UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 835 -iv

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Work and Pensions Committee

The Work Programme: experience of different user groups

Wednesday 6 March 2013

KIRSTY MCHUGH, SEAN WILLIAMS, ANDREW CONLAN-TRANT AND RICHARD CLIFTON

Evidence heard in Public Questions 268 - 388

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Work and Pensions Committee

on Wednesday 6 March 2013

Members present:

Dame Anne Begg (Chair)

Debbie Abrahams

Mr Aidan Burley

Jane Ellison

Graham Evans

Sheila Gilmore

Glenda Jackson

Stephen Lloyd

Nigel Mills

Teresa Pearce

________________

Examination of Witnesses

Witnesses: Kirsty McHugh, Chief Executive, Employment Related Services Association (ERSA), Sean Williams, Managing Director, G4S Employment Support Services, Andrew Conlan-Trant, Director of Labour Market Services, Rehab Group, and Richard Clifton, Business Development Director, Shaw Trust and CDG, gave evidence.

Q268 Chair: Can I welcome everyone this morning to the fourth evidence session of our inquiry into the Work Programme? Can I welcome you here to give evidence? There are some familiar faces and some new faces as well. Can I start, perhaps, with you Richard? Could you introduce yourself for the record?

Richard Clifton: My name is Richard Clifton. I am Director for Business Development at the recently merged charities of CDG and Shaw Trust. We are the prime contractor in London East for the Work Programme and also subcontractor in another six areas, as well as being a prime for Work Choice across England, Scotland and Wales.

Sean Williams: My name is Sean Williams. I am the Managing Director of G4S Employment Support Services. In that role, I have responsibility for our three Work Programme contracts: Manchester, Cheshire and Warrington; Kent, Surrey and Sussex; and North Yorkshire and Humberside.

Kirsty McHugh: I am Kirsty McHugh; I am Chief Executive of Employment Related Services Association, ERSA, which is a trade body for the welfare-to-work industry. We have about 120 members, including just about all the prime contractors. You can see numerically more of our members are subcontractors or those outside Government-commissioned programmes.

Andrew Conlan-Trant: Good morning. I am Andrew Conlan-Trant; I am a Director of Rehab Group. Rehab Group is a third-sector charity organisation with over 60 years’ experience of working with hard-to-help people, guiding them towards independence and an improved quality of life. We are the lead partner in Rehab JobFit, which has Work Programme prime contracts in Wales and South West England. We were set up specifically for the Work Programme. Our delivery model is 100% through a supply chain. About two-thirds of that supply chain is third sector and public sector. We also do some delivery ourselves in Wales and South West England through Rehab’s subsidiary organisation TGB Learning.

Q269 Chair: Thank you very much, and you are all very welcome. I will address the first question to you, Kirsty. If job outcome performance builds as ERSA expects, what level of performance do you expect the Work Programme to achieve in years two and three of the contracts?

Kirsty McHugh: The Committee will be familiar with the Work Programme outcome and sustainment figures, which were released by the Government in November of last year. You will also know that they are a partial snapshot of performance and they alone will not give you much of an idea about what is going to come next. The stuff that was released at the end of November relates to people who had been in work for six months by the end of July. In effect, it only really told you about people who had entered work by the end of January 2012. You can see there was a real time lag factor, which we need to address in terms of getting good, timely information into the public arena.

ERSA has been collecting job-start figures, so not those people who have been in work for six months but those who have got into work. We know at the end of September of last year, 207,000 individual jobseekers had entered work; it does not tell you how long they have been there, but they had entered work.

Now, if you go back through 2012, frankly, the start-up phase for the Work Programme was tough, for a range of reasons, at the end of 2011. In February 2012 we had the industry getting about 11,000 people per month into work. By September, that had doubled to 22,000 people a month, so you can see the upward trajectory. That was partly because the economic situation was slightly better than it was before, partly because contracts had settled down, and partly because people were just getting better at what they were doing.

We are going to be releasing new job-start figures towards the end of April, we hope, and we are working with the prime contractors around the collation of those. I cannot give you that figure yet, but it will probably be 50% higher than the one we released at the end of September. Do not hold me to that if it is not, but we are probably looking at about 300,000, who have gone into work.

Q270 Chair: If that is your projection for year two, what about year three? Will it improve substantially? If you are saying it will be 50% better than it was last time, that is still not very good.

Kirsty McHugh: Of course, it is about how many of those turn into the job outcome. One of the things the industry is getting far better at is identifying the interventions needed to get them to the job outcome point and sustainment, and, of course, they don’t get paid. There are all the incentives around making sure that does happen.

Targets were missed in terms of minimum performance level for year one, and there are no surprises there, for a range of very well rehearsed reasons. Year two is looking far happier, and year three is as well, but the economic situation is one of the unknowns. If the economy does not grow at a sufficient rate, it is going to be difficult for anybody, whether they are a subcontractor or prime contractor, to get as many people into work as they would otherwise. Therefore, there is certainly an element of the unknown around that.

Q271 Chair: You must have known what the economic situation was going to be. That has been the situation since 2008, when you were bidding for these contracts.

Kirsty McHugh: In terms of the prime contractors in my membership who were bidding, I do remember that at the time the invitation to tender was put out, the Office for Budget Responsibility was talking about 2.6% economic growth in 2012. We have recent figures showing 0.2% economic growth, which is quite different.

Q272 Chair: The whole point of the Work Programme and the claim that the Government has made for it is that it would be better than anything else there has ever been. To be better than anything else that there has ever been, we need to operate in the good times and the bad times. The minimum performance levels were not hit in year one. From what you are saying, it is looking as though they are unlikely to be hit in year two and year three. There is a mismatch there, surely.

Kirsty McHugh: It is probably the best designed programme that we have had to date. It really builds on a lot of good work the Labour Government did in terms of the Flexible New Deal, etc. All those elements are good. Some geographies of the UK are tough and there is no point pretending otherwise. It is going to take a while for this to build. The Work Programme is very much a work in progress. There are a lot of very good indications, and the job-start figures are the most solid indication we have got as an industry of what the job outcome and sustainment figures are going to be. If you ask me, Chair, what it is going to look like in two years’ time, I think I would be quite foolish to give you some firm predictions in relation to that-I would probably get it completely wrong.

Q273 Chair: Perhaps I will ask the rest of the panel if they have got predictions in terms of whether the output in job outcomes is going to achieve more than the minimum. Sean, you are itching to speak.

Sean Williams: I will come in on two points, if I may. If Work Programme is not measuring against the minimum performance levels, there is clearly either a problem with Work Programme or there is a problem with the minimum performance levels. I would suggest that the minimum performance levels are completely inadequate for the task that they have been set to do. They were set in completely different macroeconomic conditions and, even at the time, leading figures in the industry said that those minimum performance levels were just not realistic.

Q274 Chair: Indeed, this Committee said exactly that.

Kirsty McHugh: It did.

Sean Williams: Absolutely. You made another point-that the Work Programme was supposed to be the best programme. It is supposed to be the best programme, given the macroeconomic conditions and given the amount of funding it has got. I don’t think there is anyone who works in this industry who does not think that Work Programme is performing better than any other programme would, given the amount of funding and given the macroeconomic conditions.

Chair: You have just condemned it with faint praise there, surely.

Sean Williams: I don’t think so.

Q275 Chair: In other words, the other programmes would not have done any worse than this. Is that what you just said?

Sean Williams: No, the other programmes would have done much worse than Work Programme-let me be clear on that. Work Programme is doing better than any other programmes, given the amount of funding and given the macroeconomic conditions.

Let me give you some reason for hope on some of the measures. Remember, this is a two-year programme, so we are also measuring the number of people who have completed the marathon a year into the marathon and saying, "No one’s completed." We need to get to the end of the race. For young people who have been on the programme for 18 months, we are currently helping well over half of those young people into jobs.

Q276 Stephen Lloyd: Just to be clear there, Sean, and to be precise with the words, do you mean over half have got jobs?

Sean Williams: Job starts.

Chair: That is not sustained job outcomes.

Sean Williams: That is not sustained job outcomes.

Stephen Lloyd: They are into a job start at the moment.

Sean Williams: Absolutely right. Of course, the time lag effect is doubled. Of those young people who have been on the programme for 18 months, over half have got jobs. We would then have to wait another period of time until they can become sustained jobs. We would expect 80% of those jobseekers to have sustained jobs, and that would be over 40% of young people going through Work Programme, who of course have been with Jobcentre Plus for at least nine months unsuccessfully. These are very hard-to-help jobseekers who are coming on to that programme, and the G4S Work Programme will be helping-from the statistics I have-well over half of those young people into jobs. We would expect at least 40%-so 80% of the 50%-to be sustained in that employment if they are given sufficient time to reach a sustained employment outcome.

If you look at the historical cohort data-so, not including data for people who have been on Work Programme for one or two days, as it is not enormously surprising that it has not helped them into work-Work Programme is performing much better than the minimum performance levels and various other coverage would have you believe. It is an enormously misleading picture.

Richard Clifton: Our experiences mirror what Sean is saying. We are looking at a similar figure: half the people in the 18 to 24 group have already entered employment and, yes, that is then the time lag that we have to wait for before we get to an outcome. There is a similar picture in the JSA. Of customers 25-plus, 40% have been on the programme from the start and have already moved.

Q277 Chair: Are you both saying that, when the figures come out in May, the minimum performance outcomes will have been achieved for year two?

Sean Williams: No, I am not saying that. I am saying that there is a fundamental problem with the minimum performance figures, and if the Work Programme metric does not meet the minimum performance level metric, I think that tells you more about the minimum performance level metric than it tells you about the Work Programme. If it is a very specific question, I think G4S’s Work Programme will meet the minimum performance levels in some areas for some customer groups, and miss it for some customer groups in some areas. I think that it will be similar across the piece.

Q278 Chair: That could lead to quite serious problems for you, because in 2011, in our previous inquiry into this, Inclusion told us that it would not be possible for prime contractors to be profitable if you were operating at around or less than the minimum performance levels. Those levels are really quite important to you; you have to hit them, otherwise you don’t make a profit. Would you recognise that? Will you struggle to make money if you don’t hit the minimum performance level? From what you are saying, you probably won’t reach that level.

Richard Clifton: I think we will hit close to or near to it in a lot of the categories, and in our actual modelling, from the start, when we put the contract in, we were, as a charity, very careful to make sure that we did not put the organisation at risk. Actually, all of our predictions are showing that we will be secure with the flight path of performance that we have got for people entering work and the numbers we expect to get into outcomes. From our point of view, we don’t see it as a major risk at this point, but it is something we would have to continue to monitor.

Sean Williams: I expect a lot of programmes to be profitable.

Andrew Conlan-Trant: I would expect more programmes to be profitable.

Q279 Chair: Kirsty, are any of your members quite worried about their financial viability? I appreciate you would not be able to name them. Obviously, we have got big organisations here, but there are ones that perhaps are operating closer to the line.

Kirsty McHugh: Absolutely. We have subcontractors in membership as well as primes, and over half our members now are voluntary sector. I will be open about it. During 2012, a lot of them went through a very tough time. I certainly got a lot of telephone calls, a lot of emails and a lot of concern, because the cash dip, in terms of the payment by results programme, was deeper than many thought, because it is taking longer, generally, to get people back to work. They thought it was going to take six months to get x number of people into work. The reality of the economic situation means that it has been taking them nine months and, therefore, in terms of the PBR-the payment by results element-the cash need was deeper.

We have turned the corner a little bit. Generally, what I am picking up is that the return on investment that everybody needs, regardless of whether you are a charity or a private-sector organisation, is significantly lower than people thought when they signed the contracts. The overall money available to the Work Programme is significantly less than when people signed the contracts. That is the reality by which everybody, at all levels, is operating.

Q280 Chair: Why?

