis and its impact
on targets
3.6.3.1 We believe that DWP needs to consider
contract outcomes in the current financial climate. Programmes
that were designed when unemployment was low are now putting providers
under unreasonable pressure. This is particularly worrying for
those third sector providers who are responsible for providing
specialist support for specific client groups.
3.6.3.2 It must be recognised that economic
conditions have a massive impact on a provider's ability to meet
contract targets, and we believe that there must be flexibility
and dialogue throughout the life cycle of the contract—including
when the programme is put out to tender.
3.6.3.3 Providers should be rewarded for
making an honest assessment of possible job outcomes in the immediate
economic circumstances rather than making the most ambitious contract
offers to meet requirements of programmes based upon redundant
economic and labour market data and then failing to meet targets.
We thank the Committee for the opportunity to
contribute on the above issues. We hope this information is useful
to the Committee and would welcome the opportunity to provide
further evidence at the forthcoming hearings.
October 2009
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