Conclusions and recommendations|
1. The number of incapacity benefits claimants
has remained in excess of 2.5 million for over a decade, and nearly
1.5 million claimants have been in receipt of these benefits for
more than five years.
This has been an intractable problem for the Department and it
deserves credit for trying to tackle it. Nevertheless, its work
has, at best, reduced the number of claimants by just 125,000
between 2005 and 2009. Our recommendations suggest how we believe
the Department should prioritise its work to ensure resources
are used effectively to tackle this problem and help claimants
back into work.
2. The performance by the mainly private sector
providers has been universally poor in relation to their main
target group, those people who are required to go on the Pathways
programme. The targets agreed with providers
were over-optimistic, considerably exceeding the best performing
Jobcentre Plus districts in the early pilot areas, and underestimated
the difficulty of supporting this client group. Providers started
from a low knowledge base with little direct experience of working
with incapacity benefits claimants. Providers have also had less
opportunity to work with people early in their claim, partly because
handover of claimants from Jobcentre Plus has taken longer than
was anticipated at the procurement stage. The Department should
be more ready to challenge bids from providers where there are
grounds to suspect performance projections are over-optimistic.
The Department should seek to maintain a balance between public,
private and voluntary providers to ensure adequate opportunity
to compare performance and value for money.
3. Effective implementation of the programme
was hampered by a flawed process of piloting and evaluation, which
gave too positive a view of how well Pathways could be expected
to perform. The Department should make
sure it properly evaluates its pilots so that it has precise evidence
of the likely employment impact for claimants before it launches
4. In 2008-09, £94 million (38% of Pathways
expenditure) was spent on employment support that did not deliver
additional jobs. The Department should
fundamentally review the nature and funding of its employment
support for claimants of incapacity benefits. It should provide
clear guidance to those involved in delivering the Work Programme
on the type of support that is most likely to deliver additional
jobs, drawing on robust evidence.
5. There is a lack of robust information on
what happens to those claimants who fail to participate in Pathways.
The Department does not hold proper information on the number
of incapacity benefits claimants who have failed to take part
in mandatory elements of Pathways and had their benefit reduced
as a result. In developing the new Work Programme, the Department
should build on its experience of measuring sanction rates for
Jobseeker's Allowance claimants and create a robust equivalent
system for claimants of incapacity benefits.
6. Better information is needed to help set
incentives for providers based on better analysis of the claimant
group. Providers favour a differential
pricing system that would reflect the varying levels of support
needed to help people with different problems. The Department
should collect data so that it understands the costs and benefits
of the different types of support for incapacity benefits claimants.
It should use this knowledge in designing and testing the contracting
model it develops to deliver the Work Programme from Summer 2011.
7. The controls in place are insufficient
to manage the risk of providers submitting inaccurate contract
payment claims. The Department should
strengthen its controls to provide greater confidence that it
will detect claims that are not valid, drawing on a range of techniques
including systematic checks against benefit records, and contact
with individuals and their employers. Contracts should be clear
that, where errors are found, the rest of a provider claim will
be investigated and deductions applied.
8. The Department lacks the information it
needs to understand the supply chain for employment support, which
conflicts with its objective of ensuring a healthy market exists.
The work underway to guard against unfair treatment of subcontractors
and other delivery partners through the new 'Merlin' standard
is welcome. The Department should assess its effectiveness in
ensuring risks and benefits are distributed fairly throughout
the supply chain and should report back to this Committee by the
end of 2010.
9. As the Employment and Support Allowance
is extended to all existing claimants, there is a risk that some
of those who are re-assessed and found fit to work will not receive
the employment support they need. Early
evidence shows that the new medical assessment, introduced with
Employment and Support Allowance, will deliver a significant reduction
in the number of incapacity benefits claimants. The Department
should evaluate the accuracy of the new medical assessment robustly
to evaluate that it is fit for purpose.
10. Many existing incapacity benefit claimants
will be found fit to work when they undergo the new medical assessment,
and many will move on to the more work-focused benefit, Jobseeker's
Allowance. The Department has no information
on claimants who are refused incapacity benefits. It should monitor
them to know how many move onto Jobseeker's Allowance. The Department
has also not yet fully evaluated its capacity to support large
numbers of people who transfer in this way. It should undertake
such an assessment and put in place the additional support required
before the medical assessment is rolled out.