Kirsty McHugh: There is a range of reasons. It is around how many people they are getting into work over the period. It is the payment by results element. They work with an assumption of how much money they have got overall to work with.

Q281 Chair: It was not just the minimum performance that was ambitious; it was how much money you were going to get for getting people into work that was overly ambitious?

Sean Williams: We were expecting 2.6% growth. If we believe the minimum performance level targets, we should also believe the 2.6% growth, which was put in the same document. That 2.6% growth just did not materialise. When people were making their estimates of the number of people who would go into employment, it was done in a very different macroeconomic context.

Work Programme is doing some really fantastic stuff, and one of the key things that Work Programme does is move the measure of sustainability. With old employment programmes, you got paid when somebody started on the programme or when someone started a job. It did not really align with the incentives of the jobseekers and the incentives of the taxpayer. Work Programme properly moves that payment point to, first of all, six months and then potentially up to 18 months/two years after somebody has started a job.

For the first time, we are looking at transforming someone’s life-getting them off benefit for a long period of time and really moving them from a culture of unemployment to a culture of employment. No one had ever done that before. We made some estimates around how long it would take to get someone to six months of employment, and then we made some estimates, as an industry, about how many people were then continuing in those jobs. Some of those estimates have proved to be too optimistic. We should not be ashamed of that; we are trying to do something new for the first time.

Q282 Chair: We have had welfare to work and new deals since the late 1900s. Not the 1900s-

Sean Williams: It just feels like that.

Chair: I mean, since the late 1990s. That was a criticism of it. There was a plethora of different new deals, and some of them were moving very long-term people into work.

Sean Williams: The private-sector-led New Deal was paid 80% up front, so 80% when someone started on the programme, and 20% when someone started a job. There was no money whatsoever attached to a sustained job outcome.

Q283 Chair: It still must have been able to trap people who were in the sustained group; there was not a payment attached to them. Are you saying that nobody knew what happened to these people?

Sean Williams: What gets paid, gets done. In the private-sector-led New Deal, people measured the number of people going into work and they did not measure the number of people staying in work.

Q284 Sheila Gilmore: For a long time, we were told by the Minister-maybe not by you-that we could not rely on ad hoc figures or we had to wait for the performance outcomes that had been promised, which we are now told were probably rubbish, and everybody said that in the first place. Why should we believe these figures? We were told by the Minister it was unsafe to believe figures like this. What constitutes a job start?

Kirsty McHugh: Our job start figures are the best you are going to get. Realistically, what we want is more information put into the public arena more regularly. It is not good for the industry for there to be a vacuum of information around performance.

Q285 Sheila Gilmore: We were told the reason for the vacuum was that the figures would be unreliable.

Kirsty McHugh: That was a political statement, and I am not going to comment on that. From an industry point of view, all I hear from all my members is they would rather share more information about performance with local authorities, with constituency MPs and with each other than they are able to at this point in time. The fact that we had to wait a year before we got any information in terms of job outcomes and sustainment was not good for the public and it was not good for the industry either.

ERSA collects the information from all of the prime contractors. Our information is as good as they give us, and we have to rely on that. We can collate that and put the job-start figure into the public arena-because we think there is a public interest in that-but then, also, we can play back to our members how they are doing against each other, because otherwise that is not visible to them, and that is not a good state of affairs either. It is really important that that vacuum is filled.

Q286 Chair: What is the definition of a job start?

Kirsty McHugh: This is about individual customers and individual jobseekers entering work.

Q287 Chair: It could be one day?

Kirsty McHugh: It could be one day or it could be one, two or five years.

Q288 Chair: What goes towards the payment?

Kirsty McHugh: We do collect the job outcome and sustainment figures as well, but we are not allowed to put those into the public arena. That is stuff the Department wants to control, via ONS. We are allowed to publish only the job-start figures; I would like to publish more.

Nigel Mills: It is intriguing that you are told what you can and cannot publish.

Kirsty McHugh: Indeed.

Q289 Nigel Mills: Can I just take you back to the financial health of many of the contractors in this situation? You all seem to say you would be profitable, including perhaps the weaker-performing of you so far. Do you expect any contractors basically to go bust and to have to give this contract up, or are you expecting now that that will not happen?

Kirsty McHugh: I don’t think we are going to have any prime contractors going bust. 2012 was tough for a lot of organisations for the cash dip reason, etc. We are not in that situation across the prime contractors now.

In terms of the subcontractors, we have got a mixed picture of performance; we have a mixed picture of performance across the prime contractors as well, which is one of the interesting elements that is coming out of that. One of the things we do need to be aware of is the disappearance of the attachment fee, which goes-if you remember-down and then disappears entirely halfway through the contract, which is going to put quite a lot of pressure on subcontractors. They will be delivering without that upfront payment from here on in. I am very conscious that that is going to put quite a lot of pressure, financially, on subs.

The Minister would say, "Well, they knew that when they signed their contracts." However, as I said, because the return on investment is lower and further away for the industry across the piece, they are the organisations more than anyone else that I am concerned about at this point in time.

Q290 Nigel Mills: When or if DWP decides to start tweaking referral levels to reward those who have been more successful, do you have any worry that that might tip some contractors over the edge?

Kirsty McHugh: It is a mixed picture. Frankly, if the only contract you have got is Work Programme and it is payment by results, that is a less comfortable situation to be in than if you have got a diversity of contracts, as you can spread risk. If you are part of a larger organisation that has deeper pockets, that is probably a more comfortable position to be in than if you are not. That said, even if you are a very large organisation such as G4S, you will, like Sean, have to justify your performance all the time within that organisation.

I don’t think we are looking at a big financial collapse or anything along those lines. But it is tougher than people would want, and it is the subcontractors, in particular, that we need to keep an eye on.

Q291 Nigel Mills: Presumably you think that, if one contractor did have to give up their contract, there would be lots of other providers who would be quite willing to step in. Would G4S be keen to expand into other regions if a vacancy became available?

Sean Williams: Yes, absolutely. We have seen a microcosm of this. We are a pure prime contractor, so we don’t keep any referrals to ourselves; every jobseeker who comes to us we refer out to our network of subcontractors. We have been already moving referral flows between subcontractors. We have brought new supply chain partners into the supply chain. Indeed, we have had to remove a number of providers for underperformance. That active management of the market has made a massive difference to performance. We find that, when we move flows, in about six to seven weeks the performance goes up across the whole system. As you would expect, if we move an underperforming subcontractor and bring in a very high-performing subcontractor, again performance goes up. There are, therefore, some real lessons to be learned around active management of supply chains there at the DWP level.

Q292 Nigel Mills: What is your measure for underperformance that means you sack a contractor?

Sean Williams: It is reasonably easy. We would not make the mistake of setting a minimum performance level. What I can do is take my 26 core subcontractors and put them in a league table. We account for regional differences and various other bits and pieces. In the South East, for example, if I have got 10 subcontractors and we put them in a league table and the ones at 8, 9 and 10 are performing significantly worse than the top seven, that is a pretty clear indication. For the first time ever in welfare to work, we are comparing apples with apples.

Q293 Nigel Mills: When did you first sack a subcontractor? How far into the contract were you?

Sean Williams: We had a significant renegotiation with one of our subcontractors six months into the contract.

Q294 Nigel Mills: We have just been hearing that it was not fair for DWP to publish data or assess prime contractors until 18 months into the contract. Yet, you, taking that down a level, managed to take a pretty robust decision at only six months.

Sean Williams: The more actively you manage the market, the more quickly you drive performance improvement.

Q295 Nigel Mills: Are you saying DWP perhaps ought to have been more actively, and earlier, managing the performance of prime contractors?

Sean Williams: If the Department started to implement market share based on relative position in contract package areas, we would see a performance improvement. The sooner and the more boldly that is done, the better the performance you will see in Work Programme.

Q296 Nigel Mills: Can I just take you back to the expected level of outcomes? You appear to be suggesting that we might get to 40%-particularly for younger people on the contract-and the numbers we worked out suggested we might get to 30%, roughly, as that sustained outcome. That figure is roughly around the minimum performance level. If what you are saying is that this is the best value programme and we are going to get those 30% of people into a sustained job, is that successful for these programmes? Do you think that would be a real achievement that was worth having?

Sean Williams: Yes. Our job as prime contractors within Work Programme is to spend the money we have got to help as many people into sustained employment as possible. Personally, and as an organisation, if we are supporting 40% of people into work and sustained jobs and not supporting 60%, we will always consider that 60% a failure. We want to help every single unemployed person we see into employment, so, of course, we always want to achieve 100% and get as close to that as we possibly can. However, given the funding that Work Programme has got and the macroeconomic conditions it finds itself in, I personally would think 40% would be an extremely good result.

Kirsty McHugh: You have got to remember, of course, that there are no easy wins on the Work Programme. By definition, these are people who, by and large, have been unemployed for at least a year. In some cases, it is much longer. We have got some interesting demographic information coming through about the barriers that people are facing to work-multiple barriers in many cases-which is really going to help us in terms of designing future programmes.

For me, the last thing I want to do is paint a picture that says, "You shouldn’t take someone from the Work Programme because they are hard to help." That is the worst message to send out to employers. We want employers really engaged and enthused about this. We have a disability employment forum, and we do know, through our work with them, that the health conditions we are seeing on the Work Programme are quite severe, in many cases. 40% of people coming through on Jobseeker’s Allowance have some sort of health-related condition. The people coming through on Employment and Support Allowance, I was hearing yesterday, have got more challenges than those who were previously on WORKSTEP, which some of you will know as a previous disability employment programme. That information is really helpful to have, because it means we can design services now, as an industry, and it will also help with future commissioning.

Q297 Nigel Mills: What do we do with the 60% to 70% of people who won’t find a job? What is next for them?

Kirsty McHugh: Absolutely.

Sean Williams: Sorry. It won’t be 60% to 70% of people who won’t find a job; 40% to 50% of people won’t find a job, and 60% to 70% won’t get to the sustainment point of six months. There is quite a big difference there.

Q298 Chair: They may have got jobs in previous schemes. Isn’t the danger that that 60% to 70% of people are the same group who have already been through new deals and various other things? They have been in the revolving door for the last 10 years, and they will have got some jobs, because other welfare-to-work schemes did get them into jobs, but not the sustained jobs. What happens to them?

Richard Clifton: What we have got to remember on this is that, because it is an individualised programme, we are progressing people nearer to the employment market-even those that do not get to that sustainable job market.

Q299 Chair: The Government does not like that, because it cannot measure that and cannot pay for that.

Richard Clifton: As a charity, we are investing a lot in everybody that we serve, and I am sure that is the same for the majority of providers out there. We do not see that we are just chasing those outcomes; we are working with people on an individual basis to move them forward.

We can give an example of one agoraphobic customer we had through, who our advisers could not get out of the house. We had an outreach adviser who had to work with them and take them through steps. First, we had to get them to walk as far as posting a letter at the end of their street. Six or eight months later, they can now get into our centre. This is not a programme that is leaving people behind, and we cannot just see this as being a programme that is solely about job outcomes. It is about changing people’s lives and allowing them to move forwards. Even if we do not get paid outcomes for every single person, as a charity the reason we are involved in this is to make sure we change people’s lives.

Q300 Nigel Mills: Mr Williams said, "What gets paid, gets done." Presumably, that does not get paid but is still being done. Perhaps you are being more generous than Mr Williams’ organisation, by that logic.

Richard Clifton: We will have different views, but unless you work with everybody on that, you will not get any of the payment. There cannot be this idea that we can pick off any particular group of people and that will be where the outcomes come from; that is an absolute myth. We have to work with everybody who works through and move everybody as far as we possibly can; that is how this programme will work.

