Work and Pensions Committee - Minutes of Evidencehc 162

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Oral Evidence

Taken before the Work and Pensions Committee

on Wednesday 20 March 2013

Members present:

Dame Anne Begg (Chair)

Debbie Abrahams

Jane Ellison

Graham Evans

Sheila Gilmore

Glenda Jackson

Stephen Lloyd

Nigel Mills

Teresa Pearce


Examination of Witnesses

Witnesses: Mr Mark Hoban MP, Minister for Employment, and Ms Julia Sweeney, Contracted Customer Services Director, Department for Work and Pensions, gave evidence.

Q465 Chair: Thank you very much for coming along this afternoon, Minister. This marks our last evidence session in our inquiry into the different claimant experiences of the Work Programme, so you are very welcome this afternoon. If you can introduce yourself and your officials for the record.

Mr Hoban: I am Mark Hoban. I am Minister for Employment. I have with me Julia Sweeney, who is the interim director responsible for Contracted Services, which includes the Work Programme.

Q466 Chair: Minimum performance levels (MPLs)-how do you respond to Sean Williams of G4S who told us that the real lesson to draw from the primes’ failure to meet the yearone minimum performance levels was that they themselves were "completely inadequate for the task"?

Mr Hoban: We set out very clearly when the Programme went out for tender the level of performance we expected throughout the life of the contract. I think it is absolutely right that we are ambitious for the Programme; we should set some demanding goals for primes to deliver. There are a number of issues why primes fell short of the minimum performance levels in the first year. I think that the challenge around mobilisation of their supply chains was much greater than they anticipated. The economic climate was not as strong as they hoped for. I make no apologies for the targets we set. They set the right objectives for the Programme, but there are some challenges around delivering those.

Q467 Chair: So you do not take any responsibility that actually you just got the levels wrong.

Mr Hoban: The levels are the ones that we have been set. There was quite a long process that took place prior to the contract going out, setting those levels. There is one area, Dame Anne, where I might just highlight an issue in terms of where the MPL was set, and that was for payment group six, for Employment Support Allowance (ESA) claimants, where actually this is a relatively new programme; it is a relatively new benefit with very little past experience on how employment programmes work for these claimants. I think there is a challenge about the setting of the MPL for that payment group. There was an extensive programme and processes of negotiation and discussion, between ourselves, the Treasury and Cabinet Office about what that MPL should be, and the primes all knew that MPL when they signed up.

Q468 Chair: Most of the claimants were straightforward Jobseeker’s Allowance (JSA). In fact, the problem was that they were mostly JSA; there were very few of the other categories. Are you not, as a Government, making it incredibly difficult for the primes or setting them up to fail, if you like? If they do not hit their minimum performance targets in year one, they are unlikely to make them in year two or it is going to get increasingly difficult in year two, because they are always going to be a moving target for them.

Mr Hoban: We have not set them up to fail. We have set them up to have some difficult targets to meet. That is important. This is a scheme to get people into work, and I do not think we should make it easy for primes to hit those MPLs. I am not sure I agree with your comment about making it harder to hit in year two. Obviously, we are going to publish data on performance at the end of May, so I do not want to say anything now to prejudge that data. What we saw, particularly in the figures that Employment Related Services Association (ERSA) produced to the end of September last year, showing 200,000 job starts, demonstrates that there is performance in the pipeline.

Chair: We are going to be coming to exactly that question. I am not going to take my colleagues, because I know that that is a question and we know we are coming on to those ERSA figures in just a moment.

Mr Hoban: There is plenty of time to achieve six months’ job outcome in the twoyear period. That is why ERSA thought it was important to publish that job start data to get a sense of how many jobs had been started, to demonstrate there were people in that pipeline and that you could achieve good performance in year two off the back of that.

Q469 Graham Evans: If job outcome performance continues to fail to meet the contractual arrangements under minimum performance levels, at what point are you able to take action against under-performing primes and what form would that action take?

Mr Hoban: There is a range of measures we can take, Mr Evans. I made it very clear, when we published the data in November, that we can take action against under-performance. We wrote to five primes in certain areas to highlight the need for improvement plans. My team, and Julia leads this, engage very closely with primes on performance, through a frequency ranging from daily through to monthly meetings with them, depending on some of the issues that primes have. We have started that engagement. I have spoken to a number of primes highlighting the need for them to raise their game, that they need to achieve the MPLs, proving we are not going to let them off in trying to hit those MPLs.

The next lever that we have is a market-share shift, so where there is a gap in a CPA (contract package area) between primes that is more than 3%, we can move market share from one prime to another. We can move 5% of that market share from an underperforming prime to a strongerperforming prime, and we intend to use that mechanism. The final sanction is actually that we could move a contract from a prime. We can decide they are not making sufficient progress or there is no sign of them making sufficient progress to hit those MPLs. As a last resort, we can move that contract away from them. If we need to do that as a Department, we will do it.

Q470 Stephen Lloyd: On both those issues, Graham, if I can chip in there, I understand and support the concept, because then obviously we are going to be rewarding the betterperforming primes, so on the surface it looks absolutely sensible. Comments have come up from the expert witnesses and I would be really interested in how you would respond. Let us say, in a few months’ time, you have two primes in an area. One is clearly outperforming the other, so you do want to shift it. My first question would be: what management systems are in place to ensure that the jobseekers that are with the poorerperforming prime do not actually lose out, because clearly that needs to be taken into account? Secondly, is it really a realistic option for the DWP to terminate a prime contract? The first thing is how you manage the worstperforming primes for those jobseekers who are with them. Secondly, are you really serious about possibly terminating a contract?

