The Work Programme: Providers and contracting arrangements

Written evidence submitted by MyWorkSearch

1 BACKGROUND

MyWorkSearch is a UK business that provides Internet based services that help jobseekers find their next job more quickly. We provide essential job seeking tools such as our Job Finder and CV Builder software. We also provide interactive training and support to help job seekers acquire the essential skills required to be an effective job seeker. A full description of our services is provided in the Appendix.

Since our launch we have enrolled over 30,000 users, and we have won the LinkedIN European Business Award Best Business Startup of the Year 2010, the Microsoft BizSpark UK Summit 2010 Award, the 2010 E-Learning Awards for the most innovative product. We have also been finalists in the 2010 National Online Recruitment Awards and the 2011 IT Training Awards.

Our technology, software and jobseeking solutions are available via subscription. Typically this is paid either by employers for employees they are making redundant or, for qualifying Jobcentre Plus customers, by the Department for Work and Pensions (DWP) under the Support for Newly Unemployed Professionals budget.

2 COMMENTS & EVIDENCE

Before turning to the specific areas raised in the Inquiry’s terms of reference we would like to emphasize an specific issue.

The expected launch for the Work Programme is in summer 2011, some months after the budget for some current support programmes, including that for Newly Unemployed Professionals, terminate on 31 March 2011. This will create a hiatus in essential support at the same time as the impact of public sector unemployment will likely be increasing. We therefore suggest that current contracted programmes such as Newly Unemployed Professionals be extended until the replaced by the Work Programme.

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

The Work Programme as currently envisioned does not include support for newly unemployed individuals. As such this will not address the needs of the recently unemployed to assist them back into employment while their vocational skills are still relatively up to date and before their confidence and motivation has atrophied. In what is still a harsh employment market this is a significant and risky omission.

The challenge of achieving re-employment for the recently unemployed is far lower than for those who have become demoralised or tarnished by many months of unemployment. For the recently unemployed, a relatively lower level of immediate help may be all that the majority require to get them quickly back into productive employment. Such support might include:

• Help with identification of transferable skills,

• Familiarisation with psychometric tests and other assessment techniques and the opportunity to take practice tests,

• Interview skills training and practice.

In our view the current focus of the Work Programme, while understandably aiming to deal with the needs of the existing long term unemployed, runs the risk of replacing them with the newly unemployed unless they too receive re-employment support. The optimal approach requires a focus on both the long term and recently unemployed.

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

2.2.1 Innovation & risk

The Government has made it clear that it is not looking for ‘more of the same’ and wants to bring innovation to the problem of getting the long term unemployed back to work, however the Work Programme may not be structured to facilitate this:

• Doing things differently and experimenting with new approaches means taking risks. But the Work Programme’s task-oriented focus may not lend itself to experimentation or investment in new ideas. If the desire of commercial contractors to innovate and experiment is suppressed or frustrated the resulting impact on long term unemployment will inevitably be sub-optimal.

• Technology is widely regarded as an affordable, scalable enabler that can deliver dramatic improvements. As MyWorkSearch has demonstrated, a relatively small team with reasonable funding can produce a technology solution that is a significant step forward compared to the prevailing way of working. Recent research of our users showed that:

- 61% had found work,

- 92% of these stated that our service contributed to this outcome.

However, funding this type of venture carries significant investment risk which can only be justified if the opportunity to serve market demand is subsequently made available.

The proposed Work Programme structure will place control of access to a large proportion of the market into the hands of a relatively small number of Prime Contractors. For smaller innovative businesses such as ours, this potentially introduces increased risks that could make the speculative development of ‘game changing’ technologies extremely difficult to fund.

Smaller providers are frequently better at innovating and experimenting. However investment will be held back if there is a fear that Prime Contractors will deny access and/or take the best ideas and scale them, resulting in the small innovators not benefitting from their investment and risk. This particularly applies where technology is being developed and risk finance is required. The Merlin Standard is designed to minimize this problem however real world commercial behaviours will be hard to control.

We believe there should be some mechanism within the Work Programme to ensure investment in innovation and this can only happen if the contractual framework provides for this.