Andrew Conlan-Trant: I would support what Richard has just said there. In a third-sector, charity-type organisation, certainly you have to work with the contracts that you have; there is no doubt about that. You have to also work within the context of the people who come to you. It certainly would not be fair to say that, if somebody comes to us with a multiplicity of problems, as many do-and we have good capacity to work with that-we are not going to work with those issues. I suppose it does show up the potential issue with some of the harder-to-help clients: it could take up to two years before a customer is ready for employment. What have you got to work with during that period of time? You have an attachment fee to work with from a commercial point of view. It is very hard to do some of those things, but we still continue to and we still strive to do it with the cohort of people who come to us.

Q301 Sheila Gilmore: What are you going to do when the attachment fee goes?

Andrew Conlan-Trant: That is going to be very difficult. There is no question about that at all.

Q302 Jane Ellison: It sounds to me like you are explicitly saying that you are not "creaming and parking", to use this famous phrase. That is quite useful to have, because previous witnesses we have had have hinted in that direction. That seems to be explicitly what you are all saying you are not doing.

Sean Williams: Creaming and parking are two separate things. On the "creaming" accusation, it just fundamentally misunderstands the individuals who are sent to Work Programme. Jobcentre Plus is an effective organisation. It has seen individuals for at least nine months in the case of young people, and 12 months in the case of everybody else. It has had a range of interventions with those individuals through its personal advisers and through its support contracts, but it has been unsuccessful in finding those individuals work. By definition, the individuals coming on to Work Programme are long-term unemployed and difficult to help. There is no cream to cream. These are all difficult individuals to help.

Parking is quite an interesting one, and the data here are telling a different story to some of the outside observers, who are maybe not involved in the programme so don’t really know what is happening in it. We did a piece of work on all of our subcontractors a year into Work Programme, looking at cohorts then who had been on the programme for a year. I will be honest; what we expected to see was that, once people had been on the programme for a year/14 months, the off-flows-so the people going into jobs-would dramatically decrease. We wanted that data because we wanted it to then be able to manage our subcontractors and say, "You need to do more with the post-one-year Work Programme customers."

That is not what we found. From talking to other managing directors of prime contractors, it is not what we found at all. What we found out was that, even for the June cohort-the people who had been on the programme the longest-we are still placing people from that cohort into employment. There is data suggesting that any suggestion of whole cohort parking is not happening.

The question is then: is Work Programme going to help someone who is homeless or someone who has a severe mental health condition or someone with severe substance misuse issues? If the question is whether Work Programme is going to help that individual, the answer is, very honestly, "No, it’s not." However, there are things that we can do in delivering the Work Programme that progress that individual and move them further along. We have, if not a financial responsibility-"what gets paid, gets done" does not mean that what gets paid is only what gets done-a moral responsibility. If you look at the organisations within our supply chain, the sorts of individuals and organisations working within welfare to work, by and large they want to move all of those individuals.

Kirsty McHugh: I would like to make a couple of points from a whole industry point of view. The Employment and Support Allowance performance figures are not good enough. The industry knows that, and everybody needs to get better at that. There is a range of reasons, such as referrals having been late, etc. Even with that aside, those figures are not good enough. It is going to take quite a while to get a lot of people on Employment and Support Allowance into work. There really are not any easy wins. We are not going to see big spikes in performance early on-that will be towards the tail end of the two years in most cases. There needs to be a cross-industry effort in relation to Employment and Support Allowance jobseekers.

There probably needs to be more visibility of whether people with particular issues-I was talking to the RNIB yesterday, for instance-are able to access the support they need through the Work Programme. One of the areas we are concerned about is public sector retrenchment and local authority funding cuts. Work Programme was predicated on the combination of funding streams around an individual. If some of those other funding streams-local authority cash, for instance-have gone, Work Programme money cannot replace that because there is not the cash to do that. That is the challenge in some cases as well. The length of the contracts does mean, of course, that the contractors are in place to be able to do the best they can in that environment.

Regardless of all the efforts of all the organisations, not everybody is going to get a job through the Work Programme; it is not going to happen. Therefore, one question you may want to raise with the Department is, "What happens next?" We were expecting the commissioning of a programme-the commissioning of something-but that has not happened yet, so you may just want to probe that. What about people going through the Work Programme, having support to progress towards the labour market-as Richard has just been saying-making strides and not getting there? The Work Programme finishes, and then what happens? They get sent back to Jobcentre Plus and the whole cycle could start again. We have to think about the transitions here as well.

Chair: Wouldn’t they then be the cream?

Q303 Glenda Jackson: I am really taken aback a bit here. You have been very clear that there is not sufficient information, as far as you all are concerned, either for us as the public or within the industry. You referred to the minimum requirements, which you think are totally ineffective. I hope I am not paraphrasing too extremely. We were told that you were empowered by something called the black box, so why aren’t you changing it? Why aren’t you removing those things you regard as blocks, because we have been told you have the power so to do?

Sean Williams: The black box is fantastic in the service that we can give the individual who comes in; we then have the contractual freedom to do whatever it takes for that individual to help them into work. We don’t have to put them on a two-week motivation programme or put them through things that might not be appropriate for that individual. If they are, we do them; if they aren’t, we don’t.

Unfortunately, the black box does not extend to being able to change the minimum performance levels or the funding regime; those don’t fall within the purview of the black box. If the question is, "Are we constantly evolving our delivery models? Are my subcontractors constantly evolving what they do to get better at it?" then the answer to that is an absolute, "Yes, they are," and that is why we see cohort performance on the programme go up and up.

Q304 Glenda Jackson: In the process of learning about the people you are supposed to help, why didn’t you know about this before? The Government was very clear that this whole programme, essentially, was to help those who, historically, have always been the hardest to reach. You knew this when you signed up for the contract, so I am a bit bemused that you are suddenly realising who it is you are having to help.

Sean Williams: Every individual is different. Of the tens of thousands of jobseekers on our Work Programme, they each have an individual set of needs. We need to find that out individually as we progress. We cannot do that in theory, prior to the programme starting. It is not a failure or a weakness of the programme or the organisations delivering it that we are learning and getting better at doing this, because nobody had done sustained employment in this way ever before. It is a brand new attempt to tackle this very entrenched social issue. I genuinely do not think it is a weakness that we did not get this 100% right to begin with and that we are learning and getting better and better at it. That is not a fair criticism.

Q305 Glenda Jackson: You must have had a great deal of information, before this programme came, from those particular groups who have actively been campaigning for and on behalf of these people, for decades. Kirsty mentioned the RNIB; the RNIB and Mind are just two out of the dozens that are out there, and they certainly have the information at their fingertips. I am pretty certain they gave it to you, didn’t they?

Sean Williams: I slightly challenge that. I don’t think they do-I don’t think anybody knows how to successfully help people. I don’t think anyone did know how to help people into six months, a year or 18 months of employment. No one had tried to do that before.

Q306 Glenda Jackson: That is a time trail. That is not what I am trying to say here. I absolutely take on board that you are actively dealing with individuals. But the variables within those individuals and the evidence of how difficult it was going to be was most certainly out there, and it was certainly part of what the Government was selling us as the reason for introducing this programme. I am still bemused by what seems to me to be your lack of information, even though you signed contracts to help these people.

Richard Clifton: I would look at it from the fact that we are delivering the majority of the delivery model that we put in place. That is based very much on the evidence that we had. We put a lot of innovation into it; we would not have been able to, if we had not had the black box. If we look at what we launched as CDG volunteers, which allows us to complement what we are doing as far as the support that our paid staff give, additionally to that, we are now bringing in volunteers from all walks of life to coach, mentor and support people and give additional help that was never there and never possible to give in the past. We have brought in loads of different innovations using technology and using different ways of working. That was all based on evidence that-you are absolutely right-was out there and was part of the research we did for the bid.

What we are saying is that, by doing that and putting those interventions in, we are learning that there are even better ways of helping people, and we continue to improve the programme and we will continue to do that. The only reason we exist as an organisation is to move long-term unemployed people into stable employment. We have got 30 years’ experience of doing that. We know, internally, what those barriers are. You know what the barrier is; you try a way of addressing that; but as soon as you have done that, you will say, "Well, actually, we do that even better," and that is where we are now continually improving the model. That is the freedom that the black box gives us.

Q307 Glenda Jackson: Is the improvement of that model dependent on freebies? You spoke of volunteers; presumably these people are not being paid, so there is no bill as far as the country is concerned.

Richard Clifton: Absolutely not. This is about communities wanting to support themselves. These are people giving their time freely. It is not replacing what we are doing. We are still investing the same as, if not more than, a lot of the other prime contractors in our main delivery. This is additional to that. Yes, the Work Programme was set up to work with complementary funding streams. We are using things that are already funded by the Skills Funding Agency, and that is working alongside what we are delivering as well.

The key to what we do, and I suppose this is where we are a bit different from G4S, is that, acting as a charity, the surplus we make we reinvest. We have already invested over £1 million into the volunteer scheme, because people say, "Yes, it’s free." Well, actually, we still train, support and mentor the people donating their time to make sure they can deliver the best service possible. It is not free, by any stretch of the imagination.

Q308 Glenda Jackson: No. What I am trying to drill down to here is: is the improvement of your programmes financially dependent on what has been accorded to you from this programme? From what I am hearing from you, the only reason you can improve your programmes-and it is marvellous that they are being improved-is because you are outside that financial constraint in some way. This is either because people give their time and effort for free or you are taking money in from other income streams that are not part of the financial structure of the Work Programme. That is all I am trying to find out.

Richard Clifton: That was the original design of the Work Programme. The Work Programme was there to put a structure in place that pulled together all of those other resources that there were and made the most effort for that individual for their journey towards employment. That was the original design of the programme; that is what everybody’s bids were built around.

Glenda Jackson: We have had evidence from others that says, for example, small subcontractors-who are way down the food chain of subcontractors-have gone out of business because the work that they had been doing for two decades, in one piece of evidence, had dried up because money from local authority funding had disappeared. I am still trying to work out what the financial benefit is: if you had to pay those people, how much would it cost? Do not misunderstand me; I am not critical of what you are doing-it is entirely valid and valuable. I am trying to find out what the actual financial costs would be if they had to be paid for.

Chair: Glenda’s asked the question. We do have questions around that, so that will give you plenty of time to think of answer.

Glenda Jackson: I can think of some more.

Chair: We will be coming on to that, but we really need to move on, at the moment, to JCP and the handovers.

Q309 Stephen Lloyd: Talking about barriers, one of the things that has come up over the past nine or 10 months in this Select Committee is some possible barriers around the interconnectivity between JCP and primes and subs. I have got some specific questions on that I would be grateful for a bit of information on. The initial DWP evaluation found that the warm handovers from JCP to Work Programme providers, which should involve a three-way meeting between the participant, a JCP adviser and the Work Programme adviser, rarely happen in practice. Why, in your experience, are warm handovers not happening?

Sean Williams: Warm handovers did happen in the majority of cases.

Q310 Stephen Lloyd: Is this the majority of cases in your experience?

Sean Williams: Sorry, I am talking for the G4S Work Programme. It does vary between contract package areas. It does vary from district to district, and it does vary from Jobcentre to Jobcentre. It tends to be about local relationships and the relationship between the local Jobcentres and the local subcontractors. Warm handovers absolutely are happening. They are not happening in 100% of cases, but they are in a significant proportion of cases.

Q311 Stephen Lloyd: To give a ballpark figure, because you cover three quite large areas-it is a length-of-string question-in what percentage terms in your three areas would you say warm handovers are happening?

Sean Williams: It would be happening in over half of all referrals coming through.

Andrew Conlan-Trant: We invested a lot in the relationship with Jobcentre Plus. We felt, from the very beginning, both at a senior level but, more importantly, at a local level, that getting that relationship right was going to be very important in terms of the handover, particularly then for the harder-to-help customers, such as ESA customers. I can give examples where, with some supply chain partners, all of those handovers are warm handovers. For instance, we have a supply chain partner in Cardiff, and we have an arrangement with the local Jobcentre Plus there, whereby one day a week the supply chain partner staff will work in the Jobcentre. They will meet the ESA people there, do the warm handover and take them from there into the Work Programme.