Mr Hoban: Let me assure the Committee-and anyone who is interested in this-that I am absolutely serious about this. I do not think it is acceptable for under-performance to continue. We are letting the unemployed down if we do so. It is wrong for the taxpayer to allow this under-performance to continue, because effectively we will be paying benefit for longer. It is unacceptable for poor performance to continue and we will not hesitate to use the contractual powers at our disposal to penalise poor performance.

On the point about the marketshare shift, this would be for new referrals going to a prime; it will not affect the referrals that have already been made to them. What is quite interesting, and I have talked to a number of primes that have used this already with their subcontractors, is that what you tend to see is this: you do see a reward for betterperforming subcontractors. What you also see, which I think is quite interesting, is it means that there is then a lighter caseload for the under-performing contractor. I hope that would mean that there would be an increase in resources on those people who are attached to that subcontractor, which would then lead to an improvement in outcomes. That has certainly been the experience of one or two primes I have spoken to that have done their own marketshare shift within their supply chain.

Q471 Stephen Lloyd: Would it be a fair statement to say, backing up what you have just told us, that, yes, the Department is crystal clear that it will use that sanction if it chooses to and if it has to? Secondly, say I am one of the primes that is performing worse; I lose 15% perhaps of jobseekers who have shifted to a betterperforming prime and you are crystal clear that you are prepared to do that. Equally then, if I improve as a poorerperforming prime and demonstrate that I have clawed my way back and am getting more and more jobseekers into work then, potentially in a year’s time or so, I might actually get rewarded for that good performance. Is the DWP keeping that level of intelligent flexibility within the process?

Mr Hoban: It is. Just to be clear, the maximum transfer is 5%. You have to be fair about this and to say to those providers that actually raise their game that the market shift can be reversed. That is absolutely right. We have to have some incentives in the system.

Just one point I want to raise that just goes back to Dame Anne’s question about MPLs; there is one issue that primes raise to us in the context of MPLs. Because the MPL is based on this year’s outcomes and this year’s referrals, a beneficiary of marketshare shift would see a slight dip in their performance potentially, because their number of referrals has gone up, whereas a prime that has lost market share would see a slight improvement in their MPL, because you have fewer people flowing on to your programme. You still have people who have referred to previous years; you can still claim job outcomes for them from there. There is a nuance or a subtlety in the MPLs on marketshare shift that we just need to bear in mind.

Q472 Stephen Lloyd: Let us go back finally to the potential of termination, that a prime has not stepped up to the plate. You made it crystal clear the DWP is prepared to take the final sanction. Are you confident that, if you have to do that, the DWP would have the systems in place that could then cope with the 5,000, 10,000 or 15,000 jobseekers who are with the failing prime? I appreciate the strength of statement that, if necessary, you will pull contracts, but I would want to be satisfied that, if that does happen, those people are properly accommodated and dealt with. I do want to be satisfied that the DWP has that plan in the locker if it ever needs to be implemented.

Mr Hoban: What we have done is we have looked at this scenario. It is right that you would expect us to have done so. Our expectation would be that a new contractor would move in and become the prime for that area, and effectively take up that workload, rather than it coming in house, although that is a fallback option. My expectation would be that a new prime comes in.

Q473 Debbie Abrahams: You mentioned that you would consider converting from one prime to another. Can I ask what the circumstances would be? You mentioned the 3%, so there is already-thinking in my own area-a difference in primes of at least that. Bearing in mind that, today, we had figures where there was an increase of 92% in people over 25 who were on JSA for over two years in the last year-an increase of 92%, Minister. At what stage will you actually take those sanctions?

Mr Hoban: Also, Ms Abrahams, you should look at the other figures in today’s Labour Market Statistics release, which show that longterm unemployment fell this month.

Debbie Abrahams: Not in my constituency.

Mr Hoban: I am just saying that, overall, longterm unemployment fell this month and that is the second month running. We are seeing people on the Work Programme get into work.

Debbie Abrahams: It has nearly doubled in a year.

Mr Hoban: The point I am making is, if you look at longterm unemployment, it has actually fallen this month. This is not a session on longterm unemployment, but I am very clear––and that is why I set some very ambitious goals for primes and why I make no apology for the MPL targets that we set-that we want primes to deliver the right outcomes. The difference between this programme and previous programmes is, before, most of the money came regardless of whether or not you got an outcome, whether or not you got somebody into work for more than six months. This scheme is actually designed to deliver the right outcomes for people who are unemployed, the right outcomes for taxpayers for paying by results and the right outcome for primes. Primes only get paid if they are successful, so all the incentives are in there to get the right outcome. This is a much better scheme design than the previous schemes, which paid people regardless of whether or not they got good outcomes.

Q474 Glenda Jackson: Could I just ask a question on the reduction in longterm unemployment? Do you have the divisions of which category of people are in that reduction?

Mr Hoban: It is all set out in the Labour Force Survey.

Q475 Glenda Jackson: What does that mean?

Mr Hoban: There is a weekly pile of data.

Q476 Glenda Jackson: Yes, but your programme actually defines people into various benefit groups, and there is a pricing structure for those. You have just said to us that longterm unemployed, people unemployed for more than two years, has fallen. I am asking whether you have the stats that tell us which category of people are in that fall in unemployment.

Mr Hoban: Ms Jackson, what you will see in the figures is that they show the number of people in longterm unemployment defined by the ILO Labour Force Survey.

Glenda Jackson: Which includes students.

Mr Hoban: It depends. You can break down the categories by age, by education and whether they are in employment or not. It also has the Jobseeker’s Allowance payment count in there as well.

