Support to incapacity benefits claimants through Pathways to Work - Public Accounts Committee Contents

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 future programmes.

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.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2010
Prepared 13 September 2010