Another example is that, for people who fail to attend the Work Programme provider, we would go back into the Jobcentre premises with the Jobcentre management and work with the people who failed to attend in there. We have a good, strong process of warm handover built up at this stage, and the percentage of people for whom that happens is growing. I certainly can say that is happening for all ESA customers, and for a lot of the JSA customers that is happening as well.

Richard Clifton: I would say, in London we find it more of a challenge. We have had to change our approach. In the early days there were more warm handovers, and because of changes to systems it got more problematic. We have now worked with Jobcentre Plus to change the way we work with them and pilot different approaches. For instance, we have now started to work on collocation basis in our Lewisham office, where we now have Jobcentre Plus doing the signing within our office, so we can start to break down those barriers and get more warm handovers happening that way. That is about to be piloted in another office. So because of the volume of customers we were getting through, as well as the logistics within some of the Jobcentre Plus offices in London, it was not as easy to do. We have looked at different ways we can approach it.

We also have outreach advisers. Where we get notifications through on the PRaP referral to say, "Actually, we’d like to talk to you about this customer," we will then have a separate conversation with some of our harder-to-help customers, and we have outreach advisers who can even go and meet them in their own home if that is more appropriate. There are different approaches we have taken to accommodate it.

Q312 Stephen Lloyd: That is interesting, because I appreciate that, other than Richard, who has explained there are some specific challenges in London, the other two primes are very bullish on the warm handovers. What is the broader experience within the trade association? It is quite clear from what the DWP pointed out that they are not happening anywhere near to the extent they should be. Also, the DWP did not seem to come up with any solution for how that should improve. What you are saying to me is that it does seem to be improving anyway. Is that right or wrong across the piece?

Kirsty McHugh: It is variable across the country. It is very much around individual Jobcentre Plus offices and their relationships with prime contractors. It is also about people. Sometimes it is good and sometimes it is less good. Probably all providers are trying to invest in this area, because the quality of the handover has a significant impact on the way somebody feels when they go through a Work Programme contractor’s office. There are particular concerns around people leaving prison. We have an Offender Related Services Forum, which has been looking at the handovers there. Sharing of data is a concern, as it is not good enough. We are trying to do some stuff nationally to improve that. Also, in the Work Capability Assessment, which I know the Committee had looked at, the sharing of information and handovers there, again, is an area that we need to improve. The Department’s view is, "It’s over to you to sort out." It is not going to do anything itself.

Q313 Stephen Lloyd: I am going to come to WCA in a minute. Before I do that, do you think the warm handovers, because of the challenges they can face, are a realistic aspiration for the programme, considering the caseloads?

Sean Williams: We see a big difference. In the North West it takes us, on average, 13 days to attach a customer, where we have traditionally done warm handovers; in the South East, it is 19 days. Now, that may not sound like a big difference, but it is a big difference in terms of engaging that jobseeker. Obviously, it plays into caseload sizes and resources. There are different ways of doing warm handovers or warmer handovers-for example, three-way telephone contact so you can immediately talk to that jobseeker. Undoubtedly, it does play into caseload sizes and the amount of resources on the ground.

Q314 Stephen Lloyd: One of the other things that has come up in front of the Select Committee again over the last few months is that, in some instances, there is some resistance in some JCPs towards the Work Programme providers. Now, I don’t want to go into the details of why that might be, because it is probably pretty obvious. Are you finding, as the programme develops, that that resistance is decreasing, or is it the same or is it worse or whatever?

Sean Williams: It is massively decreasing.

Andrew Conlan-Trant: Certainly, it is hugely decreasing. Like any programme, at the very start of this there was probably a learning curve for everybody involved here. Even if you take the likes of Wales, where we are one of the primes, I myself, along with the other prime provider, sit on what is called the Joint Employment Delivery Board for Wales. That has membership from Welsh Government, from JCPs and DWP. That, as an entity, enables us to talk more about the issues, for us to outline to the head of JCP-who attends that meeting-what the issues are and, vice versa, for him to say that to us. That has helped and our experience is that has flowed through to the individual Jobcentre.

Q315 Stephen Lloyd: And you others, is that broadly true-would you say that it is getting better? Richard, you have obviously got some specific issues, because I know London is slightly more challenging.

Richard Clifton: Relationship-wise, we have always had a really good relationship in our area. The advantage from our point of view is that CDG has been operating with the same Jobcentres through New Deal for many years, so we built up lots of local relationships, which has helped us to cultivate that and utilise that moving forward. It is the same with the supply chain with whom we work.

Coming back to your question on volumes, in London that is a significant issue, because the CPA in London East, other than the whole of Scotland, is the largest CPA as far as referrals are concerned. We do have to be honest that maybe we have to target those warm handovers on the ones they are going to benefit the most. Kirsty highlighted the prisoner group, which is something we are focusing very closely on at the moment. Working with the other six primes across London, we have each agreed to work with different prisons that are referring in so that we can start to build up. One of the works we are doing is with Wandsworth Prison to try to engage pre-release and work with the adviser at Jobcentre Plus-the adviser going in there. We are doing lots of different things and we have to take different approaches with different customer groups, to be honest.

Q316 Stephen Lloyd: Good, that is fine. If I may have one follow-up before Glenda comes in, it has been relayed back to the Select Committee-again, by a range of different groups and organisations-that having a good warm handover is a significant aspect of getting a positive outcome. Would you agree or disagree? This will have to be a yes or no, because we have so many questions to go through.

Richard Clifton: Yes.

Sean Williams: Yes.

Kirsty McHugh: Yes.

Andrew Conlan-Trant: Yes.

Q317 Glenda Jackson: The previous Minister in the Department assured Parliament that the process, as far as prisoners were concerned, began before they left prison. Are you saying to me that that system is not in place?

Richard Clifton: The system is in place and work is beginning. We are finding that we are not necessarily getting all of the information that we want. A prime example would be that, when somebody is in prison, they do not have to use their national insurance number, so they cannot remember their national insurance number. When somebody from Jobcentre Plus goes into a prison to sign them up for that beforehand, they do not know what their national insurance number is. From the prison regime point of view, there may be only two or three weeks before that person is going to be released, and Jobcentre Plus may only be going in and able to access that prisoner again at a later date. They can make an appointment but then they have been released. In some respects, we are now working with the prison to say, "At the point a prisoner comes into the prison, can you record their national insurance number?" It is simple things like that that mean when we get to release, they have got that information. That is the work we are trying to do as prime contractors to help Jobcentre Plus and make it as smooth as possible.

Q318 Glenda Jackson: Is the prison service accommodating those requests?

Richard Clifton: Absolutely. We are working very closely with Wandsworth Prison, as I said.

Glenda Jackson: It is not the only prison in the land.

Richard Clifton: No, but it is one of the largest in the country, so if we can crack it there, we can spread that across. As prime contractors in London, all six of us have divided up all of the prisons, and we are all working with different prisons. I am just using that one as an example.

Q319 Stephen Lloyd: That is a really important piece of information, and the key thing there is that it is clearly being fed back to the MoJ, because those small things make a huge difference. We are moving on to another crucial area, which is the WCA of great fame-the Work Capability Assessment. Let us start with Kirsty, because you are a trade association. In your judgment, have you observed any improvements in the Work Capability Assessment’s accuracy in assessing claimants’ fitness for work?

Kirsty McHugh: I am still getting a lot of concern through from my members about the WCA process, and I am sure you are hearing them here as a Committee as well. It does not look like the Professor Harrington recommendations have been implemented anywhere near quickly enough, and I note that the Minister has just announced that we have somebody else, Paul Litchfield, BT’s Chief Medical Officer, coming in to look at the WCA as well, which is a good thing. The implementation of the changes that were recommended has not been as fast as it should have been.

We are still finding that, to put it bluntly, people are being referred to the wrong programme in terms of Work Programme and Work Choice. Some people are better off on Work Choice; sometimes they are better off on Work Programme, so there is a concern in relation to that, which we have raised with the Department. There is also an ongoing concern about the accuracy of assessments, with people being put into the wrong group.

Q320 Stephen Lloyd: When you say "ongoing concern", is this, again, still being fed back to you by your members?

Kirsty McHugh: Yes, absolutely. I was with a number of our disability charities that we have in our membership-we have many-and often they are subcontractors to the Work Programme. They are doing a lot of work in helping people to appeal their WCA decision, because, actually, they need to be in the support group.

Now, there is a concern there, for me as a trade body, saying that, because you could look at that and say, "Okay, well they’re parking people. They’re too difficult. Let’s get rid of them." Actually, the best thing to do in some cases, for them as individuals, is to help them get the support they need if the WCA has not been right the first time. Obviously, a lot of people who come through the Working Capability Assessment are able to work, with the right support. We are absolutely not against that. The whole programme was designed around helping those people into work, but we are not there yet with the WCA-it does need review.

Q321 Stephen Lloyd: We are getting short of time, so I am trying to get very specific answers. I put the same question to each of the other three. Have you observed any improvements in the WCA since Harrington-over the last seven or eight months?

Andrew Conlan-Trant: We would say that there has been some improvement, but there are still some significant cases coming through that, quite frankly, probably should not come through. If you look at somebody who has some severe mental health issues, it is very hard to believe that they will be ready for work or able to enter work within a two-year period. As a third-sector organisation ourselves, we run a number of services for people with severe mental health issues or intellectual disability-there is a particular one I am thinking of-and we would run a programme for up to two years for somebody before they will progress. At that stage, progression is not necessarily to employment; it could be on to Further Education. It does take two years before they are ready for that, so we need to be very careful about the people coming off the WCA and into the Work Programme. Are they really likely to get into work within a two-year period? That is an important question to answer.

Q322 Stephen Lloyd: Sean, are you seeing any improvements yet in the WCA?

Sean Williams: We have seen some improvement, but it is still the case that we are seeing people referred who really should not be referred.

Q323 Stephen Lloyd: On a scale of one to 10, are you seeing a two or a nine in terms of improvement, with nine being high?

Sean Williams: It would be a four or five. For example, we had a client who was terminally ill with cancer referred to us whose life expectancy was shorter than the work-ready prognosis.

Andrew Conlan-Trant: So did we.

Richard Clifton: We have not seen that much significant improvement, and likewise we had recently a customer referred to us who had to go onto dialysis three times a week. They were more concerned about that, obviously, and maintaining their benefit, than our helping them into work. It was not appropriate at that point that they should be in Work Programme.

That is where we need to get it right, in that we refer people to the right support at the right time. Work Choice is a good option for a lot of the people who are coming through that Work Programme is not right for at that time. Work Programme can help a lot of these people, but we have to get the right programme at the right time for the right people.

Q324 Stephen Lloyd: So for the four of you here, the three primes and the trade association, it would not be unfair for me to say that you are really not seeing improvements to the WCA to the level you would hope to? Is that a fair statement?

Richard Clifton: That would be a fair statement.

Sean Williams: That would be a fair statement.

Kirsty McHugh: That is a fair statement.

Andrew Conlan-Trant: That would be a fair statement.

Q325 Stephen Lloyd: I have got an option of possibly improving it, so I would be interested to ask your views. This has come from Scope. Do you think it would be helpful if all participants were assessed for employability prior to being referred to the Work Programme?

Sean Williams: Yes, but employability is not a medical assessment in many cases. Yes, if it is done by people who understand employability.

Stephen Lloyd: That would not necessarily be Atos. The whole thing with the WCA is it is supposed to look at an individual’s capabilities. We all know that, because their background is medical, they are not going to be experienced in employability, I would have thought.

Sean Williams: Absolutely. Employability is a particular specialism, but it should absolutely be included in the test. I completely agree.

Q326 Stephen Lloyd: I don’t think you have anything else to add to that. Would you all broadly agree with that?

