Memorandum submitted by Working Links
(EP 05)
EXECUTIVE SUMMARY:
— Working Links welcomes this inquiry and
supports the Work and Pensions Committee in its initiative.
— On the whole, Working Links believes
that the Government's contract management and compliance systems
are strong and effective.
— In particular, new innovations such as
Provider Engagement Meetings (PEMs) and the development of the
Merlin standard for information sharing and reporting will further
strengthen the system. Additionally, the introduction of the Provider
Referral and Payment system (PRaP) will serve to further eradicate
the potential for human error and the opportunity to bypass formal
procedures or cut corners through the clear separation of roles
between consultants and the claims team.
Current processes are highly paper based and
more prone to error and inaccuracies than the planned PRaP system.
— Working Links believes its own systems
are robust and capable of dealing with any disruptions to its
high standards of operation as evidenced below, through clear
detection mechanisms, and procedures to deal with non compliance.
— DWP centralising of contract management
does not necessarily mean making the delivery of services less
flexible and should mean raising the standards of management across
Great Britain.
BACKGROUND
1.1 Working Links is one of Great Britain's
leading providers of employment services for long-term unemployed
people. Since its formation in 2000, Working Links has become
a key supplier of employment, skills, Information Advice and Guidance
(IAG) and support related services in some of the most disadvantaged
communities in the country.
1.2 In many ways Working Links is a quite
a unique organisation. From its inception it combined the best
thinking from the private and public sectors and the voluntary
sector. The people who founded Working Links realised that tackling
worklessness required innovative approaches that would evolve
as providers learned more about the multi-faceted levels of deprivation
that their clients faced.
1.3 Originally, Working Links was established
specifically to deliver contracts for Employment Zones (EZ). These
were highly innovative contracts, the first from the Department
for Work and Pensions (DWP) that both rewarded outcomes and defined
those outcomes as not just jobs, but sustainable jobs. Working
Links was thus formed as a public private partnership owned in
three equal shares by the Government, represented on the Board
at that time by the Employment Service, and two global private
companies, Manpower and Capgemini. In December 2005 a Christian
charity, Mission Australia acquired half the private sector held
shares creating its current public, private and voluntary sector
partnership (PPVP). The combination of three different cultures
in the structure of Working Links has enabled the company to draw
on the very best of those cultures in its approach to tackling
worklessness.
1.4 Working Links currently employs over
1,400 people, operating out of more than 140 locations,
has an annual turnover of over £86 million and has helped
over 120,000 long term unemployed people into work. It is
therefore well placed to understand the many different ways those
who become workless can suffer from multiple disadvantages right
across Great Britain.
1.5 During the course of the last decade,
Working Links has developed, in tandem with the Government, a
full range of interventions that address both employment provision
and skills development. Initially focusing on sector based employment
routes (eg retail, security, hospitality etc) it has now developed
a broad range of training, including accredited programmes and
its current contracts include Train to Gain, Offender Learning
and a range of other European Social Fund (ESF), Learning and
Skills Council (LSC) and Local Authority contracts linking learning
to employment. As a result, Working Links' expertise is now deeper
and broader, working with newly unemployed people through rapid
response contracts, more offenders through OLASS contracts and
in addition to the 120,000 people helped into work so far,
it has supported a further 7000 into recognised training
places, believing that skills and sustainable employment are key
to breaking the poverty cycle.
1.6 In the last year alone, the company
has assisted 55,000 people in their search for work. Every
30 seconds, someone walks into a Working Links office for
help. For every person Working Links engages with, there are on
average 10 transactions—equating to over 500,000 transactions
a year. 89% of Working Links people reached their objectives last
year. 2009 Working Links invested more than £2 million
in compliance and quality control.
ECONOMIC CONTEXT
2.1 The context in which Working Links has
been operating has undergone a fundamental change. Since the summer
of 2008, unemployment has risen from a figure of 1.7 million
in June 2008 to 2.43 million by the end of June 2009.
Many experts[22]
predict that unemployment may rise to over three million by the
early part of 2010. This is because unemployment is a lagging
indicator that does not respond immediately when the economy begins
to recover. Indeed some experts believe the recession is already
over.[23]
2.2 But it is not just the overall rise
in unemployment which is making Working Links' job more complex
and challenging. Long term unemployment (ie people unemployed
for more than 12 months) has also increased. Up to the end
of June 2009, it stood at 543,000, an increase of nearly 100,000 in
a year. At the same, time total vacancies have decreased by more
than 200,000 in a year to stand at 427,000 at the end
of June 2009. This makes the task of finding sustainable employment
for a growing numbers of hard-to-help workless people far harder
than it was only 12 months previously. And the severity and
depth of the recession has hit the most vulnerable very hard indeed.
