The Work Programme: Providers and contracting arrangements
Written evidence submitted by Community Links
1.
Summary
1.1.
Community Links’ response is based on our experience as a community charity running the most successful New Deal in London and the south east.
1.2.
As a potential subcontractor we believe there need to be strong guidelines to protect smaller voluntary sector subcontractors from the risks associated with a payment-by-results system, and from the uncertainty of fluctuating volumes of clients. As part of this, subcontractors need to be paid largely upfront, and for the hardest to help clients payments need to reward progression towards work.
1.3.
The local labour market and barriers to work need to be fully taken into account when undertaking needs assessments and allocating differential payments. For this reason we urge government to prioritise an awareness of the local situation when choosing prime contractors.
1.4.
The migration of clients off from IB and ESA onto JSA will pose particular challenges for providers – the time taken to learn how to work with this new client group needs to be taken into account.
1.5.
The Work Programme’s interaction with Jobcentre Plus will be crucial – we suggest JCP advisors carry out an initial needs assessments with new clients, and those with particular needs are allowed to join the Work Programme immediately.
2.
About Community Links
2.1.
Community Links is an east London community charity working with 30,000 people each year across a wide range of children’s, youth and adult projects which include employment support.
2.2.
We are based in Newham, the east London borough with one of the highest rates of long-term unemployment in the country. We have been delivering the New Deal since 1999 and have remained the most successful Prime contractor in London and the south east for over 4 years, supporting over 2000 people into work. The majority of our clients have complex needs, are aged between 18-24yrs and are considered long-term unemployed yet through the new Deal they have remained in employment for at least 6 months.
2.3.
We submitted an expression of interest for the Work Programme framework agreement as a potential Prime contractor but were unsuccessful, and are now in negotiations with all the potential prime contractors with the aim of becoming a subcontractor in east London.
3.
Policy responses
3.1.
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:
3.1.1.
The DWP has a fundamental role in monitoring prime contractors’ service provision and relationship with subcontractors. Therefore DWP should:
3.1.1.1.
Take responsibility for ensuring the Merlin standards are met, and act if the standards are not adhered to by prime contractors
3.1.1.2.
Set the differential payments pricing to ensure consistency and transparency, whilst allowing primes and sub-contractors to develop the categories of needs to be assessed; taking local employment barriers into account.
3.2.
The extent to which the Work Programme will differ from existing contracted employment programmes
3.2.1.
The Work Programme is the biggest employment programme to date and is being developed at an exceptionally rapid rate. The most obvious difference is in the size of the contracts being awarded, both in terms of finance and geographical coverage. The other main difference will be the flexibility afforded to providers through the black box approach.
3.2.2.
The size of prime contractors has eliminated smaller voluntary and community sector organisations such as Community Links from a role that they have shown themselves capable of fulfilling under the New Deal.
3.3.
The relationship between prime contractors and sub-contractors and DWP’s role in overseeing this relationship
3.3.1.
The Work Programme’s success will depend on the formation and development of sound working relationships between a prime and its subcontractors. For this to develop primes need to form an excellent understanding of the needs of the client groups and employment barriers in specific areas. The DWP have a role in ensuring these two factors are being given substantial recognition by the primes through a monitoring and scrutiny role. Therefore:
3.3.1.1.
Localised needs assessments should be recognised by primes
3.3.1.2.
Differential payments should reflect the needs assessments and be determined centrally by DWP
3.3.1.3.
DWP should hold primes to account for delivering on the contract agreed. They should set targets for working with the hardest-to-help and ensure that primes provide evidence that they are meeting this target.
3.4.
The role of Jobcentre Plus in delivering the Work Programme, including the lessons learned from the Delegated Flexibility Pilots
3.4.1.
Community Links ran a project over the summer of 2010 interviewing 550 people from around the UK about their experiences of the benefits system and Jobcentre Plus. Participants, particularly those who had been out of work for a long time, were clear that more and earlier support would be crucial in improving their experience of the Jobcentre. Therefore we suggest that:
3.4.1.1.
An initial needs assessment should accompany every new claim for an out-of-work benefit, undertaken by a JCP advisor familiar with the local barriers to employment.
3.4.1.2.
On the basis of this, and if the client and advisor agree it would help, the client should be able to access support provided by the Work Programme immediately, rather than having to wait 6 months.
3.4.2.
More generally, participants felt that the dual role of a JCP advisor – both policing their claim and supporting them into work – hampered the supportive function, and suggested that one or other of these roles be removed. In the longer term we would like to see more significant structural changes to the way Jobcentre Plus operates to address this issue, and its interaction with the Work Programme should be a crucial part of these changes.
3.5.
The implications for providers of the increase in volume and the change in profile of JSA claimants arising from the migration from incapacity benefit and employment and support allowance
3.5.1.
Uncertainty over the way the migration from IB and ESA will work makes it hard to predict volumes of clients. Specifically, it is still not clear what will happen to the ESA support group; whether they will be placed with the JCP for the initial 6 months, given the option of voluntary self referral to the Work Programme or mandatory placed on the Work Programme despite being on a benefit that does not requite them to seek employment. Volumes are also dependant on the rate at which DWP carries out the assessments. Fluctuating volume is already a problem, particularly for smaller providers, and the added complexity of the profile of this client group would only exacerbate this. Therefore we suggest that:
3.5.1.1.
DWP carefully manages the rate at which people are reassessed, to ensure the capacity exists to accommodate them within the Work Programme. It would be particularly damaging to assess someone as fit for work, move them onto JSA and not be able to provide them with the appropriate level of support they need immediately.