Q477 Chair: When would you take any action in terms of marketshare shift? At what stage into the contract-we are over 18 months, getting on for two years of the contract-would you make that decision?

Mr Hoban: The marketshare shift: we have to allow providers to demonstrate what they are capable of doing. If someone was on the programme for two years, we would look at the performance of providers over a twoyear period.

Q478 Chair: You do not get your twoyear data until another six months further down the line. Are we looking at two and a half years from the beginning of the Work Programme before you actually take any of these decisions? You are going to have that time lag in the data.

Mr Hoban: Absolutely. We have management information that the Department uses to help manage these contracts, but I would expect to see marketshare shift to have completed by no later than the end of this year.

Q479 Sheila Gilmore: One of the reasons for randomly allocating people was to be able to assess which is doing better. Is that information going to be available soon, because quite a lot of individuals find that random allocation quite difficult? When the Permanent Secretary was here a few months ago, he suggested that might be looked at again.

Mr Hoban: It is certainly the model we are going to use for this programme. It is the right approach. It is interesting; I visited Australia last month to look at how they run their equivalent of the Work Programme. There, there is an element of choice by claimants, but my understanding is most of them are actually allocated randomly. The claimants do not express any choice as to which provider they will go though.

Q480 Sheila Gilmore: I appreciate that but, in a few cases, people have asked and had strong reasons for doing so. I had a case a few months ago when somebody was sanctioned for six months because of that situation, and I think the Permanent Secretary did suggest, when I asked about that, that it might be looked at again.

Mr Hoban: It might be, but that would be quite a significant contractual change and I think it would require some systems changes to do that.

Q481 Chair: In reply to Stephen, you gave the example of a provider that might lose market share because they were under-performing and that might improve their performance. For some, the bigger risk will be that it actually threatens their financial viability, particularly as, from April 2014, there will not be any attachment fees.

Mr Hoban: That is exactly why, Dame Anne, we are very focused and they are focused on driving outcomes as high as possible, as quickly as possible. Actually, their financial viability is under threat if they do not perform well. They recognise that risk that is there.

Q482 Chair: What risk assessment have you carried out with regard to the viability of some of the providers when these attachment fees disappear?

Mr Hoban: We have been very clear that, when the contracts were awarded, the providers knew the attachment fees would disappear. That was something they understood and they modelled their financial performance on the back of that.

Q483 Chair: My question is: it is one thing for them to know it is going to happen; it is quite another thing for it to happen and they, as a result, as a company, go down the tubes.

Mr Hoban: There are two points to make. The first one is that we do monitor very carefully the financial position of Work Programme providers. That is something that Julia’s team do, and we understand their financial position. Also, I do not think it would be right to keep people at an under-performing Work Programme provider just simply because we were not sure about the financial viability of that provider.

Q484 Chair: Again, what is the chance of anyone else coming into the market if there is no attachment fee and there is nothing upfront, so that they would be able to take on some of the work that has been left behind?

Mr Hoban: My experience has been that there is no shortage of people who are keen to take part in this market.

Q485 Stephen Lloyd: One of the things that has come out from a number of providers is that the twoyear length of time is a good thing, because it gives them the time and space to work on getting those harder to get to jobready or jobs to that position. That is a good thing. However, what has also come out is that, realistically, the sorts of numbers that the primes are saying to us that they are hoping to be able to get into sustainable jobs are around about 30% or 40%-I use that figure fairly loosely, because it is guesswork at the minute. That means that, with the best will in the world, anywhere between 60%, 65% or 70% perhaps, at the end of those two years, clearly are not going to be in post. What arrangements and plans have the DWP started putting together first, to manage that number of people who perhaps are not in sustainable employment after two years and, secondly, actually to support them in a way that their confidence would not then be completely shot and it would be impossible to ever get them a job? Do you get my point? That is a very large cohort, and it needs real underpinning plans to manage those folk, and also to maybe help work with them, because they may eventually get work.

Mr Hoban: I think, Mr Lloyd, that is an important point. We will have been through a situation where people, let us assume someone who was 25 or over, would have been unemployed for at least a year when they joined the Programme. They would have spent two years on the Programme and have obviously returned to Jobcentre Plus (JCP). We need to think: what do we do to help them back into work? It may be that a number of those people will have had work experience during that time. They may have started a job. They may not have got a job outcome, but they hopefully would have found some work. Broadly, a quarter of those who had been referred to the Programme, by the end of September last year, had some work. What we need to do is to look at what else we can do that will move them closer to the labour market.

We did a couple of pilots last year. We published evaluations of these; I can talk about them reasonably freely. One was for perhaps those who are closer to the labour market, where we have a community activity placement (CAP). They would do a combination of making some contribution to the community and, at the same time, doing job search. For those who are further away from the labour market is a thing called OCM, ongoing case management, trying to do some more intensive work, building on work the Work Programme would have done with people, to identify what the barriers were to getting them back into work and what the right interventions were. They may be interventions that Jobcentre Plus can do by themselves; it may be that we would have to buy in interventions using our Flexible Support Fund. Evaluations on both of those proved to be reasonably effective.

It struck me, in talking to some of the advisors in the East Midlands-I think it was trialled in Leicestershire and Derbyshire-that actually it was effective at reaching out to some of the hardest to place and finding employment opportunities. We are thinking about this and it is something that the Department is very much focused on, at the moment. We hope to be able to make more announcements in due course.

Q486 Stephen Lloyd: If I can drill down a wee bit on the "due course", because it is not too long in the foreseeable future, could you give the Committee some sort of indication of perhaps when the Department might publish some outline plans about what you would be proposing to do with those individuals? Can you give some sort of broad outline?