Young people have borne the brunt of job cuts, as have those in
the production industries. Moreover the geography of unemployment
has not changed since the 1980s and 1990s. As in the previous
recessions, it is the same northern, midlands, Welsh and Scottish
centres that have been hit first and hardest.
RESPONDING TO
THE COMMITTEE'S
INQUIRY:
3.1 Turning to the substantive questions
the Committee has posed, this response sets out in full Working
Links' stance and the evidence and argument for the position in
as much detail as possible.
Safeguards: Are there sufficient safeguards in
place to prevent providers from making fraudulent claims for outcomes
they have not achieved?
3.2 The straightforward answer is "yes"
in the case of Working Links' own processes and procedures. Despite
the more lurid claims by some in the media, the nine cases of
fraudulent activity by Working Links people that have been cited
represent only one case a year for the nine years Working Links
has been operating among an employee base of now 1,400 people.
Over that time more than 120,000 people have been helped
back into employment. That is a rate of activity which translates
into 0.6% of the workforce per annum and a rate of fraudulent
activity per person helped into work of 0.008%. And even those
figures are slightly too high given the fact that some of the
allegations were found to be untrue when investigated by the Department
for Work and Pensions (DWP) Risk Assessment Division.[24]
Where cases of fraudulent activity have been proven, involved
employees have been dismissed. Appendix 1 provides greater
detail of the safeguards in place at Working Links to prevent
fraudulent activity occurring within the business.
3.3 Working Links has a zero tolerance of
any fraudulent activity and has dismissed any employee found to
have engaged in such conduct. The Internal Audit Charter (see
Appendix 2) and Anti-Fraud and Corruption policy (Appendix 3)
makes clear the important steps Working Links takes to manage
its risks as professionally as possible. Furthermore, the inspection
regimes of Ofsted and the DWP are rigorous and provide an external
audit function that is of a very high standard. The introduction
of a dedicated Supplier Relationship Manager (SRM) from DWP ensures
consistency across Great Britain and provides one-to-one support
if necessary. Should any audit process identify high risks, Working
Links instigates management procedures to tackle the weakness
and ensure improvements. The company's comprehensive Anti-Fraud
and Corruption Policy (aforementioned Appendix 3) makes it crystal
clear that the business is committed to operating with complete
honesty and integrity.
Protection of Employees: Is there sufficient protection
for employees who raise concerns about their employers' delivery
of a contracted employment programme?
4.1 Working Links is committed to developing
and nurturing all its employees to the highest standards possible.
It is rigorous in its recruitment and induction procedures and
provides comprehensive training for its entire workforce in how
to manage their work, their clients and the processes that support
them. Of its 1,400 employees over 200 are dedicated
to managing contract compliance across all Government departments
and local authorities. Working Links has developed a whistle blowing
policy (see Appendix 4) which makes clear the steps employees
should take if they suspect colleagues of engaging in corrupt
or fraudulent behaviour. Individuals are protected under the Public
Interest Disclosure Act 1998, which is also incorporated into
the Employment Rights Act 1996, under a process known as Protected
Disclosure. Working Links is satisfied that employees are both
encouraged to uphold the highest standards when at work, and also
feel able to blow the whistle should they become aware of corrupt
or fraudulent activity. Should irregularities be reported, Working
Links investigates swiftly and thoroughly and takes appropriate
action, based on proven evidence once the investigation is completed.
DWP Contract Management: Does DWP's contract management
approach ensure that the quality of service received by customers
is commensurate with the level required under the contract terms?
5.1 Appendix 5 gives a detailed account
of how the new Provider Engagement Meetings (PEMs) work. It is
our firm belief that these new ways of working and engaging with
providers are to be welcomed. The new PEMs create a more open
culture of communication and partnership through which to manage
the DWP's £1.2 billion a year business and the performance
of providers. In particular we believe the PEM achieves the following:
— Engagement with all key participants
involved in the contracts.
— Uniform ways of working and managing
contracts across Great Britain.
— Better alignment of strategy and delivery.
— Greater transparency for all parties.
— A mechanism for spotting the early warning
signs of contracts that are going off course.
5.2 It is Working Links' intention to mirror
the PEM architecture in its own internal ways of working and managing
its supply chain.
Monitoring of provider information: Do DWP and
the National Audit Office effectively monitor the accuracy of
providers' management information systems, provider performance
against targets, and the evidence on which provider payments are
claimed?
6.1 On the whole, the performance management
regime is tight, targeted and rigorous. The Financial Appraisal
and Monitoring programme (FAM) run by DWP and recently changed
and strengthened[25]
is a robust mechanism. When the new regime starts on 1 October
2009 the outcome should then determine the subsequent level
of audit activity.