Andrew Conlan-Trant: I would agree with that, provided the assessment is holistic.

Q327 Glenda Jackson: The decision we are being told, post the Atos assessment, is being made by Jobcentre Plus. Is it the fault of Atos? We all, from the constituency level, know that it has not improved. Is the decision as to where the individual goes still essentially the responsibility of Jobcentre Plus, because we have been told by Government that part of Jobcentre Plus’s responsibility is to be flexible and sensitive?

Sean Williams: It is important that Jobcentre Plus are encouraged to refer everyone who ought to be referred on to Work Programme. We can clearly see in some of these individual cases that, wherever that decision was taken, it would have been better if it was not taken.

Q328 Sheila Gilmore: One of the big issues that have come up so far is the question of the differential pricing structure. The main criticism has been of the pricing structure that we have, which is based primarily on benefits. Now, I have looked at most of your written statements, and I think all of you make that criticism in your written statements. Part of the question is why this is coming up now, and what can be done in the short to medium term to change this?

Sean Williams: The Work Programme is an enormously complicated programme to put in place. Traditionally, these programmes have been done based on benefit type. There is only so much you can change at once. Benefit type is a very blunt proxy, which I think everyone would agree with. Length of unemployment is a better proxy. Obviously, the best way of doing it is to try to get a really accurate assessment of need, for example like the jobseeker classification instrument that they have in Australia, which is better.

Q329 Sheila Gilmore: Who do you think should do that? We have had some evidence before from people about that particular instrument, and some people think it is very good, whereas some people think perhaps it is not the ideal. There is also maybe a question about who should carry out that assessment. How many organisations do you want involved in this? Should the providers do the assessment?

Sean Williams: There is an obvious challenge with the providers doing it. We might decide everyone was very hard to help. The assessment can take into account some data, but if you spoke to frontline Jobcentre Plus advisers, they would be able to give you an enormously accurate picture of how difficult someone is to help into employment. This is because they have been working with that individual and understand that individual, and the judgment of a personal adviser at a Jobcentre, coupled with some sort of tool, would be an extremely strong method of categorising jobseekers in terms of difficulty to help. Again, that tool is not particularly difficult. It asks you about the security of your housing; how long you have been out of work; health conditions and other various barriers we know there are to employment.

Kirsty McHugh: This is not something that has just come up now; we have all known from the outset that benefit type was a very rough proxy. For instance, the majority of people who are coming out of prison are on JSA, but the chances are they have got an awful lot of barriers, and we have known that. A political decision was taken, and I understand why, earlier on in terms of this process.

Obviously, Universal Credit is bearing down on us. We have been doing quite a lot of work in terms of the potential interaction of Universal Credit and employment programmes, and how that is going to operate. The benefit types, of course, will disappear, so there is an opportunity, in terms of Universal Credit, to move towards something that is a fairer assessment of people’s needs.

Q330 Sheila Gilmore: Does it disappear or do you just have different elements of Universal Credit? I have seen diagrams that have been used by the Department that, effectively, have different types of Universal Credit recipients, usually in terms of conditionality. Actually, there is still going to be a framework, but it will still be just as bad as the present one.

Kirsty McHugh: It will be a political decision. The Work Programme contracts come to an end in 2015 and, obviously, there are two years to work with the customer, which takes it up to 2017. You look at the timeline in terms of the implementation of Universal Credit and there is the opportunity to move to a better assessment process, in terms of the design of future employment programmes, around that period. We need to start doing that thinking now.

Q331 Chair: That is a long way away. It must be really difficult for you, because you know that there is a group of people who have quite a high price on their head, but you cannot get them because they are not being tagged probably.

Kirsty McHugh: Indeed, yes.

Q332 Sheila Gilmore: Do you think it has to wait for this whole process to be gone through?

Andrew Conlan-Trant: Certainly at the moment it is a proxy that is only working in a mediocre-type way, because it does not make any reference to the needs of the individual at all, or it is somebody’s view on a need that puts them into a particular benefit category. If you are extreme about it, you can say that some people who are harder to help are almost being discriminated against by virtue of the benefit tag that is put upon them. It is something that should not wait until the end of the programme; it is something that should be addressed now.

Q333 Sheila Gilmore: Just to follow on from what Stephen said, in some ways we have got a double problem here. One is that the system that allocates people to benefit groups may be flawed. Equally, when you have done that, it is not necessarily a very good guide to people’s distance from employment. You are struggling with two issues.

Richard Clifton: I think that we ourselves as providers have to do all of the assessments, and we start that with a triage assessment, with the first contact we have with the customer, and that continues through the programme, because that assessment is very much ongoing. I don’t think we ever take from a payment group in which somebody comes to us what those barriers are likely to be; there is no way of doing that, because we have just as many people with health problems and disabilities coming through on a JSA payment group. If we look at the ex-prisoner group, in fact within London we probably have more ex-offenders within our JSA 18 to 24 and 25-plus than we do ever within that group. So I do not think we can ever look at the benefit groups we have at the moment being any sort of indicator for the service we deliver. It is an indicator for the funding that is available for that customer. As a charity, actually, that does not make any difference to the service we deliver. I can see that it might skew it for other people being able to deliver the service.

Sean Williams: That is a really critical point. People think that the differential payments make a difference to operational delivery on the ground, i.e. so someone is worth the mythical £14,000 we often hear misquoted or someone is worth £3,000. That does not make any difference to the service we deliver to those jobseekers. It does not make any operational difference to how we deliver at all. Our frontline adviser probably would not know the amount of money attached to that individual’s head. We are just interested in doing the right thing for that jobseeker. The differential payments are not working, I don’t think, certainly not within my organisation.

Q334 Sheila Gilmore: The differential payments were intended to work, so it is one thing that they are not working. In think in some of your submissions, some of you suggested that some change to the timing of when money came in might be helpful. In other words, bring some of the payment, not necessarily all of it-and not going back to what some of you described as the bad old days-forward at an earlier date.

Richard Clifton: Absolutely. For future programmes moving forward, I am quite open to looking at it in the very short term, but it also has to be linked to getting the assessment right. You could not do that bit. We would absolutely advocate for some groups a distance-travel model for some of the people I described. For somebody who is agoraphobic, who we have to spend a lot of one-to-one support on, there are milestones that we could look at that would be more appropriate for that group.

I would say, though, that first we have to get the assessment right. You could not just do it on benefit type at the moment, because we would not be targeting the right people. The first bit is to get the assessment part correct. I think there is a challenge there with the roll-out of Universal Credit, although it is an opportunity, because you could roll this together and say the assessment is linked to the Universal Credit roll-out. There is going to be quite a lot of challenge in rolling out such a large change to benefit. I think we have got to be realistic about the time it would take to change that approach.

Q335 Glenda Jackson: The Wheatsheaf Trust told us that it was not so much the level of payment on offer as the amount of time available that was acting as a disincentive for providers working with those furthest from the labour market. Would you agree or disagree?

Andrew Conlan-Trant: It is like what I was saying earlier on with some of the harder-to-help customers. They are not ready. They will not be brought to a point where they are ready for an outcome for potentially two years. How those two years are paid for is an important question to answer. I think the point that you make is valid in that context.

Q336 Glenda Jackson: Would you extend that time period? We have already heard what happens to someone at the end of two years. Is it the kind of rolling, revolving door syndrome all over again?

Richard Clifton: I think this is where we get to the appropriate referral to the appropriate programme. I do not think we should be changing the design of the Work Programme, as I do not think we have had it for long enough. It has been two years, bearing in mind that our average length on programmes is something like 6.5 weeks if we look under the old New Deals. We have extended that to two years. We have got considerably longer to work with the majority of customers. However, that works if we get the appropriate referrals.

If we look at the changes that were made to the work-ready prognosis of somebody being able to go into work after assessment, originally we were looking at people with a six-month prognosis. We moved to 12 months. We have already looked at people who are unlikely to move into employment before that 12-month period. We still have two years so that may still work. If that was extended and we started looking at people with a prognosis of 18 months or more, then we could have difficulty. But that is more about referring the right people to the right programme, which comes back to getting the assessment right. It is all linked together. This is the first time we have had a programme of this length. It is the first time we have had the freedom to support people as we have. As all providers have brought in a lot of innovation to the delivery of this on the ground, it is too early to tell on timescale whether that is right or wrong.

Q337 Debbie Abrahams: You say that this is the first time. There have been a lot of first times: the first time we have done this; the first time we have done any modelling of estimates for how many people go into different parts of the Work Programme; the first time in terms of the approach that has been taken. What about internationally, and can I also ask what relationship you have with the academic sector? I know that almost 10 years ago, a lot of concerns were being raised in terms of its appropriateness, and people were asked to learn from international evidence, where welfare to work has been running a lot longer. It is the first time here, but what are we drawing on from the academic sector and from international evidence?

Sean Williams: I worked in Australia for two years. I ran one of the largest sites in the Job Network in Australia. Australia is often held up as the forefather, I guess, of quite a lot of these welfare reforms. In Australia, the sustainability payment was paid at six months. There was some evidence from Australia, albeit in very different economic circumstances and a very different benefits regime, so you are never comparing apples with apples in the international comparisons. But we did have good evidence of the six-month point. No one has done-in the United States, in Australia, in Canada, in any other OECD countries, or anywhere in the world-sustainability up to 18 months/two years. So nobody has done very long-term sustainability before.

We do have good links with the academic sector. Again, the challenge with welfare to work, pre-Work Programme, has been that we were never comparing apples with apples and we never had good data. It is one of the things with the organisations you bring in to give evidence. Everyone tells you they are very good at helping long-term unemployed people into work. There is actually a handful of organisations in the UK who really are good at helping long-term unemployed people into work.

Q338 Debbie Abrahams: We knew 10 years ago that what was being provided did not work, and you have not mentioned the Scandinavian countries, which, I think, have less of a problem than we do.

Sean Williams: Absolutely. The Scandinavian countries have a completely different social model so it is difficult to take lessons that we learn from Scandinavia in welfare to work to the UK.

Q339 Debbie Abrahams: Absolutely-the commodification there. Perhaps that is something we should be drawing out.

Kirsty McHugh: I am chairing an event for the Swedish Chamber of Commerce for the United Kingdom this afternoon. Their youth unemployment is 25%, which is higher than it is here. It is very different overall. Just to echo what Sean said, we have some very good relationships with academics. In fact, we are hosting an event next month with the University of Melbourne on the cross-national studies they have done on four or five countries around the world looking at what is working best. That sort of feedback loop is working. It is with Professor Mark Considine. You can come.

Chair: We have a section on equity of service for harder-to-help claimants. I think we have touched a lot on this, so hopefully my colleagues will be able to pick out the bits that we have not covered.

Q340 Sheila Gilmore: It was interesting; I think it was Richard who said, "There is a lot of innovation going on". Other witnesses we have had, for example, Inclusion, told us that they felt the Work Programme was delivering the same sort of stuff as had previously been delivered. You are suggesting there have been innovations. One of the problems for us is this black box is not just about freedom; it seems to be about being very opaque. What are these innovations, if they are happening, that make this different?

Richard Clifton: We have already highlighted the use we are making of volunteers and the investment we have put into that. We also have invested heavily into EQUIP, which is an online package that supports people through all areas of employment through into once they have moved in. We have something called Customer Zone, which people can utilise once they have gone into work, so they can utilise technology to do that. We brought in specialist outreach advisers that we fund separately.

Q341 Sheila Gilmore: You say they are funded separately.

Richard Clifton: We fund them internally.

Sheila Gilmore: So it adds to the cost?

Richard Clifton: Yes. We want to re-invest into what we are doing. We also have just piloted with another organisation a stepping stone to employment project, where we have brought together funding pots so we can employ young people who are 18 to 24 on a six-month contract in a real workplace. We continue with our advisers working alongside them to progress them on. We have also brought in training and support within that.