Mr Hoban: What we would hope to do, assuming there is agreement from colleagues, is use something, for those who are furthest away from the labour markets, based on those two interventions. For people who have had six or nine months’ work whilst on the Work Programme, but are unemployed at the time when they leave, the fact that they have had that work demonstrates we should be able to return them to the labour market. What we are trying to do through the Work Programme is encourage sustainable employment, rewarding providers for getting people into work for six months or longer.

Q487 Chair: Will there be a "son of Work Programme" for those who have got some hope of getting work?

Mr Hoban: What I would say, Dame Anne, is there will be more intensive support for those who have returned who have not had much work experience or have not had much employment on the Work Programme. I am just really keen to make sure that we do as much as we can to help the longterm unemployed back into work. There are some big barriers there; there are some challenges. We do need to provide some support beyond the Work Programme for those people who do return.

Q488 Stephen Lloyd: To be fair, a percentage of that 6070%, I think you are quite right, may well have had six or seven months’ work and, through bad luck, the company may have gone bust and so they have lost their job. I would expect them to be pretty jobready, which would be a success of the Work Programme. I do not underestimate the reality that a percentage of that 6070% or whatever-and I do not know how high or how low it would be-clearly are folk who will need just some additional support or networks or programmes to maybe reduce that level even further into longterm work. I suppose the point I am making is that for some of them probably the JCP can shift them on quite quickly, so that they may hopefully be jobready, because they may just have lost their job after a few months. Is the DWP cognisant of the fact that there will be a percentage for whom some proper additional support will be necessary? Will you be publishing those ideas or details in due course?

Mr Hoban: I recognise that, absolutely, there will be some people who return from the Work Programme who will have moved closer to the labour market, but not close enough to be workready. They will need additional support and continued support, and we will provide that, over and above the existing Jobcentre Plus offer.

Q489 Glenda Jackson: Simply on that additional support, your Supplementary Estimate shows that £248 million will have to go back to the Treasury in 201213, because job outcomes have been lower than expected. Is that budget going to be ringfenced for you? Could you go to the Treasury and say, "Look, sorry; we need this money back because we have to put in greater support"?

Mr Hoban: It is a ringfenced budget.

Glenda Jackson: So no money is going back to the Treasury.

Mr Hoban: Sorry; that means the underspend has to go back to the Treasury.

Q490 Glenda Jackson: That is what I am saying. Could you make the argument that, because the programme has not worked in certain areas, that is not in fact an underspend? It is a delayed spend.

Mr Hoban: You can be assured that we would deploy all the arguments possible to the Treasury to make sure this programme is funded.

Q491 Glenda Jackson: Is that a commitment?

Mr Hoban: We have discussed it with Treasury colleagues. Ms Jackson was a minister, and she knows the process as well as I do, I think.

Q492 Chair: I will tell you what I am concerned about, Minister. We are talking about possibly 60% or 70% of people who have been through the Work Programme for two years, who still have not got a job. They have already been unemployed for a year to get anywhere near the Work Programme in the first place. They have been out of work perhaps continuously. That is a large number of people out of work continuously for three years, by this time. If Jobcentre Plus and all its interventions in the first year have not worked and if the Work Programme with all its interventions, which were meant to be very intensive, much more specialised and all of those things-our report will show whether we believe that is the case or not-have not worked, what on earth is going to work in year four?

Mr Hoban: It is a good challenge, Dame Anne. You are absolutely right: someone who is getting to that point, if they have had no work in that three-year period, there are some really big issues to deal with.

Q493 Chair: Is that not what the Work Programme was meant to do? That is what it was sold to us as.

Mr Hoban: Let us be very clear. You criticised us earlier on the MPLs, I think for being too ambitious. They assume that 40%-

Chair: I am just asking the questions.

Mr Hoban: We recognise, and the MPLs recognise, that we are not necessarily going to get everybody who is on the Work Programme into six months’ employment. We are sufficiently realistic about the effectiveness. The challenge is that there are people who may have been unemployed for a lot longer than a year. There may be people who have gone in and out of JSA and Training Allowance, for example, who have actually been unemployed for way more than a year before they joined the Work Programme, in reality, who are dealing with alcohol issues, other substance abuse issues, perhaps a poor level of qualifications.

Chair: We accept all of that, but the way that the Work Programme was promised, and indeed the contractors we have spoken to actually say the difference about the Work Programme compared to previous ones, is they have the person for two years. They are quite hopeful that they can do the best they can for the person in two years, but that might still not be a job.

Mr Hoban: Absolutely right, Dame Anne, and I am not denying that at all. Performance metrics demonstrate that we are very clear about the minimum levels of success we expect to get. We do not expect to get 100% of people on the Work Programme into work. There will be people coming out from the other end who still have significant barriers to getting into work. I was talking to a provider last week, to give you an example, a provider in the South West. This is an ESA participant in the Work Programme, who has not left the house for some years. To get them into work may not be as easy as two years; it may require a longer period of time.

The group of people we are dealing with do have some quite deepseated challenges, in some cases, to get them into work. We cannot give up on them. We cannot say, at the end of two years on the Work Programme, "Well, we tried our best for the last three years. That’s it. You’re off our hands." We have to do something else for them, and that is why we have looked at OCM and the CAP, as a way to give more intensive support, particularly for those people who have been on the Work Programme for two years but, actually, have not had much by way of work.