2.2.2 Lack of Cultural Fit

The structure of the relationship will likely comprise combinations of Public Sector, third sector and commercial partners. This could result in a cultural/philosophical disconnect between socially minded/motivated third sector providers, commercially inexperienced public sector participants, and commercially focused Prime contractors/sub-contractors. This disconnect could lead to the Work Programme suffering problems at the interface between these different mindsets and will especially manifest itself where the speed of decision making is slower than commercial organisations are used to.

We fully recognise the commercial logic of having Primes who are both motivated by outcome and keenly aware of efficiency of expenditure. The proposed nature of the Work Programme is that Primes will manage an ecosystem of suppliers. In many commercial sectors, such as construction, the industry is familiar with this model and all participants appreciate the implications.

However the welfare to work sector, with its high percentage of third sector organisations, does not have this culture. We anticipate that the procurement and project management driven approach that the Primes will inevitably adopt will sit awkwardly with the very different mindset of many of the providers. This may lead to misunderstandings, disputes and business failures. There is a very real risk that many industry participants will not have the processes or operational approach to operate in the ways that will be expected of them and service provision will suffer as a consequence.

2.2.3 Systems and Processes

Further problems could arise where third/public sector providers do not have the systems or processes to work with more efficient, commercially focused contractors.

In addition, security and accessibility rules are often impractical, do not reflect modern technologies and react inappropriately to real world risks. This impacts on the ability of contracted providers to innovate or offer lower cost solutions by using technology and data to drive service improvement and efficiency.

In his Comprehensive Spending Review statement on 20 October, the Chancellor referred to the need for the DWP to "increase its use of digital applications in reducing overheads". However, overall Jobcentre Plus technology is old fashioned and inflexible. There is a relatively low level of access to the Internet at Jobcentre Plus offices and often where there is access, the deployment of out of date web browsers means that modern websites either don’t work or do not function well.

This issue is not just about reduction of overheads. For some segments flexible online access to re-employment support is especially important:

• Single Parents who are time poor, especially during normal working/office hours,

• Those with disabilities,

• The unemployed in remote locations,

• NEETs who are highly technology proficient.

All these segments either benefit significantly from services being available 24/7 or are just so used to accessing services via the Internet that it has become their de facto way of solving problems.

This demand for flexible access to re-employment services is a very real. Research among our 30,000 users shows that there is considerable usage of our job hunting and training services outside normal office hours:

• 23% after 8pm,

• 27% before 9am,

• 44% on Saturdays,

• 35% on Sundays.

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

2.3.1 Ensuring consistency

The awareness of MyWorkSearch has been hugely inconsistent between and within districts.

Our experience is that the availability of our services varies considerably depending on the willingness or otherwise of DWP districts to make DWP staff aware of our service, or to allow those offering MyWorkSearch to explain the service to DWP staff.

Where this is a policy decision taken at District level it can lead to anomalies in the service being available depending on where the customer lives.

Frequently, it is an issue of training and communications to front line staff. The time pressures on DWP staff are understandable but the limited staff training time means that advisers are often poorly briefed on what external providers can offer. This is exacerbated where there is resistance to outside contractors having any access at all to DWP staff. This resistance is often justified as a refusal to meet with ‘sales’ people when in fact no sale is taking place just the explanation of an existing contracted service.

Our experience is a microcosm of the overall picture but these issues must be addressed if, as expected, the Work Programme results in a greater penetration of commercially contracted services.

2.3.2 Lack of commercial experience or awareness

Greater penetration of commercially contracted services will require a greater overall commercial focus within the DWP.

There is often a disconnect between the Commercial Directorate that manages suppliers and the ‘coal face’ where activity takes place. The focus can be less on achieving desirable outcomes for the unemployed and more on adhering to process. Common sense can be absent.

2.3.3 Sharing best practice

Delivering high quality outcomes necessitates the sharing of best practice within the DWP and between the DWP and external contractors. Our experience is that while some third party managers actively encourage the spread of information and best practice most do not.

Our colleagues have had considerable experience of dealing with many hundreds of Jobcentres around the country. The consistent theme is that Jobcentre Plus staff do not have the time or bandwidth to look at new ideas. It is hard to be flexible if there is no engagement with the wider market of ideas and providers.