6.2 In addition, to support its own internal
audit team and demonstrate its commitment to continually developing
its auditing processes, Working Links has, on occasions, used
specialist outside resources to assist with investigations. It
believes that the audit function is a strong part of what it does
and the company works very closely with DWP and the Audit Office
to ensure their processes are fully observed. The internal audit
function complements the efforts of external auditors and reports
any fraud that is identified and its financial impact to the external
auditor as well as the Working Links' Audit Committee. The implications
of any fraud committed are discussed with the external auditor
including the need to tighten control systems, should control
weaknesses be highlighted, with the aim of preventing further
occurrences from arising. Working Links is committed to doing
all it can to maintain a robust control environment that deals
effectively with any potential fraud or irregularities that might
occur. It is presently working closely with the DWP to ensure
that suitable measures are in place within all our contracts to
provide a level of assurance to the DWP on the company's measures
to support fraud prevention
Centralisation of Contract Management: How has
the centralisation of contract management in DWP impacted upon
the role of Jobcentre Plus and both provider and customer experience
of outsourced employment programmes?
7.1 The key innovation is the introduction
of PEMs, as stated above, which will allow a consistent approach
nationally, and enable Working Links' supply chain to feed into
the process at the right level. This will mean the customer is
placed at the heart of delivery.
7.2 The flexibility that is required in
the system is not a requirement for flexibility over core standards
and processes, but flexibility at the point of decision-making
for each and every individual who needs support, whether through
Jobcentre Plus or an organisation such as Working Links. Tailoring
support to meet each individual's unique needs is rightly at the
heart of what Working Links does. Backing this approach with the
highest standards of contract management, centralised though that
may be, is a sensible mechanism that the company supports. The
important point is to create a system that allows expert help
to be provided quickly at the point of need. Working Links believes
the Government is genuinely committed to this ideal and is working
to deliver it, while maintaining high standards of contract compliance.
Customer Charter: Will the customer charter proposed
by DWP ensure that customers, Jobcentre Plus and contractors know
what they can expect of employment programmes?
8.1 In the sense that the Charter is a clear
expression of intent from DWP, then Working Links sees it as being
helpful. However, it is doubtful that a charter alone can ensure
that everyone knows what they can expect from employment programmes.
What matters most is how the customers feel about their experiences.
It is this reaction that will more accurately measure expectations.
In research conducted for Working Links by Populus, "Breaking
Down Barriers", (see Appendix 6 for research summary),
among 500 long-term unemployed people and with a further
qualitative phase of four focus groups, Working Links was highly
regarded by its customers who responded to the high levels of
individual attention given by Working Links frontline consultants.
It is the individualisation of attention that is the key to success.
Lone parents have different needs to ex-offenders who in turn
are different from those who suffer from substance misuse. And
in many cases people might fall into several of those categories
at once.
Sub Contractors: Will contract management in the
prime contractor model be transparent and effective in monitoring
quality throughout the supply chain, and in maintaining a role
for sub-contractors?
9.1 Yes, Working Links believes it will.
As already mentioned, PEM and the new Merlin standard are excellent
mechanisms for managing the supply chain of sub-contractors. Working
Links' internal audit processes help the business to manage its
relationships with sub-contractors in a formal sense but it also
encourages strong and open partnerships with its sub-contractors.
The new Merlin standard is being developed because it was felt
that the existing code of conduct was largely toothless, was only
a contract requirement for prime contractors, allowed no redress
for poorly treated sub-contractors and did not do enough to raise
standards across the supply chain. The development of an independent
mediation service for sub-contractors to bring complaints about
prime contractors will help ensure that quality will improve.
CONCLUSION
10.1 Working Links acknowledges that any
organisation can improve its performance standards and it is committed
to continuous improvements in its own procedures and performance.
The company is satisfied that current checks and balances are
in place to ensure it operates at the highest level in all it
does. Working Links also believes that the new arrangements being
made by Government will help strengthen the DWP audit regime and
improve contract management as long as the regime is applied sensitively
and intelligently. It is particularly in favour of the PEM as
a means to raise standards and improve the sharing of information.
Working Links is grateful to the Committee for holding this inquiry
and receiving this submission.
10.2 Working Links is happy to be approached
to supply more information to the above and to meet in person
to provide further documentation to support our response.
October 2009
22 For example Monetary Policy Committee member David
Blanchflower Back
23
See http://www.independent.co.uk/news/business/news/hopes-rise-for-economic-recovery-1784237.html
for example Back
24
DWP Risk Assessment Division found no evidence of fraudulent or
corrupt behaviour to support allegations made about the Employment
Zones programme in Glasgow; and the same was true of an investigation
by Working Links audit team and external auditors Tait Walker
about allegations about irregularities in the working of the Employment
Zone team in Brighton. Back
25
http://www.dwp.gov.uk/supplying-dwp/what-we-buy/welfare-to-work-services/notices-to-providers/changestothefamofcep.shtml Back
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