Q494 Debbie Abrahams: The example that you gave, Minister, and I believe your sincerity in wanting to do the best for this group, but does that not mean then the Work Programme is not the right thing for them? Somebody who has not been able to get out of the house: surely, although they may have all the qualifications in the world, if they have not been able to get out of the house for two years would indicate that they have a more intensive level of need other than being able to just supply them with a job. It is about getting it right for that person, right at the beginning. As Dame Anne says, to have gone through a programme that does not meet the need, does not get them back into a job and puts them back on a revolving door into the system, they are going to be worse, after having gone through it, rather than better.

Mr Hoban: I do not agree with that. What we should be doing is trying throughout. Either the Work Programme or Jobcentre Plus tries to remove those barriers. Sometimes it is about removing them one at a time; other barriers might be relatively low, so you can remove those barriers quite quickly. We have had situations where people have been written off on things like Incapacity Benefit (IB) for 15 years and actually been found fit for work. The barriers about getting them into work-for 15 years, they have been written off by society and by the state-should not be underestimated. I do not think it is an overnight job helping them back into work, but that is why it is important to give the Work Programme two years in which to help them, but also to recognise they may need more intensive support when they come out.

Q495 Nigel Mills: There will be a group of people, Minister, who have got to the end of the Work Programme and are nearly there, but just not quite. It does seem a bit of a pity to not give them that final help or shove, depending which we are. One option would be to switch them to the other Work Programme provider in the area and perhaps give them some kind of incentive to really push those people. We are talking here about programmes that are using future benefit savings to justify themselves. Is there any scope for saying, "Actually Provider One has failed; let’s give Provider Two a chance to really push them into work"?

Mr Hoban: That is an interesting point about whether a prime contractor should be able to provide further services in the future. We have to be careful about what message that sends about incentives to the primes.

Nigel Mills: I am saying it would be the other prime; it would not be the same one.

Mr Hoban: I think it depends on how extensive the post-Work Programme support is. You might be suggesting that they all start from scratch with a new provider. Certainly in our post-Work Programme support, we need to think about the roles that primes could play in that.

Q496 Glenda Jackson: It is all around this area, really. I have already touched on the differential pricing, which does not seem to be effective. You said yesterday in the Chamber, during the Back to Work Schemes Bill1 that up to the end of September, 200,000 people found work as a consequence of the Work Programme. People have got work through the Work Programme. I would like to know: a) where that figure comes from; and b) whether you can define what constitutes work in the meaning that you presented to us.

If I go on to the main thrust of this, ERSA’s dayone jobstart data, for example, showed that job starts for ESA and exIB claimants are way, way behind the main JSA group: less than 1% compared to nearly 37% in the JSA 18to24 group. Again, for the third time, why is differential pricing not having the intended impact on job outcomes in the ESA and exIB groups? Just before you start answering that, I will throw another one at you. The Government has continuously said that the centrepiece of the Work Programme was to get the hardesttoreach people, those who had been unemployed for longest-the example you gave was a precise one that has already been given by others-to get them back to work. Our understanding was that the primes got their contracts because they could show Government that they had the support, the expert experienced support coming from other groups, to be able to deal with some of these hardesttoreach groups. It is not happening. I hope you have not forgotten the original two questions.

Chair: I should have cut her off after one, so you could have answered them one at a time. I am sure you can manage.

Mr Hoban: I can pick and choose, but let me go through the questions. The jobstart data was provided by ERSA, the trade body. They collected that data from each of the primes in their organisation. Julia, can you remind me how they classify work?

Julia Sweeney: That is entry into a job, so that is at the start of the process that takes them to a job outcome, should they reach the sixmonth point.

Q497 Glenda Jackson: Does it cover how long they are actually in that job? We know people go in one day and are out of work at the end of the week.

Mr Hoban: It is anyone who has started a job.

Glenda Jackson: It does not tell you how long that job is.

Mr Hoban: Not in that measure, no. It just talks about job starts. Obviously job outcomes are predominantly for six months or longer. It is a fair challenge about why there were fewer job starts for ESA claimants. I certainly think it is the case that, when the Programme started-and this is something I suspect the primes will have said in giving evidence to you; it is something they bend my ear about quite a lot-at the start there was quite a large volume, in fact probably a largerthanexpected volume, of JSA claimants referred to the Work Programme. The referral rates for ESA claims were much lower than originally forecast. Those forecasted volumes have now picked up to broadly where primes expected them to be.

One of the answers from primes is that without sufficient volumes of ESA claimants they felt they were not in a position to either use the specialist suppliers they had put in as part of their contract, at that point, or develop the expertise and experience to deal with people who are ESA claimants and the challenges that they faced. Actually, quite a lot of the providers, either at prime or subcontractor level, have had experience elsewhere of dealing with people with disability and getting them back into work. Certainly that is a very strong strand of people’s experience in Australia, for example, where many of the providers do work with JSA and ESA claimants.

Now the volumes are flowing through. My experience of talking to primes and their supply chain has been that they are now raising their game, and rightly so, frankly, for this particular group of claimants. They were not performing very well. They know that the Department is very focused on what they are doing. Now the volumes are flowing through. There is much greater use of specialist subcontractors and much greater innovation taking place, in the way in which they support people in the ESA groups. For example, I was talking to one prime that is using healthcare professionals in their delivery to give advice on some medical issues that will help them remove the barriers to work. Different groups are looking at other ways of providing motivational courses, using Cognitive Behavioural Therapy (CBT), for example. What we now see is the providers really gearing up to support ESA groups. I hope that, when the figures are published in May, they will demonstrate a real change in the way in which people in the ESA groups are getting into work.

Glenda Jackson: I am sure the Committee will be very interested in that evidence, because it runs absolutely contrary to the evidence we have received so far.

