The Work Programme: Providers and contracting arrangements

Written evidence submitted by RNIB Group

1. About us

As the largest organisation of blind and partially sighted people in the UK, RNIB Group is pleased to have the opportunity to respond to this consultation.

We are a membership organisation with over 10,000 members who are blind, partially sighted or the friends and family of people with sight loss. 80 per cent of our Trustees and Assembly Members are blind or partially sighted. We encourage members to be involved in our work and regularly consult with them on government policy and their ideas for change.

As a campaigning organisation of blind and partially sighted people, we fight for the rights of people with sight loss in each of the UK’s countries.

During the next five years we want to tackle the isolation of sight loss by focusing on three clear priorities:

1. Stopping people losing their sight unnecessarily;

2. Supporting blind and partially sighted people to live independent lives; and

3. Creating a society that is inclusive of blind and partially sighted people.

We also provide expert knowledge to business and the public sector through consultancy on improving the accessibility of the built environment, technology, products and services.

Finally the RNIB Group comprises of Action for Blind People, certain local societies and RNIB itself. The RNIB Group has been a provider of Government funded employment support via Work Choice, NDDP. Workstep, Work Preparation and Access to Work.

The significance of blind and partially sighted jobseekers

There are 16,470 blind or partially (self-registered) people currently claiming Incapacity Benefit and some 4200 on ESA. Whilst their numbers are comparatively small in comparison with the numbers in receipt of IB their significance lies in the following:

· they crystallise the "hardest to reach" group of people that the Government is now seeking to provide employment support to in order to enable them to move off IB (e.g. they are the one group singled out in the 2006 Welfare to Work Green Paper, "A new deal for welfare: empowering people to work" paragraph 67). Their employment rates are a further 15% behind the employment rates of disabled people (Berthoud R, 2006). Almost four in every five (78%) of the total have been on IB for more than two years; of whom half of the total (57%) have been on IB for over 5 years.

· as per the Freud review RNIB's own snapshot survey reveals that blind and partially sighted people have received little support to get back to work whilst on IB - 40% had not received any kind of employment advice or support for 2 years and 25% had gone 5 years without receiving any employment advice or support.

as a group blind and partially sighted people are more qualified than the general population as a group (though the range within the group is greater i.e. between the numbers possessing a degree and those possessing no qualifications).

· Our own research reports that 49% of visually impaired people have a qualification and 12% had achieved a first degree or higher. Approximately 38% had an ordinary level or higher qualification.

· new technology continues to offer greater potential for blind and partially sighted people to work in office environments

· they are readily identified through either medical or impairment function categories within existing DWP management information systems

The steps the Department for Work and Pensions needs to take to ensure that a procurement programme of this size and complexity is managed effectively and delivers high quality outcomes

The phrase "high quality outcomes" must be interpreted to mean job outcomes, acceptable job retention rates and also progression towards the open labour market for the many that will not succeed in obtaining a job. These outcomes must apply to all entrants on to the programme regardless of their background. Crucial in turn to this will be the extent to which people receive a personalised service tailored to their individual needs. There has been a succession of statements in support of this aim.

A summary of Government commitments to the role of the specialist sub-contractor

"We will offer specialist support to disabled people to help them move into paid employment." Conservative Party, Equalities Manifesto released 3/5/10

"Early interventions to alternative more specialised provision might remain the best route for some individuals who face particular severe barriers to work." Freud Report, 2007, page 60

"We proposed moving away from a one size fits all approach. Services would be tailored to what each customer needs to move into and stay in work. The responses we received were overwhelmingly supportive of the proposals we set out." Paragraph 5.91, page 104, "Raising expectations and increasing support: reforming welfare for the future" December 2008

"It is crucial that we do not write anyone off. People with severe and complex needs who want to work will be able to access specialist support, including supported employment through Work Choice from October 2010." Paragraph 18 page 32, "Building Bridges to Work" DWP March 2010

"We are clear that the new contracting arrangements must allow for this specialist provision." Paragraph 3.45, page 78, "No one written off: reforming welfare to reward responsibility" DWP July 2008 "

The Department must work with providers to ensure that appropriate support is provided for these customers." Recommendation 23 on vulnerable groups, "Management and administration of contracted employment programmes" House of Commons Work and Pensions Committee, 4th Report, March 2010.

"And we want not for dividend organisations to be able to bid on the basis of price and not cost, and so be free to earn a return on investment if they are helping us save taxpayers money." Media release from Francis Maude and Nick Hurd on April 19th 2010

"Absolutely" David Cameron, in response to a question whether the Work Programme would be sufficiently funded to enable blind and partially sighted people to obtain the support they needed to move off benefits and into work. Spoken on March 5th 2010 at a "Cameron Direct" hustings meeting in Bolton, Lancashire.

All these words are encouraging but have not been enacted or at least not yet. In our most recent experience of DWP commissioning (Pathways to Work) based upon the prime/sub-contractor model we were put in the position of competing with prime providers for access to blind and partially sighted jobseekers. Our charitable mission meant that we could commit to recycling the economic dividend from helping people close to the labour market into work, into helping the harder to reach with the pre-employment support they need to move closer towards the open labour market. However the number of referrals was low and in the main the clients referred required intensive support. There was no opportunity in the contracts to fulfil our charitable aim or even recover our costs and ultimately we were forced to relinquish these contracts.