2.3.4 Measuring Performance

A two way exchange of data will be required to enable the tracking of performance and the achievement of agreed targets.

2.3.5 Culture of Fairness

‘Fairness’ is usually good thing. However within Jobcentre Plus offices there is a prevailing sense that all providers should receive an equal share of ‘business’. This is regularly seen as being more important than the quality of a provider, customer feedback and outcome data. Whilst this is obviously contrary to the objectives of the Work Programme it will adversely impact the success of the Programme unless active changes are made to this prevailing culture.

2.4 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

2.4.1 Increased volumes /need for scalability

On 20 October, the Chancellor referred to the need for the Department of Work and Pensions to "provide intensive help for those looking for work and support for those who could look for work but currently lack the confidence or the skills to try".

The effect of the Work Programme will be to encourage or compel certain segments of benefits claimants to seek work. The inevitable result will be to create a significant increase in the volumes of active job seekers who require support, training and job seeking tools.

Some of this volume will necessitate personal face to face support potentially creating greater pressure on already stressed Jobcentre Plus resources.

Greater use of digital applications and the online distribution of services may be the only way to serve this increased demand, mitigate the impact on DWP resources and constrain or reduce costs.

2.4.2 Change in profile of Jobseeker’s Allowance claimants

A fully effective response to the changing profile of Jobseeker’s Allowance claimants will require a customised programme capable of meeting the needs of different jobseeker segments. There is a considerable education/training/support challenge involved in serving these different segments. Where it is effective, this challenge can be met economically using Internet delivered eLearning techniques integrated with jobseeking tools.

There is also a need for better flow of management information between contractors and the DWP. Contractors need mechanisms to monitor what jobseekers are doing (and not doing) so they can be effectively manage and monitor the jobseekers they are responsible for. Currently this does not exist.

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

An effective differential payment scheme needs to enable commercial contractors to innovate, invest and sustain support for harder to help segments. This involves some challenges:

• Work Programme payments are substantially based on achieving 1 year of sustained employment. This is a desirable approach. However, an effective differential payment scheme should consider rewarding the ongoing support of individual jobseekers post employment and/or during any period when they are moving in and out of jobs until they reach stability of employment.

• Large Prime contractors are less likely to have the culture to innovate and the payments model will almost inevitably reduce the likelihood of a Prime contractor funding risky innovation on top of the existing risks and funding challenges of the Work Programme.

• The risk adjusted cost to contractors of funding programmes for the harder to help segments through to the point where the desired outcome is achieved and payment triggered will considerably add to the cost of provision.

So a formula needs to be developed that provides a reasonable return on investment for serving harder to help segments while retaining a sufficiently large carrot for achieving long term sustainable employment. Commercial organisations are not averse to risk but the eventual reward model must not deter their investment.

Differential payment schemes make sense – less should be paid for easier to serve segments and vice versa. However more intransigent segments are going to be difficult to serve unless there is an underlying structure that enables smaller commercial organisations to participate.

3 SUMMARY AND RECOMMENDATIONS

3.1 Arrangements need to be put in place to bridge the hiatus between the removal of currently available support programmes (including that for Newly Unemployed Professionals) on 31 March 2011 and the eventual launch of the Work Programme. This can be most simply achieved by extending existing contractual arrangements.

3.2 To be fully effective the Work Programme will require more effective training and communications to frontline DWP employees and greater sharing of best practice within the DWP and between the DWP and external contractors.

3.3 Online delivery of services, training and support is a better fit, has greater reach and will be more effective at getting some unemployed segments back to work more quickly.

3.4 Deployment of online service and support will enable greater volumes to be served more effectively at lower cost.

3.5 Any differential payment scheme must support and encourage investment and involvement of smaller commercial organisations who will bring much needed innovation to help solve harder to help segments.

3.6 The proposed Work Programme structure and the way it is managed by the DWP needs to protect the smaller innovative businesses most likely to develop ‘game changing’ ideas, technologies and services. Without this, this increased investment risk and could make innovative solutions technology too difficult to fund.

November 2010