Q498 Sheila Gilmore: Can I just ask a followup question, which I think is based on our visit yesterday, or largely based on our visit yesterday, but also something that was said when we had some of the providers in? One organisation in particular, which is now called, I think, CDG, which is the result of a recent merger with the Shaw Trust, was clear from the evidence they gave, both at one of our evidence sessions here and while we were at the Jobcentre yesterday, that they are putting in a lot of extra effort, which is not coming out of the money that is coming into the Work Programme from Government. They do have other sources of funding. It included, for example, giving people the kind of healthcare support that I think you were talking about, at approximately-I did write it down-I think it was about £900 a head. That was not coming from the Work Programme, and they did not expect it ever, even if they got some of those people into work, to cover that, not least because some of these people were not in any of the high category groupings anyway, even if they got them into work. Is not what is happening there that some of that extra work may be being done, but it is not actually within the Work Programme contract?

Mr Hoban: Clearly the primes have the responsibility of managing their finances. If they are able to access other sources of funding that is their choice. We are saying that, for the hardesttohelp group, we will pay up to £13,800. That is three and a half times more than we pay for the lowest group.

Q499 Sheila Gilmore: That assumes two things here. It assumes that that hardesttohelp group is correctly categorised. A lot of the evidence we have had-there may be further questions on this-is that they are not necessarily. The evidence from the prime providers yesterday was that they do not distinguish or they are trying not to distinguish. They are helping those people anyway, because they are actually quite hard to help, but they do not have the right money attached to them. Nevertheless, that hardesttowork group are not always getting the money, even if they got them into a job. A lot of them may not progress that far in the two years. Actually, the evidence from these people is that they have to put in extra money, which they do not expect, within the pricing structure, to recoup. If they are having some success or they are putting in this personalised work that we expected, it is actually coming off another funding source. It is not actually coming out of the Work Programme.

Mr Hoban: I do not think there is anything particularly startling about that. For example, people on the Work Programme can participate in Skills Funding Agency-funded courses. There is no problem in accessing other sources of funding to support the work of the Work Programme. There is a limitation on that, but there is no problem about accessing that money where that is appropriate. The issue about whether people are differentiating or not is a matter for the primes. We have been very clear: we have given them operational freedom. We set minimum service levels in conjunction with them. It is a blackbox model. That means they are free to innovate, free to produce the best service possible. If they do not differentiate that is a choice that they make.

Q500 Chair: It comes back to that we have been told, at the beginning, that the differential pricing structure would make a difference. From a lot of the evidence we have got, no, it has not. The vast bulk of claimants going through the process are being treated as they would have been under any previous system, and the ones who are getting extra help may not be the ones who have the high price attached to them. It is the primes or the subcontractors or whoever is delivering the service on the ground and making the analysis as to who should get what appropriate help. If that money is not available for them through the differential pricing structure, which it is not, they actually have to find other sources of funding, sometimes through charitable giving.

Mr Hoban: Dame Anne, I think there is a challenge for the Work Programme providers. There are some very expensive interventions out there. I have talked to some specialist charities that have some very expensive interventions. That is fine if people want to access those. One of the challenges is, if we are going to provide more support to a much wider range of people, how we take those interventions and operationalise them, so that they can be available to more people. There is no bottomless pit here. It requires people to be innovative, to look at what works, to look at how they can structure things and the way that will help.

Chair: The point is it is not the pricing structure that is doing that. That is the point we are trying to make: it is not the pricing structure that is making the contractors make those decisions.

Q501 Glenda Jackson: For example, G4S has stated candidly that the Work Programme would not be able to achieve job outcomes for homeless people or people with severe mental health conditions. St Mungo’s has told us that their homeless clients require support before they are ready to engage effectively with the Work Programme. As Dame Anne said, despite the differential pricing structure, those people with the most complex barriers to work are simply regarded as being too difficult and nobody is handling them. Could there be, within the present structure, scope for establishing separate programmes for these jobseekers, even though we were told-to bore everyone by repeating-that the Government’s whole thrust with this policy was indeed to tackle and assist those people who were hardest to reach and to get into work?

Mr Hoban: There are two points there. First of all I do not think it is right to say that the Work Programme cannot help people who are homeless. I have met people on the Work Programme, who have been placed into jobs, who are homeless. I would just counsel caution here. I am not surprised that Work Programme providers are asking for more money. We should not be surprised that they should take this opportunity to ask for some more money, but I do think they can get good outcomes. I have met people who have been helped into work with mental health conditions.

Sheila Gilmore: That is what they were contracted to do. It should not be such a great surprise, surely, Minister. They were contracted to do that job and we are expected to applaud and say how wonderful it is that they have got people into jobs with mental health problems.

Mr Hoban: Ms Gilmore, what I am saying is that they can get them into work. Your colleague, Ms Jackson, was saying that they cannot. I am actually making your point, Ms Gilmore, that actually they can get into work. I think the contractors are capable of giving people the help they need to get into employment. What they need to do, thinking about value for money, is think about what is the most effective way to get people into employment.

Q502 Sheila Gilmore: Are you going to account for the extra money? I ask this because I think it is important. I am hoping these people are successful. A lot of what we heard yesterday was actually very encouraging about the kind of approaches that Shaw Trust and others are taking. However, it is clear-it would appear to be clear-that to do that, to make that progress with people and give them things like that medical support and to help them manage their condition, so that they could reach that floor from which they could progress-is that going to be factored in when we decide how much this programme has cost? One of the things that has been said and will be said is that this Government has measured its Work Programme against previous work programmes on the basis that this was going to be the cheapest. It will be much cheaper, therefore much better value for the taxpayer. If, in fact, the reality is that it has to be subsidised from other sources, I am not saying that is a bad thing-I think it is a good thing-but we have to be realistic, do we not, about the cost?

