Work Programme: providers and contracting arrangements - Work and Pensions Committee Contents

1  Introduction

Announcement of the Work Programme

1.  Employment programmes to help long-term unemployed and certain other economically inactive people to find jobs and to come off benefits ("welfare to work") have been delivered through government contracts with the private, public and voluntary sectors since the 1990s.[1] The Coalition Government announced its plans to "end all existing welfare to work programmes and create a single welfare to work programme to help all unemployed people get back into work" as part of its Programme for Government in May 2010.[2]

2.  The scheme will be called the Work Programme and will replace existing contracted employment programmes for a range of unemployed and certain other economically inactive people, including those with health conditions and some disabled unemployed people. The programme will not, however, replace Work Choice.[3] Contracts to deliver most existing programmes (Flexible New Deal, New Deal for Young People, New Deal 25+, New Deal for Disabled People, New Deal for Lone Parents, Pathways to Work, Progress2work and Employment Zones) will end during spring/summer 2011. The Work Programme will be rolled out nationally in June 2011.[4] We discuss the transition from existing contracts to Work Programme contracts in chapter 9.

3.  The Work Programme will be available to people claiming income-related Jobseeker's Allowance (JSA) and Employment and Support Allowance (ESA) (both income and contribution-based). The programme categorises customers into eight groups, based on the benefit which they are claiming at the time they are put on the Work Programme. For some customer groups, individuals will need to have been receiving benefits for a specific period before becoming eligible for the programme.

4.  The eight groups will form the basis for differential payments, which are designed to incentivise prime contractors to support the hardest to help by offering these organisations larger payments for finding jobs for those furthest from the labour market. The intention is to ensure that prime contractors do not focus simply on working with people for whom it may be easier to find jobs. We discuss the differential payments model in chapter 4.

5.  Some key features of the Work Programme are as follows:

  • Providers will be required to help benefit claimants into sustained employment of up to two years rather than the previous requirement of only six months
  • It will allow early access to employment support for those facing the severest barriers to work; for example, those under 25 will be able to access the programme earlier than in previous programmes
  • Payment to contracted providers will be largely results-based and the additional challenge faced by providers in finding employment for people who face the greatest barriers to work will be recognised in a differential payments system
  • The Programme will be funded from the money saved in future benefit expenditure as people are moved into work
  • The Department for Work and Pensions (DWP) will not prescribe the type of support which providers will be required to provide. Providers will be free to determine the type of intervention which a client requires depending on their specific needs (the "black box" approach).[5]

Background to this inquiry

6.  We were keen to examine the contracting arrangements for the Work Programme, including requirements to be placed on providers, and report on our findings before the programme is rolled out nationally. Our inquiry therefore focused on the following issues:

  • The steps DWP needs to take to ensure that a procurement programme of this size and complexity is managed effectively and delivers high quality outcomes
  • The extent to which the Work Programme will differ from existing contracted employment programmes
  • The relationship between prime contractors and subcontractors and DWP's role in overseeing this relationship
  • The role of Jobcentre Plus in delivering the Work Programme
  • 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 to Employment and Support Allowance
  • The implications for providers of "payments by results" arrangements, with particular reference to the voluntary and social enterprise sector
  • The likely effectiveness of a differential payment scheme in encouraging providers to support harder to help groups
  • The implications of regional variations in the labour market.

7.  We received 37 submissions from a range of organisations and individuals. We took oral evidence from academics and experts; prime contractors, subcontractors and the industry body, the Employment Related Services Association; and the DWP Minister, Rt Hon Chris Grayling MP, and DWP officials. A full list of witnesses is set out at the end of the report. We also visited the United States to talk to organisations and individuals involved in the delivery of welfare to work services in the State of Wisconsin and New York City and academics in the field. We are very grateful to all those we met in the US and to everyone who contributed to the inquiry.

8.  We would also like to thank our Specialist Adviser for this inquiry: Ian Mulheirn, Director of the Social Market Foundation.[6] We very much appreciate the contribution he made to our work.

9.  We intend to look at the operation of the Work Programme in more detail, focusing more specifically on its effectiveness in supporting different customer groups, later in this Parliament.

1   See, for example, David Freud, Reducing dependency, increasing opportunity: options for the future of welfare to work: An independent report to the Department for Work and Pensions, March 2007. Back

2   HM Government, The Coalition: our programme for government, May 2010, page 23. Back

3   Work Choice, a separate programme to help disabled people with severe disability-related barriers to work, was launched by DWP in October 2010. Work Choice replaced the existing WORKSTEP and Work Preparation programmes and the Job Introduction Scheme. Back

4   HC Deb, 10 June 2010, cols 37-8. Back

5   HM Government, The Coalition: our programme for government, May 2010. Back

6   Relevant interests of the specialist adviser were made available to the Committee before the decision to appoint him on 17 November 2010. The Committee formally noted that Ian Mulheirn declared an interest as Director of the Social Market Foundation, in that some of the Foundation's work has been sponsored by private and third sector employment service providers.


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Prepared 8 May 2011