The recent information supplied by the Department for Work and Pensions in response to a Guardian newspaper "Freedom of Information" (FOI 2484) illustrates the poor profile of third sector organisations as beneficiaries of DWP commissioning based upon the prime/sub contracting model. Of the top 100 suppliers to DWP only five are registered charities. These five represented around £30 million of spending from a total commercial spend of just over £4.5 billion. Whilst it is undoubtedly the case that many private sector organisations have third sector organisations in their supply chain their own return investment goes into shareholder dividend and management fees rather than helping the harder to help.

Consequently if taxpayers are to get more value for money more must be done to facilitate the involvement of specialist third sector organisations.

Recommendation 1

Flexibility in the delivery of the Work Programme will allow specialist providers providing a service for a distinct population geographically dispersed and with a low prevalent health condition to be able to bid for national contracts. This option will be conditional on the proviso that the customer chooses this option and they can demonstrate a "contestability" argument based upon evidence of job outcomes, quality in terms of progression towards the open labour market and value for money.

The extent to which the Work Programme will differ from existing contracted employment programmes

The Work Programme being a single programme with three client groups not previously involved in back to work support and with a Government preference for only outcome based payments raises huge challenges. Specifically these can be listed as follows:

· how the commitment to individual job seekers receiving the personalised and tailored support (widely recognised as making a difference to their job prospects) will be safeguarded

· what the reward for employment retention beyond the first six months should be when there is no consensus within the industry as to what the levels of retention are likely to be and no public data as to what constitutes a reasonable expectation

· what the job outcomes are likely to be when there are over five million people in receipt of benefits but only some 470,000 vacancies in the economy

· how job outcomes (over the life of long term contracts) are likely to be affected by global economic factors, most immediately by poor export performances, a weakened dollar, the ongoing sovereign debt crisis affecting the stability of the countries in the Eurozone etc

· how the funding model will reflect the difficulty of "activating" a group who have not previously been on mandatory employment support programmes. Such a group will inevitably contain people without structured lifestyles, unwilling to accepting instructions, not respectful of individual differences and thus resistant to team working and so on.

· why would private sector finance plug a funding gap that the Government is unwilling to fill

· how sub-contractors could or should be shielded from the financial risks incurred by prime providers borrowing against the reward for future outcomes

· unlike previous employment support programmes there will be no pilot

The recent IPPR report, "Now It's Personal" concluded; "However the evidence of the limitations of active job search is persuasive, suggesting that UK businesses lack the capacity to absorb our swollen unemployed workforce. IPPR argues that if policy is to reach its goal of reducing inactivity in the longer term, welfare to work must be reconfigured to meet the complex needs of employers as well as clients." (Lanning T, 2010, p 35)

Recommendation 2

The Work Programme should be reviewed after one year in order to ensure that providers are not making excessive profits or undertaking risks that imperil the whole programme.

The funding model should be along the lines of 20% social activation fee, 60% of the reward for job outcomes and 20% (or less) employment retention.

In the light of a declining number of vacancies in the general economy a significant proportion of the projected funding in the Work Programme be set aside for providers to bid for, to facilitate job creation through the creation of new markets rather than simply job placement. These new markets not to be conditional upon a subsidy to the jobseeker or their employer.

The relationship between prime contractors and sub-contractors and DWP’s role in overseeing this relationship

The framework document has unleashed a flurry of negotiations between potential primes and potential sub-contractors. Nervousness amongst the industry has to who might succeed and on what basis has led to a huge duplication of information requests. Potential sub-contractors will no doubt have struggled to respond when at the same time delivering services. Consequently there may have been much wasted time and effort, an irritation for primes but possibly detrimental to the performance of subcontractors.

Recommendation 3

The Department as the instigator of the framework document should encourage prospective primes to rationalise EOI procedures to the benefit of potential subcontractors.

Recommendation 4

Prospective primes should be asked to agree what they all want as a baseline and relatively what is required in terms of process and make this public. They should then simply be expected to ask prospective subs to submit EOI with the level of information, deepening further on down the process and as milestones in procurement are passed. EOI should be owned by prospective subcontractors.

DWP has pinned its hopes on the Merlin standard for ensuring the quality of supply chain relationships. Whilst RNIB has been a member of the Merlin Advisory Group and like other members of the group hope it will ensure transparent and equitable contracting practices, concerns remain. These concerns arise because the language used in Merlin is very subjective; there has been an avoidance of floor standards. Merlin is not independent of the industry; it has only been piloted to date in an ongoing two-year trial and at present the standard is owned by Government but with the intention of it being ultimately industry financed. Since the Department is not bound by Merlin despite being the instigator of all commissioning this further weakens its ability to ensure good practice. Finally whilst sanctions are there for primes who transgress the standard, uncertainty remains over the ability of a sub-contractor to obtain adequate redress.