Mr Hoban: The cost to the taxpayer is the amount of money we spent on the Programme. If providers seek to supplement the money we pay them on an outcome from other sources that is their choice. That is not a choice that is available to commercial organisations, which I expect to make a profit from this.

Q503 Glenda Jackson: I did not say that homeless people cannot find work. This was the evidence that has been presented to the Committee on an actual field trip. Members of the Committee heard that, not infrequently, Jobcentre Plus does not even know the individual they are dealing with is homeless. Yesterday on a field trip, the evidence was presented to the Committee that, in many instances, for homeless people Jobcentre Plus does not even know their phone numbers. It is not unusual for homeless people to keep that kind of information to themselves. That is not the central issue here; the central issue is that a programme was set up which, we were told, was going to concentrate specifically on the hardest to reach. There was a pricing differential. Apparently £1 billion has already been spent, and we have received evidence that the most difficult clients are being parked. It used to be called creamed and parked; it is just parked now.

Mr Hoban: I think what we should do is wait until the results come out in May and see what the evidence is.

Glenda Jackson: You have had almost 18 months.

Mr Hoban: Unfortunately, what I cannot tell you is what the results are to date. I am not allowed to do that. We shall have to wait and see what the progress is. Julia wants to add something.

Julia Sweeney: Could I just give a couple of examples of some of the structures that are in place? The health issue is a really interesting one. Some providers are dealing with it through mainstreaming their service. Some Work Programme providers have occupational health therapists available to anybody who feels they need help with health and wellbeing. They are delivering very well in support and delivering good outcomes for ESA customers.

On the blended funding question, it is a really interesting one. One of the things we wanted Work Programme providers to do was to innovate and to enhance services to unemployed people. Some of the best providers are bringing together a whole host of services, funded by other agencies, and delivering them coherently to Work Programme participants. There is one centre in Birmingham where they have justice, skills, health and education monies, all in the same place. They have the credit union in there as well. Work Programme participants get the blended help that they need, not all funded by the Work Programme. Actually, that enables them to achieve outcomes more efficiently and more effectively than if that Work Programme participant had to go to five venues, visit five different people and try to join it up themselves. There are very different approaches.

We will get a sense, as we head into year two and year three, of how that innovation is playing out in terms of outcomes and which groups are benefiting the best. There will inevitably, I think, be some groups where there are some real funding or supply issues, in terms of the help that they need, because we have not worked with them in this workfocused way before. There are lots of answers, and we will know which are the best delivery mechanisms pretty soon.

Glenda Jackson: Your scheme was set up as a black box. That was the answer we were given: the black box, which was innovation. It was all going to be wonderful. What you are not saying-

Jane Ellison: Glenda, can I just correct you?

Glenda Jackson: Can I just finish this one question?

Jane Ellison: I was actually on yesterday’s field trip, which actually you did not attend, so I would like to put some questions to the witnesses in relation to that.

Q504 Glenda Jackson: If there is best practice, is the Department going to spread that best practice around all the primes or will it take the contract away from primes that are not doing it?

Julia Sweeney: We are doing it in real time, and the market is doing it themselves. Providers are also sharing good practice. They really care about getting this right and delivering a performance to the levels that we expect.

Q505 Jane Ellison: I was just following up the point that Ms Sweeney was just saying. We did hear some very interesting evidence, some positives and some negatives yesterday. A number of the primes that we met on our trip to Brent yesterday morning were very positive about some very hardtoreach groups. We did pose the question to them about how they were using that experience and, if you like, how they were trying to harness best practice. It sounds like you have some thoughts about doing that centrally. I just wondered, when you said you were going to look across a scheme at how people were working, particularly the hardtoreach groups, what you are going to do with that information.

Mr Hoban: There are two things. First of all, we will be evaluating this scheme as we always do, and using evidence to demonstrate the effectiveness of different approaches. What we are also doing is setting up a bestpractice group to look at some challenges, look at some of the hardtohelp groups and work out what is working well and what is not working well. That is not necessarily being prescriptive, because different organisations have their own style. I had a meeting with Gingerbread, for example, where we talked about how Work Programme providers work with lone parents. There were some dreadful examples and some great examples of practice, even simple things, like ensuring that you ask a lone parent in for an interview when their child is at school or has got care. It sounds very straightforward, but does not happen all the time.

There are some practical guides. We can share different approaches to use of healthcare professionals. Are they mainstreamed? Do they get specialist contractors in to provide that? It is that free flow of information and discussion that we want to promote through a bestpractice group. That is very different from saying, "This is the DWP way and this is what you shall do," because providers will have different approaches, but what we need to do is get more data out there about these approaches and what they feel works well in their situation.

Q506 Glenda Jackson: In the light of your experience of programmes that work and programmes that do not work, is there a possibility that you could be looking at additional work programmes that really are looking in a much more detailed way at some of the hardesttoreach clientele?

Chair: Specifically, we are talking about Work Choice. Anecdotally, we have heard good things, but then we do not have the data to back that up. Almost all our witnesses say that Work Choice is doing well. It would be interesting to see the data.