3.5.1.2.
Reserve resources are made available to manage unpredictable volumes of new clients with complex needs.
3.5.1.3.
Sufficient regard is given within the payment system to the need for a period of learning on the part of the provider about how to deal with the particular needs of people who have been on IB for many years: we stress that this will be a new client group for many, even specialist providers will need time to adequately develop the best service adapted to their needs.
3.5.1.4.
Contractors shape their employment support services to encourage local companies to hire people with a very poor track record of work.
3.6.
The implications for providers of 'payments by results' arrangements, with particular reference to the voluntary and social enterprise sector
3.6.1.
Payment by results is to be welcomed - it ensures in-work support, drives up competition and hopefully standards of support. However the model requires contractors to have the upfront capital to deliver initially. Voluntary sector organisations, unless they form a consortium, are therefore largely restricted to a subcontractor role. Even then, the level of the upfront payments which smaller organisations will need to function depends on the individual negotiations between a prime and its subcontractors. We suggest that:
3.6.1.1.
Primes must pay subcontractors a large percentage of the fee, if not the entire cost, upfront to allow smaller voluntary organisations to deliver support immediately and effectively.
3.6.1.2.
Both performance income and aftercare income must be factored into the contract design from the beginning, otherwise payments on outcomes of one year will prove problematic.
3.6.1.3.
The costs of supporting people once they are in work should be factored into contract design and not left up to the black box approach. This should be agreed by the provider when the contracts are signed, with DWP knowledge.
3.6.1.4.
The Work Programme should be linked to other provision - core funding must be available and combined with complimentary funding streams for delivery agents to operate effectively;
3.7.
The likely effectiveness of a differential payment scheme in encouraging providers to support harder to help groups.
3.7.1.
The effectiveness of differential payments will depend on how the contracts ensure that they adequately account for the resources required by specialist providers to address the needs of harder to help clients. Therefore:
3.7.1.1.
Needs assessments should be universally categorised, shaped by specialist providers in the development of the Work Programme and ultimately carried out by JCP advisers in their new capacity following the Universal Credit reforms.
3.7.1.2.
Although the Black Box approach is less prescriptive, a continuum of joined up services are necessary for the client to progress into the labour market without falling through the providers net or getting appointment fatigue – differential payments should be focused on end to end support services, in particular for harder to help clients.
3.7.1.3.
Differential payments should be based on a client’s employment history and the distance travelled when with a provider. Targets for progression or distance travelled must be set by the DWP to lesson the risks for specialist sub contractors.
3.8.
The implications of regional variations in the labour market, and whether these will be reflected in the differential payment arrangements
3.8.1.
Local variations in the labour market, and in other barriers to accessing work, will be crucial. We suggest:
3.8.1.1.
Prime contactors in the two contract package areas in London must show a solid understanding of, and ability to, meet London’s needs, and their contracts should be aligned to the London employment strategy.
3.8.1.2.
We recommend that local labour market variations be identified when contracts are being shaped and the time and size of differential payments should account for the nature of the local labour market. For example east London has a high degree of temporary employment and agency work. Providers need to have enough upfront resources to be able to offer clients support in-between these short-term jobs.
3.8.1.3.
Primes must be contracted by the DWP to take on a percentage of differential payment contracts which reflect local needs.
3.8.1.4.
Providers must have a strong track record with local employers; understanding the supply and demand of the local labour market.
3.8.1.5.
Providers should value local small businesses, which often offer the ideal working environment: they are likely to be more flexible and understanding to employees needs.
3.9.
How providers will be encouraged to work effectively with local authorities and other local agencies
3.9.1.
The framework agreement in itself will encourage providers to work more closely with local agencies as it will incorporate all procurement for a wide range of other programmes such as Work Choices, Get Britain Working, Work for Yourself, etc. Furthermore;
3.9.1.1.
Primes should show evidence of valuing working relations with other local service providers in each region. They should actively encourage sub contractors to form better relations with JCP, Local Authorities and other local voluntary and community organisations to develop a smoother referral process and a more accurate needs assessment of clients.
3.9.1.2.
Local Employment Partnerships have a varied success rate across the UK – co–commissioning may not necessarily be right for all providers, but LEPs should be acknowledged at the very least.
3.9.1.3.
Local providers should become jobs brokers; working with local employers to identify their needs e.g. for lone parents, providers could highlight to employers the benefits of part time employment
4.
Other issues
4.1.
Personalisation
4.1.1.
Our work and research (Deep Value, 2010, attached) suggests that a good relationship between the personal adviser and the client, in both JCP and the Work Programme, will be critical to its success. Therefore:
4.1.1.1.
Advisers need adequate training, particularly around identifying multiple needs, responding to personal needs and building stronger networks locally.
4.1.1.2.
Employment support programmes need to be extremely individualised services with comprehensive assessments of barriers.
4.2.
Risks associated with the transistion to the Work Programme
4.2.1.
Voluntary sector organisations are in danger of committing to targets they will not be able to deliver in the current labour market context. There is a serious risk of gambling on their charitable status.
4.2.2.
The timeframe for rolling out the programme is much faster than the culture change period, therefore the DWP should build in a learning period for providers.
4.2.3.
Mass migration from IB to JSA or work ready ESA will bring new clients with complex multiple barriers - providers may not yet have developed the specialist expertise to work with these individuals. The lack of experience in a new and high-volume client group will potentially impact on successful outcomes for providers.
4.2.4.
If voluntary sector organisations are required to implement sanctions, this could have a significant impact on their reputation locally
November 2010
|