Recommendation 5

The Department (DWP) must be bound by the same ethics code as the provider community and therefore the Merlin standard should apply to the Department. The only alternative to this recommendation would be for independent monitoring of the standard by a group that includes customer representation and is able to comment upon the Department's own role in commissioning.

The role of Jobcentre Plus in delivering the Work Programme, including the lessons learned from the Delegated Flexibility Pilots

We are aware of a debate over the role of Job Centre Plus and the notion that they may simply become a "banker" in the Work Programme, responsible for releasing payments to the providers according to contract terms. We would not wish to see their role reduced in this way. Job Centre Plus have an important role to play as a gateway to the programme and responsible for the administration of any appropriate sanctions against either the claimant or the provider. Job Centre Plus also has an existing nation wide infrastructure and embodies expertise in its own right.

Job Centre Plus also have a successful record in delivering programmes in comparison with all other providers. "The article contends that there is little evidence to support the Government's case for the wholesale embrace of contracting out employment services. Based on reviewing experience of previous projects it argues that given the same flexibility's and financing routinely offered to contractors, in-house provision would match or surpass contracted performance." ("Contracting out employment services to the third and private sectors: A critique." Davies S, 2008, p136 in "Critical Social Policy" Cardiff University.)

Recommendation 6

Job Centre Plus are retained in their current role but also as potential providers in their own right (especially given the very large numbers who will feature on the programme), given the same flexibility's and evaluated in the same way for their performance.

The implications for providers of the increase in volume and the change in profile of Jobseeker’s Allowance claimants arising from the migration from Incapacity Benefit and Employment and Support Allowance

Many seriously disadvantaged people in the labour market require support over a long period in order for them to obtain jobs. Many blind and partially sighted people typically require support over twelve months because many need to acquire disability specific skills such as navigation, the use of assistive technology or the need to learn Braille, before they can be job ready. The limits on the availability of contributory Employment Support Allowance (for those in the work related activity group) after twelve months and the loss of ten percent Housing benefit for those on Jobseeker Allowance for over twelve months are likely mean additional hardships for our clients when they are already facing the stresses of adjusting to sight loss.

The Department is rightly concerned about the issue of "deadweight" in the programme but this needn't be a concern in circumstances where charities are committed to recycling the dividend from supporting the easier to help into work into pre-employment support for the harder to help. Open book accountancy should provide the Department with the necessary safeguards to ensure that this commitment is followed through.

Recommendation 7

These factors lead us to seek the earliest referral of blind and partially sighted people to appropriate employment support from an experienced provider.

The implications for providers of "payments by results" arrangements, with particular reference to the voluntary and social enterprise sector

The RNIB Group is supportive of payment by results though would not wish to see this as the sole element of the funding model, please note our earlier comments in recommendation 2 in support of an activation fee.

The likely effectiveness of a differential payment scheme in encouraging providers to support harder to help groups

The RNIB Group is supportive of differential payments but cautions against the use of over simplistic diagnostic tools for fixing the payment. The Australian rate card has much to recommend it for its attempts to score barriers to work and then use the information to fix a price for a provider successfully placing the individual into work. However the categories do not include cognisance of issues of "emotional intelligence" nor does it adequately weigh the significance of certain categories such as disability.

Emotional intelligence can be understood as a set of learned rather than innate competencies (Coleman 1995) and includes: self-awareness, self-management, social awareness and relationship management. The lack of these competencies is not akin to a mental health condition but will impair an individual's ability to learn and develop from their own feelings and emotions.

Employers may translate these competencies into: the ability to manage ones own emotions to minimise their potential harm on others, the ability to change emotions as the situation merits, the ability to respect other people, take an instruction, creatively listen to others, work cohesively in a team and inspire or influence others for the benefit of the organisation.

Disability is a significant barrier to work, only one in two disabled people are in work compared to three in every four able bodied people. Sight loss is even more significant, only one in every three blind or partially sighted people is in work.

Recommendation 8

If a U.K. version of the rate card were to emerge it would be important for it to be statistically based upon all available evidence of the impact of these barriers and in the event of an individual facing multiple barriers to work accurately reflect how the barriers act together.

The implications of regional variations in the labour market, and whether these will be reflected in the differential payment arrangements

There are significant variations in regional labour markets with some parts of the country have a vacancy for every jobseeker e.g. North-West Leicestershire whereas much of the rest of the country can be characterised as a tight labour market e.g. seventeen applicants for every vacancy in Deptford, London. The most recently available research by Sheffield Hallam University led by Professor Stephen Fothergill and commissioned by the National Worklessness Forum found that the unemployment rate in "post industrial blackspots" was running at 18%.

Recommendation 9

The differential or cohort price per job outcome should reflect variations in regional labour markets.

How providers will be encouraged to work effectively with local authorities and other local agencies

Local Authorities have an important role to play. They have an history of regeneration activity and knowledge of economic local trends, hold dialogue and contact with employers, are responsible or co-responsible for securing supportive infrastructure e.g. planning, skills, transport etc and are accountable to local people. They are also major employers in their own right.

Recommendation 10

There should be a formal link between the new Local Enterprise Partnerships and both providers and local authorities.

November 2010