There are numerous other examples that we could show you that are working on the ground. We have designed our centres in a totally different way, and people can access the services whenever they want. We have a customer support centre that is now open weekends and evenings, so people can access advice and support at any time that they want. As the merged charity now, we have the advantage that we have other social enterprises that we can use to offer work experience and employment to move people forward.

Having worked in this sector for over 20 years now, starting on the front line supporting people, I have seen it totally change over that period. Instead of having a manual that is that thick telling me exactly how I am going to support every customer that walks through my door, we have the freedom to be able to do what is right for that person at the right time, moving them forward, to give them the support to have sustainable employment. That is probably the biggest innovation that is in the programme.

Q342 Sheila Gilmore: A lot of us are getting reports from constituents-and I don’t have any constituents who joined your programme-which suggests two things to me and to my colleagues. It is not just one anecdote I am talking about here. One is that it may be a two-year programme but the amount of input over that two years seems to be quite light touch and infrequent. People are not getting that great a service. That is one example, but it is quite typical of the kind of example I am getting. Somebody who has been on the programme for 14 months-a young person of 21-has had six meetings with an employment adviser. Three different employment advisers were in that six, so they felt as though they were going back to the beginning again. When he ultimately sourced a much more intensive course, I have to say, with Barnardo’s in construction skills, which is what he wanted to do, and was told by Barnardo’s that they could take him, he was told by his Work Programme provider that he could not do it because he was contracted to the Work Programme and could not do a Barnardo’s course. Six meetings with an adviser in 14 months does not sound to me like a very personalised programme at all, or innovative, or very different from before.

Sean Williams: Sheila, that is appalling. I think on a programme that is seeing a million jobseekers, there will always be stories that are not good. I have also brought with me-I cannot read out all of them-a massive amount of good news stories. Let me give you some data. We just recently did a survey of 1,000 of our jobseekers-so a statistically significant survey. 63% of our Work Programme customers believe they are well supported by the Work Programme. Now, that means 37% are not. We are working very hard on that, but it is 63%. This is the actual hard data rather than looking at individual examples. On the G4S Work Programme, 63% of our customers believe that they are well supported. By the way, it is more for our Employment and Support Allowance customers, where 64% believe they are well supported.

Andrew Conlan-Trant: There are a few things in what you said there just to pick up on, and I would echo what Sean has said: that type of example is appalling. But each of us individually will have minimum service standards that we have committed to. In our case, for instance, we commit that we will meet with somebody, we will have contact with somebody, every two weeks. Irrespective of what their status is in terms of finding or not finding employment, in or out of work, there is contact with that person every two weeks. That is a commitment that has been made and that we are measured against. To pick up on something else Richard made reference to, and that was passing people through to Skills and other programmes, in Wales there is a very specific issue where there is a problem with accessing Skills or other activities or other interventions that are funded through ESF funding. That problem does not exist in England or in Scotland, as I understand it. So if we have somebody on the Work Programme, which is defined as this black-box type of a solution, and it is suggested that they should be referred to a piece of ESF-funded skills activity, they are not allowed to do that because of a decision that the Welsh Government has made. That is having a significant impact, compounding other factors.

Q343 Sheila Gilmore: With this young man with the Barnardo’s issue, I have still not had an answer from either the work provider or the Jobcentre, because I have gone to both of them to see if we can get this sorted out. First of all he was told, "Well, you have contracted to us so you cannot go off to Barnardo’s." Then he was told, "Well, maybe you could if the Jobcentre allow it," but then Jobcentre seem to have said, "You cannot go to two Government-funded entities. Because you are with the Work Programme, we cannot let you go on the Barnardo’s programme."

Andrew Conlan-Trant: The key thing from a Government point of view is that funding is not being paid twice for the same activity. In an example like that, it does not sound like that is the case, and that should not be the case-and would not normally be the case.

Q344 Chair: With payment by results, you are not getting paid anyway in the Work Programme until you get the result. In this case, it would be worth their while getting them through another project.

Andrew Conlan-Trant: Exactly, which is why there is a problem in Wales with ESF-funded programmes not being available.

Q345 Jane Ellison: Just building on something Sheila said earlier, it is the case that we do hear about the exceptions; people who feel they have had a bad experience, or whatever, naturally contact us. It just made me think when you were answering Sheila’s question. In your experience, are Members of Parliament doing enough to understand what is going on in the schemes? Are you getting approaches from people to spend time with providers, to sit down and really understand the journey so that at least they do get that more balanced picture? I will hold my hand up here. I probably have not done that and put that time in. Is that something you would welcome?

Sean Williams: Absolutely.

Kirsty McHugh: Absolutely. I think there is also a question about whether we as an industry are doing enough to help you understand and make the connections. To a great extent, that is my job.

Q346 Jane Ellison: I am not sure I have had that many invitations.

Kirsty McHugh: What you will be getting is an MP toolkit: basic information, FAQ-type stuff, sources of information, performance statistics, and where to go to find information about operators in your own constituency, so you can make those links. I think a lot of organisations, both primes and subs, have reached out to their MPs. I think probably, if you have not had an invitation in your area, shame on my members. They should have reached out to you.

Q347 Jane Ellison: I could not say for definite, but I just wondered if you had a general sense that more contact would be useful, and I think your toolkit will be much appreciated.

Sean Williams: It is the unfortunately named black box. I agree with Sheila that it kind of gives the impression that something secret is going on under the hood. Nothing could be further from the truth. It is a contractual protection that means that we can do whatever it takes for that individual to help them into work and we will not have additional bureaucracy thrown into that, which would not help jobseekers. If people came to visit to see what happens on the ground, and talked to jobseekers and the subcontractors who are delivering, I think they would get an enormously different sense of what is happening in the Work Programme.

Q348 Jane Ellison: Just to follow-up on that, presumably, building on those contacts, if MPs have come across very useful groups who have the potential to fit into the process somewhere, presumably you are open to MPs bringing that contact. That is another ongoing issue that many of us have. We feel that good local groups cannot find a way in. Are you open to those approaches as well?

Sean Williams: Absolutely. We have singularly failed to explain what is going on in Work Programme. Black box has given the impression that something strange is going on. Because of the minimum performance levels, we have singularly failed to talk about the really good statistics of the Work Programme. It is at least much more mixed than what you would read about it. We have failed as an industry to get that message across at all. We certainly recognise that, but we feel that the impression that is being given of Work Programme at the moment is deeply misleading.

Q349 Glenda Jackson: Just briefly, again this is mostly constituency-based. I would have thought there is a major difference in delivering these services, say, in big metropolitan areas, like London or any of our other metropolitan areas, and urban situations. It is on the level of what we are told-and you have been telling us-is a targeted, personalised service. It is not happening out there. It is not happening in the main because people who have regularly gone to Jobcentre Plus all their lives do not have one person who sees them each time they go in. That can be variable. It can be whoever happens to be there, so that structure is not there. Also-again this is anecdotal-when the Work Programme person steps in-again, to repeat what Sheila has said-they are not seeing anything different from what they have had to go through before. It seems impractical and in many instances it does not really meet their need, so there is still this big gap between what we are being told is happening and what individuals on the ground are receiving.

Sean Williams: Glenda, let me tell you about Karen, who got a job as a caterer through our subcontractors, the Shaw Trust. "Without my adviser Becky, and the support from the Shaw Trust on the Work Programme, I would not have been able to get this job. I am so thankful for their help and guidance." Sonia, who we got into work in Hull: "If it was not for the great help and care of the wonderful staff at Eye to Eye, I would not be in work now. I would be sat at home worrying about how to pay the bills. Thanks to everyone." I can read out pages and pages like this, Glenda. These are people who have been on the Work Programme who have received a personalised service.

Q350 Glenda Jackson: I was not being clear about what I was honing down on. We are talking about people who are very used to the old structures of having to claim benefit, going into Jobcentre Plus, of being told, "Come back," or "Sign your paper and the money will come in." That is their experience, and it does not seem to me-certainly looking at my constituency, where there is this plethora of that happening-that there has been a fundamental change between the three parts who are supposed to be delivering this service, namely Atos to start with, then Jobcentre Plus and you. It is on that level that I am simply saying there is not enough attempt to break down the customer’s perception of what is being offered, when not infrequently they are being put on to the wrong programme. It is not cynicism. Nine times out of 10, it is fear.

Kirsty McHugh: Yes.

Q351 Teresa Pearce: Just going back to Sean Williams, you mentioned this statistic earlier of 63% of people who are satisfied with being on the Work Programme. I doubt you have it in front of you, but could you let us know what percentage of the people you have on the Work Programme fill the feedback in. Clearly, it won’t be 100%. We have had evidence that there are a lot of people who are very far away from the workplace who do not understand that they are on the Work Programme. So, we have got these people who clearly are helped and clearly do find it a good experience at one end, and right at the other end you have people who don’t even realise they are on it. I would be interested to know how many people fill the form in.

Sean Williams: Theresa, we can do that for you. I will check for you, but I believe it was 1,000 jobseekers.

Teresa Pearce: Out of?

Sean Williams: There are 80,000 jobseekers on the programme. We use a variety of feedback methodologies, and some people were very direct with us in their dissatisfaction with the programme in their feedback. We can give you the numbers.

Q352 Chair: Can you give us a note of what you are doing to address that? You are talking about a third who are not satisfied. I know you want to talk about the positive stories, but really our job is to look at what is not working.

Sean Williams: Clearly there are a third of people who are not happy and we need to do better with. Absolutely. I will come back to you on that.

Q353 Sheila Gilmore: I also wonder if some people are not unhappy at it being light touch, and so there is a slightly bizarre outcome of that. There are some people who thought that it might be awful, because the first letter they get majors on all the sanctions and how awful it is going to be. All that warm handover stuff has to be placed in the context of getting a letter saying, "You have got to go here. By the way, if you don’t, this, this, and this." It is not very warm. Some people might think, "If I am not called in very often, I am happy."

Sean Williams: Sheila, I absolutely take on board that some people might be happy not to be, and some people might be very unhappy with our service because we are calling them in so much. There is a flipside to that as well.

Q354 Debbie Abrahams: Following on from what Jane said, I contacted the prime that delivers services in my constituency in Oldham. I arranged an appointment and they did not show up. I contacted them again to arrange to see them, and they were going to get back to me, but they still have not come back to me.

Kirsty McHugh: Debbie, come and talk to me and I will tell them off. That is embarrassing.

Q355 Debbie Abrahams: I won’t embarrass them in front of everyone.

Kirsty McHugh: No, no. Embarrass them to me, and I am going to embarrass them absolutely in a big way.

Q356 Chair: I know triple appointments happen in one that is delivering in my area, in that each adviser has a three-appointment slot all through the day, and the third one is the one they usually don’t expect to turn up. Is that common?

Sean Williams: I think I would need to speak to my subcontractors about that. It seems not an unreasonable way of doing things where you know some jobseekers have very low attendance rates.

Andrew Conlan-Trant: I would not know specifically.

Kirsty McHugh: We can check though.

Chair: I was just wondering if it was common or not.

Q357 Teresa Pearce: Kirsty, it has been acknowledged that primes’ minimum service standards vary in detail. Does that mean, depending where you are, it is a postcode lottery?

Kirsty McHugh: There is huge commonality in relation to the standards. What differs is how much detail they go into. If you look at some of the prime contractors’ commitments, there are pages and pages and pages. For others, it is really quite top line. I think there is something about visibility of this across the industry that we could do something better with as a trade body. We are in discussion about how that could be a good thing.

At the same time, what we don’t want to do is undermine the black box. What we heard from the three prime contractors here-and you would hear it from the subcontractors-is they really value the black box. I don’t want to put in place rigid structures that end up going back to an old tick-box-type approach. I think there is something about the visibility of what is expected that is not there at the moment.

Q358 Teresa Pearce: So what you are saying is that you don’t want to have a whole range of service standards, where everyone has to do things. It is people’s experience that they can be flexible. Would you support a minimum service standard-a minimum that people should do?

Kirsty McHugh: The problem with this is that the devil is often in the detail. You think, "Yes, that is a really good idea." Then you start drafting it, and it stops individual frontline advisers from doing what they need to do. We know for some people it is group work that is going to help motivate them and get them enthused and confident enough to be able to approach the workplace. With others it is one to one. If we put in minimum service standards that say you will see an adviser x amount of times, that may not be what they need.

Q359 Teresa Pearce: What you are describing is a really personalised service. What we are hearing is that does not always happen at all, because that is about relationship, isn’t it? If someone does not see someone regularly or the same person, they are not going to build up that trust and relationship.

Kirsty McHugh: The sort of organisation that is not providing a good enough standard is not going to get the performance results. If you are in Sean or anybody else’s supply chain, you are not going to survive. Your cash flow is going to be looking quite difficult.

There is also something about the skills of frontline advisers. I will be open. This is an industry that has not invested in the skills of its frontline advisers as much as some. The reason for that was sort-term contracts: lots of short-term contracts, lots of flows of staff between providers, big TUPE issues, high turnover. Having a longer contract means that there is the stability to invest. We now have fit-for-purpose qualifications developed by the sector for the sector. We have set up an Institute of Employability Professionals. We have career route ways-all the sorts of things that an industry needs. The previous regime of the high turnover was not helping that. To some extent, it is an industry growing up in that way.

Q360 Teresa Pearce: If we don’t have set service standards, even minimum service standards, what things need to be there to make sure everybody gets an adequate service? If it is not service standards, we need to know what it looks like. We need to know what to expect. If you do not have set service standards, how can you say that to someone when they come along to you? The first letter does set out the sanctions. It has to by law. People have to know it is not a game. There are consequences, but it does not help with trust.

Kirsty McHugh: It does not help the motivational element, does it?

Teresa Pearce: How do you put into a mission statement what it is people should expect? They won’t know that they haven’t got it if they don’t know what it is they are going to get.

Sean Williams: I think minimum standards are the enemy of an individual service, because they force you to do inappropriate things for individuals. If you say, "Everyone will go on a two-week motivation programme," that might be completely inappropriate for some individuals. It might be right for one; it might be completely inappropriate for the other.

The question then, which is exactly the right question, is, "Well, if you don’t have a tick-box exercise-if there aren’t 20 rules that the bureaucracy can tick and say, ‘Great, the person came in every two weeks, they got a CV and they went on the motivation course’-and minimum standards, how do you ensure that everyone one is receiving what we at G4S call an appropriate service?" It is a situational approach, and the way we do that is through spot audits, where our auditors go in. They talk to the jobseeker and the adviser. They look at the action plan for that individual jobseeker. They make sure that the action plan meets the needs assessment that forms part of it for that individual. They look at what we call our situational contact plan and make sure that the contact activities-how often that person is being seen and what they are doing-fit again into the needs analysis and the appropriateness of the needs. Then they check that that plan is being implemented. We audit it by looking at the narrative journey rather than a tick-box exercise.

I think you can audit it; it is more complicated and more difficult to audit than a bureaucratic tick-box minimum standards, but it is much more effective. To move away from what we still call black box-essentially contractual protection-and try to impose bureaucracy-"You will do this for every jobseeker"-is the enemy of helping individuals into work.

Q361 Teresa Pearce: What you are describing is what can be checked is what you have done. What I am saying is, "How can an individual who comes to you know what they are entitled to and what they should expect?" They are the people who are seeing you and they are the people who should be saying, "Actually, I am not getting what I am meant to get here." If there is a black box that no one can see, and the person coming along does not even know what they are meant to get, there needs to be some sort of statement of: "This is what we will do for you."

Sean Williams: They can expect appropriate support and a personal adviser-a named point of contact that continues. I completely agree with that. They can expect their action plan to be implemented. I think they can expect to have a contact plan for how many times they should come in, what is expected of them, and what is expected of the organisation that is supporting them. All of those things, I think, are minimum standards, which are situational rather than tick boxes: "You must come in this often."

Q362 Teresa Pearce: Targets are not what we are looking at. We are looking at a service. Somebody needs to know what service to expect, and whether they have got it or not.

Kirsty McHugh: Yes. It is a visibility issue.

Q363 Debbie Abrahams: I would have to take issue with what Sean is saying. I cannot remember the exact phrase, but I think it was: "The enemy of a personal approach is service standards." I think we need to distinguish; a personalised approach does not mean it should not be evidence-based. I think that is what we are trying to get at here. We have talked about lots of evidence from the academic sector, and if there is not, then surely we should be looking to build that. But personalisation-look at the health sector-should not mean that you compromise on an evidence-based approach and what works. That is what we are trying to get to. What is the evidence and what evidence-based approaches should be in all contracts?

Sean Williams: I completely agree with that. For example, you would find, if you did a piece of academic research, that having a good CV would correlate strongly with going into sustained employment. You might well say, "Let us have as a minimum standard that someone has a CV." For someone going into the types of jobs that don’t use CVs, making that individual a CV rather than cold-calling eight employers who you know will go straight to interview might, for example, not be in that individual’s best interests to get that job. That is all I suggest. But I 100% agree with an evidence-based approach-absolutely.

Q364 Chair: Do you publish what your auditors find or is that for your own internal use? You say you have spot auditors going in. Do you publish the results of that?

Sean Williams: We share that internally with our supply chain.

Q365 Chair: It is the supply chain you share it with?

Sean Williams: Absolutely.

Q366 Chair: If you find that there is something untoward happening, would that lead to immediate sacking?

Sean Williams: It would depend on how untoward it was, but if it was very untoward, yes it would. In most cases, as you would expect, there is an enormously strong correlation between those people who give the best individualised service to all jobseekers and those people who are at the top of our league tables for performance. The two go hand in glove.

Q367 Graham Evans: Is it possible or appropriate for prime contractors to deliver a service in-house to all types of participant?

Kirsty McHugh: Yes, depending on their prime contractor. There are prime contractors out there who have got a long history of expertise in relation to a wide range of customer groups. It would be mad to think they would be prevented from either acting as the prime contractor or doing some delivery. However, all the prime contractors have diverse supply chains. They have to have diverse supply chains, first of all, because of the volume of business, as they cannot handle it all themselves. More importantly, there are huge amounts of expertise among the subcontractors. I don’t think, looking across my membership or, indeed, looking at the performance figures, that one size fits all.

Q368 Graham Evans: How can primes develop the expertise to deliver the specialist interventions that are needed for people furthest away from the jobs market?

Richard Clifton: As far as what we put into the bid and where we got to, we ended up increasing the number of specialist providers, and that continues to increase over time. I think, from our point of view, we are looking at continuing to develop the range of support depending on the customer groups who are coming through. One thing about doing our assessment and our triage up front is we are identifying trends in the customer groups that are coming through and identifying where we have gaps in our supply chain. We can then go and work with organisations to bring in the expertise that we either don’t have in-house or don’t already have in our supply chain, and therefore we bring in additional support to do that.

We particularly chose our supply chain based on the areas in which they work and the customer groups they are going to work with to make sure that they can deal with and support the customers that are there. We are forever replenishing that and making sure we have the right people to support the customers that are coming through.

Q369 Graham Evans: Many of the Tier 2 subcontractors have commented that they have received far fewer referrals than they had expected or no referrals at all. Why is it?

Andrew Conlan-Trant: Our experience of that is quite different. For a start, in constructing the Tier 1 supply chain, we have some providers in there who would almost be specialist in nature but still take the full range of people who come to them. We have supply chain partners like the Salvation Army, Tomorrow’s People, CEiS and NACRO. These are people who have a specialism in particular areas. They are spanning the whole of the referrals coming in.

In addition to that, you have the Tier 2 providers. I got some data on this before coming here. I know that, for instance, of 23 that we have available to us within a CPA, 18 of those have been working fairly constantly with the Tier 1 providers. There is good usage there, and they are utilised because of their capacity and because of the skills that they have. But then outside of that, there are another 79 organisations, most of whom would be outside the supply chain, that would be accessed as well because of a specialism or a capacity that they have. Our utilisation of specialists is pretty high.

Sean Williams: I think many are being used and many are not being used. There is a uncomfortable truth to this. I will be very unpopular for saying it, but I will say it anyway: many Tier 2 providers are not being used because the services that they provide make no difference whatsoever to an individual’s employability prospects.

Q370 Graham Evans: Is it possible to get that point across more succinctly? Tier 2 charities, for example, small organisations that don’t have the wherewithal, feel that they are used by Tier 1 organisations to get the contract, having gone through a lengthy, costly exercise.

Chair: As bid candy.

Graham Evans: Yes, bid candy. They have not got the wherewithal. It is very time-consuming, very costly, and they have the expectation that they will receive some referrals. But, if it is the case that you have just given there-that they don’t add any value-why use them in the first place?

Sean Williams: I am talking about our own personal experience, which is I think an exemplar of how you should do this. Before you go into contracting, be 100% clear with organisations about what they can expect to receive in referrals. For example, for the majority of our Tier 2 providers, we were very clear that they could expect to receive no referrals. That was in black and white. Then before the bid, they signed to say that they understood that they could expect to receive no referrals and they had modelled and it was financially viable for them to contract on that basis. We then put those letters in our bid to the Department for Work and Pensions. I think you have to be 100% transparent on this, and I would encourage the procuring body, DWP, to prevent bid candy, which is quite easy. You make them publish their bids and you hold them accountable to what they have said in their bid.

Kirsty McHugh: Just to talk about the bid candy point, that is obviously something that has been raised for the last 18 months or so. I think some of the concern came from organisations that did not end up with contracts at all but did enter into conversations with prime contractors during what was a very rapid procurement process. It was so rapid that it did not allow sufficient depth of conversation between prime contractors and all of their supply chain. Even though the Work Programme went live in June 2011, contracts were still being signed up until December of that year-there was a six-month implementation phase. Some organisations were disappointed because the conversations did not turn into contracts.

There has also been an issue around the volume of referrals for Tier 2 organisations, which I think is the same across the piece regardless of the model of the prime contractor. Partly that has been about the profile of the jobseekers being referred to the Work Programme. Again, the issue around Employment and Support Allowance customers not coming through has had until recently a disproportionate impact on voluntary sector subcontractors. They were not going to the prime contractor for them to refer to anybody. They were just not there at all.

I think prime contractors could have improved in some cases in communicating what was going on in referrals down their supply chain. I don’t think that happened. That led to a lot of suspicion: "You are keeping these customers to yourselves." Actually, no; they were not there to begin with.

Q371 Graham Evans: You don’t think that the fewer referrals to Tier 2 specialist service providers is a consequence of the payment-by-results funding model.

Kirsty McHugh: I am not going to rule that out entirely. There are consequences to the model. However, I think it is primarily around the volume and mix of customers.

Sean Williams: Where there are really effective Tier 2 organisations, on a payment-by-results model, you have an extremely strong incentive to refer individuals to those organisations. If I have got a Tier 2 provider who is extremely good, and we do have a number of Tier 2 providers who are extremely good-for example, the Deaf Education Advocacy Fellowship in Manchester is a fantastic organisation, and they are helping "big D" and "little D" deaf people into employment-I would be mad not to send them referrals because they are brilliant at doing their job, and I get paid by results. If I send them to them and they get them a job, I get paid.

Q372 Chair: That is not happening a lot. Is that because, as you said rather bluntly, quite a lot of these organisations are just not very good?

Sean Williams: Some of these organisations are extremely good organisations. They are extremely good specialists at helping and supporting individuals and their families. There is a difference in being extremely good at helping in a range of important areas in society and being really good at making someone more employable. As a Work Programme prime contractor, it is the latter we are interested in. I think the Work Programme has sometimes been a little bit of a fall guy here for cuts in funding elsewhere. I do take a personal view, but I also take a professional view on the funding for these charities. They might be doing extremely good work, but that is not the same thing as increasing someone’s employability.

Kirsty McHugh: Some, of course, are very good at both.

Sean Williams: Some are.

Q373 Chair: A lot of these organisations may have spawned into employability, but what you are saying is that that is not the focus.

Sean Williams: A lot of organisations follow the cash. That may not have been their specialism-what they were really good at.

Kirsty McHugh: They were over-promised by Government as well.

Q374 Jane Ellison: I have a quick question on that. I do understand the distinction you make, and I have seen groups in my own patch-and I am sure others have had this-where people are very good, but their background is they are coming from a charity and support and welfare in the more general sense. Sometimes the people involved have got negligible or no private-sector experience, for example, and therefore their actual insight into what a private-sector employer might be looking for and what it takes to get someone over the doorstep is limited not by lack of will but simply by the general background of people in that sector. Is that your experience?

Sean Williams: I completely agree with Kirsty that there are some very good organisations delivering this, but absolutely, I completely agree. Being very good at helping individuals into work is a specialist skill. It is not the same specialism as being very good at dealing with someone with a severe learning disability, for example.

Q375 Sheila Gilmore: Surely, it does bring it back to the initial contracting basis. It was too rushed-and that is a lesson to be learned-but if people are not very good at it, they should not be in your supply chain in the first place, rather than being in a supply chain and saying, "Actually, you weren’t very good."

Sean Williams: I will come back to the data point, Sheila. The data available were terrible in this marketplace prior to the Work Programme. Whenever you spoke to these organisations, they all told you they were very good at it. There was, unfortunately, a little bit where we just had to try, and see what worked and see what did not work.

Richard Clifton: From our point of view, we went on to try to offer contracts to everybody we put in our bid. Not all of those ended up taking a contract because, as charities, once they drilled down into the commercials, even though they had agreed to take part at the point of bidding, they realised that it was too much of a risk for them. As a charity, we have ended up with a supply chain that is 62% voluntary sector. We have tried to do capacity building for them. We have managers who are going out and helping them to understand the commercial side of it, because they bring so many more benefits to it. We have done all we can to build capacity.

We are also working with ACEVO, which is the Association of Chief Executives of Voluntary Organisations, to put together support on the capacity building for voluntary organisations so they can really realise the commercial constraints that they are entering into in order to work in this area. I think we do have to be honest that, for some organisations, it is not right for them to be in the Work Programme supply chain. I think they have to realise that, but that does not mean they do not have a part to play in helping that person in their life. We just need to make sure it is the right funding route for doing that type of work.

Q376 Graham Evans: If they are on the supply chain, and their expectations are that they are going to receive referrals, and yet they get no referrals, clearly something has gone badly wrong there. What you are saying is they should not be on the supply chain, but they do not know that they are not on the supply chain and they are expecting referrals.

Richard Clifton: From our point of view, everybody will know if they are on our supply chain because we will have a contract in place with them to deliver that service, and we will have been very honest and up front with them from the point we put the bid in all the way through. I cannot comment on other providers and how their procurement worked. We have always been very open and honest about people who are on our supply chain or not.

Q377 Chair: In any cases, did you find that, compared with the actual subcontractors you had in your supply chain for your bid, you ended up using a completely different lot of contractors in reality now that it is up and working?

Richard Clifton: I think at this point, from our Tier 1 providers, we have ended up with 13 out of 15 that we put into the bid. For Tier 2, we ended up with 12 that we had in the bid, of which six got to the contract stage. We are quite open about that, and we are now up to 23. We have added more to it to meet the needs of the customer, so we have very much kept to what we said in the bid.

Q378 Chair: Why is information about subcontractor referrals not in the public domain?

Richard Clifton: Because, in actual fact, the Department will not necessarily have those figures, and it would have to get them from each individual provider.

Q379 Chair: Is there a gagging clause on this from the Department?

Richard Clifton: For referrals, not as far as I am aware. There are some commercial aspects to this that I think different providers will take.

Q380 Chair: Do you have a gagging clause on your subcontractors, saying they are not allowed to complain about lack of referrals?

Sean Williams: Absolutely not.

Kirsty McHugh: Not that I am aware. There are a lot of lessons for future commissioning-whether it is probations or stuff going on at the Ministry of Justice-and future employment programmes that we need to learn from the Work Programme. We have detailed those, actually, for the MoJ. I had some subcontractors in membership, or potential subcontractors, who put in 100 different expression-of-interest forms. They were small, private-sector ones in some cases as well. We developed a standardised expression-of-interest form that could be used across everybody to take some of the pain out of that. The Ministry of Justice is also talking about capacity building around supporting the whole contracting element during that whole process. The Department for Work and Pensions could do that in future as well. There are some things that we could do collectively as an industry with the Government that could help future commissioning, and take the pain and cost out of it for smaller organisations.

Q381 Chair: As primes you are meant to bear the financial risk, as part of your job as the prime contractor. Do any of you pass that financial risk down to subcontractors at all?

Sean Williams: As a prime, our job is to help as many people into sustained employment as we can. We bear a considerable amount of financial risk. The Department rightly believes in payment by results and outcomes-based contracting as the best way of getting results and driving performance, and strangely enough prime contractors believe the same thing. It is different for some very small subcontractors and Tier 2s who need upfront funding, but on the whole, for our biggest subcontractors, we need to have a heavy outcome-payment element and they need to share some of that risk as well.

Andrew Conlan-Trant: It is right that supply chains should take risk. In parallel with that, as has been mentioned earlier, the supply chain needs help in building capacity and, to the greatest extent possible, we should ensure that a supply chain delivery organisation has a stable operating environment. We have provided a standard IT system, standard processes to the extent that that is possible, and so forth, so that they can take on the risk and get the benefits from that as well.

Sean Williams: We should be realistic here. On a 100%-outcome-funded contract at the prime level, it is not realistic to expect prime contractors to act as banks. Prime contractors are not banks; they are very good management organisations. The funding at the top level will inevitably reflect, to a greater or lesser degree, the funding for subcontractors. There are some important lessons there, for example, in the justice space at the moment. If you want to have upfront funding for subcontractors, you have to have upfront funding for primes. It is simply not realistic to expect primes to sit in the middle of that and carry 100% of the risk.

Q382 Chair: If you are over-performing compared with your subcontractors-in other words, you are getting a lot more of the profit, which I suspect is the case-surely, as a consequence of that, you should be bearing more of the risk.

Sean Williams: I think that is the other good reason to make sure it is a fair apportionment and that, when we are over-performing, subcontractors share in that reward.

Q383 Nigel Mills: I can see why you would not take 100% of the risk yourself and just pay people on a fixed-payment basis. Presumably, you do not just have to mirror your contract and pass that down. You can take some of the risk yourself. Where do you think the right balance is between how much risk you try to pass on and how much you absorb?

Sean Williams: It depends on the subcontractor.

Kirsty McHugh: Some subcontractors are local authorities or very large multi-million pound charities, and they can bear that risk. The sort of small Tier 2s we have just been talking about cannot. There have to be different arrangements for different organisations. Now, I would be wary. I sometimes hear people saying, "Prime contractors cannot share any risk with their supply chain." If you went down that route, you would stop all but the biggest organisations being prime contractors.

Sean Williams: They wouldn’t do it either.

Kirsty McHugh: They wouldn’t do it either. You would certainly stop charities acting as a prime contractor, and everything I hear is: "Actually, you want some prime contractors to be charities." There needs to be that fair element of risk-sharing, but it does need to be fair.

Q384 Nigel Mills: There is clearly a difference. If you are the prime contractor and you choose to deliver some of the programme yourself, presumably you are paying staff out and taking the whole financial risk, whereas if you choose to subcontract, you are pushing some of that away from yourself down the chain.

Richard Clifton: Our model is exactly that. We both deliver and have a supply chain. I think, very much, we have negotiated on an individual basis the terms that are appropriate for the organisations and the services they are delivering. We have done more upfront fees for some people at Tier 1 than we have for other providers, but they have to acknowledge that, if they have that, they are getting less reward if they over-perform on their performance. They reduce their risk but they also reduce their potential reward. We have been very fair and open about that. For all of our Tier 2s, we work more on a fee-for-service basis and not necessarily on payment by results.

Q385 Nigel Mills: Do you remunerate any of your staff on the basis of payment by results or are they on fixed salaries?

Richard Clifton: We have all our staff on fixed salaries, although we do have incentives built into the programme. That is more about actual recognition and reward rather than a payment-by-results-type salary basis.

Andrew Conlan-Trant: Within the supply chain, some supply chain organisations may manage that differently. Our view is that delivery staff are not on performance as much.

Q386 Chair: As prime contractors, this may not be the case here, but we have heard that some specialist subcontractors have received far fewer referrals, some have received inappropriate referrals, some have complained about the funding model and that the transfer of financial risk is inappropriate, and some have even gone out of business. We have heard stories of that this morning. Yet all the prime contractors in the country have received Merlin accreditation, which is meant to say that they have got very good relationships with the supply chain. How can Merlin be improved to better protect all of the providers? I suppose this is to you, Kirsty. Can Merlin be improved to protect the very people it was set up to protect? In some cases, it is not.

Kirsty McHugh: I am on the Merlin Standard Advisory Board, so I will declare that. As far as I can see, it is still fairly early days with Merlin. It think it is fundamentally a good assessment tool but it is not perfect. Now we have been through one cycle, where all the Work Programme prime contractors and indeed the prime contractors of other programmes have been reviewed and assessed, we need to go back and review what has worked well and what has worked less well in relation to that. We have surveyed our members on their views. There has been a mixed bundle of views, I have to say, of Merlin. Fundamentally, however, there is a lot of good stuff around that.

It does not cover some of the points that you have just raised. Merlin will not cover issues around guaranteed volumes. It just doesn’t. I don’t think we can get Merlin or any assessment tool to do that. It does not stop subcontractors signing contracts that are not in their best interest. So there is a limit to what Merlin as a tool can do. Can it be improved? Yes it can. I definitely think it can.

Sean Williams: We tend to get two different views from subcontractors. Those subcontractors we are using, who tend to be the most effective, give us very high, even positive ratings for our subcontractor management. Those organisations that we don’t use tend to give us very low ratings for our subcontractor management.

Q387 Chair: Is Merlin on your radar?

Sean Williams: I have a 100% subcontracted delivery model. If I don’t have brilliant relationships with my subcontractors and my subcontractors are not performing really well, then I am not performing really well. It is a completely symbiotic relationship, and Merlin forms an important part of that.

Andrew Conlan-Trant: It has to be part of the culture of supply chain management. We should not just be driven by Merlin as to how we manage the supply chain. The important thing is that we develop sound relationships, that we are supported through the supply chain, and that we manage them effectively through to delivering outcomes.

Q388 Nigel Mills: A last question: if you could change one thing about the Work Programme to make it work better, what would you change?

Andrew Conlan-Trant: I would address the ESF issue in Wales.

Kirsty McHugh: There are so many. Can you come back to me? I am thinking in terms of primes and subs.

Chair: You can give us some more.

Sean Williams: I am going to go for two: more referrals and better differentiated payments.

Richard Clifton: I would go for the better differentiated payments, but linking that to a proper assessment up front so the right people get the right support.

Kirsty McHugh: I think it is around ensuring that there is a very strong relationship with the Department, sharing of information, and ongoing dialogue based on new information coming through. As an industry, we need to get performance up in relation to Employment and Support Allowance customers.

Andrew Conlan-Trant: It is also important to acknowledge the regional differences.

Chair: Thanks very much for coming along this morning. Your evidence has been extremely useful for us, and we do appreciate that you have given us your time today.