Mr Hoban: Work Choice is the responsibility of the Minister for the Disabled but, as it happens, I went to visit a Work Choice provider in my constituency on Friday. It was actually Mencap, which works with CDGWise. There are some good things we can learn from Work Choice about the amount of inwork support that is offered. I spoke to Mencap, which employs somebody through Work Choice, but also the Cooperative Wholesale Society, CWS, which employs people through Work Choice. Inwork support is absolutely vital, but of course what they do, what Work Choice is able to do, is provide support beyond a fixed period and provide more extensive support. Some of the lessons from Work Choice can be used on the Work Programme. For example, how do you get an employer to think about how a job can be broken down into manageable chunks for someone who has been absent from the labour market for a while? How can we support employers to make reasonable adaptations to their processes-it might be just, say, recruitment-to help people.

Q507 Stephen Lloyd: On that specific question, if I can, Dame Anne, do you have a view about possibly allowing the Work Programme providers to have access to Access to Work? For instance, as I think I mentioned to you before, if you have a deaf person who uses sign language, BSL, and has been away from the job market for a long time, maybe 10 years, that individual is going to need a fair amount of interpreting provision to go through the interviews, to be trained and to then go to the job interviews, but they are not actually allowed to access Access to Work, which is a very good scheme. Is it possible that the DWP might think about joining up those dots?

Mr Hoban: It is an area we do need to think about. There is a difficulty about Work Programme and Work Choice, as they both work through prime contractors, and they are rewarded separately for that. We should be looking at how we can utilise these schemes to the best effect and join them up.

Q508 Glenda Jackson: What about pre Work Programme support?

Mr Hoban: PreWork Programme support is often the support that Jobcentre Plus will offer. We do give Jobcentre managers quite a lot of flexibility about what they can offer. We have devolved budgets down to managers to enable them to buy services to meet particular needs. To give you an example, the Cardinal Hume Centre, which is not very far from here, is a very, very good integrated service. Julia was talking about the one in Birmingham, where all the services are brought together. The Cardinal Hume Centre does the same thing. Actually, Jobcentre Plus buys in support for the homeless from the Cardinal Hume Centre. The Flexible Support Fund is there to be used to provide intensive interventions, intensive support, to people who are some distance from the labour market. We do not want people to have to wait for the Work Programme before they get access to this. Jobcentre Plus does also buy in services from other homelessness charities as well.

Q509 Glenda Jackson: Is that budget a separate budget?

Mr Hoban: Yes, very much separate from the Work Programme and it is very much under the control of Jobcentre Plus managers.

Q510 Chair: The numbers going into Work Choice are capped. Again, some of the evidence suggests that they could make a lot more use of Work Choice if it was not capped. Is that something that you are looking at?

Mr Hoban: The best thing to do, Dame Anne, is to get my colleague Esther McVey to drop you a line on the stats.

Chair: It is also not payment by results, so there is a very different funding model as well.

Mr Hoban: Yes, absolutely.

Q511 Debbie Abrahams: The Committee has heard evidence from witnesses that the pricing structure, which is generally related to the benefit type that claimants are on, is a bit of a blunt instrument. We wondered whether the Department, whether Government, is considering a more holistic approach to assessing employment needs and employability, and within that relating both the pricing structure and the interventions that would be appropriate, such as some of the very good ones that you have just talked about would be available.

Mr Hoban: It is a good question. What we have is a range of approaches to identifying the payment groups that people should be in and the amount of money that should be linked to that payment group. For example, there is a separate payment group for exoffenders. We have just launched a pilot where there is additional funding for people who have drug and alcohol problems. There are people who have been referred to payment groups by virtue of the benefit that they are claiming. I would say there are a mixture of approaches to identifying why people are in different payment groups; it is not just about benefits.

You do raise an important point, and it is something that we need to think about quite carefully, both in the context of the interpretation of results, but also future direction of policy. There will be people on Jobseeker’s Allowance, for example, who have mental health conditions. There are a number of people on Jobseeker’s Allowance who will be selfdeclared as disabled, using the DDA2 methodology, who will not go into one of the groups that get the higher payment. That is why it is quite interesting the approach that providers take. Some will not seek to differentiate between payment groups and provide a wide range of services to every payment group, such as having occupational health available to everybody. Some will perhaps triage on a range of different factors, including employability, and not necessarily by benefit.

Q512 Debbie Abrahams: On that point, then they must be doing some form of assessment. That would seem a very good example of the model that was being used that you have given. Presumably, they will have to assess. Are you actively considering a more holistic assessment that relates to the whole person’s needs, including their employability? For example, we heard about the Australian Job Seeker Classification Instrument. I know that New Zealand, several years ago, again had a more holistic approach in terms of identifying the overall needs for the person.

Mr Hoban: I think there is a broader point and not just something related to the Work Programme. One of the things that the Secretary of State and I are interested in is looking at much more segmentation for jobseekers, from when they walk in through the door. You are absolutely right: in Australia, they have the Job Seeker Classification Instrument. Having seen it, there are some benefits to it. There are some challenges, too. We need to think about that in connection with future policy development, but it is a very interesting idea and one that we are looking at quite carefully.

Q513 Sheila Gilmore: Can I just ask on that, who do you think should carry out the assessment? We had some different evidence on this from different people. Some of us were probably a little anxious about whether that should be done by providers who, after all, might have a vested financial interest in assessing somebody as high need. At what point in the process do you think that might take place?

Mr Hoban: You are right to highlight that concern about providers. The flipside is-and this is the anecdotal feedback I got from meeting some of the Australian providers-that having the Government to do it means that, sometimes, the banding between the four categories varies depending on budget pressures.

Sheila Gilmore: It is an interesting question.

Mr Hoban: It is an interesting question. What you need to do though, Ms Gilmore, is have an approach that commands confidence and has credibility, and a recognition that people’s distance from the labour market changes over time and is not necessarily all in the same direction. Someone may actually fall ill whilst on the Work Programme and actually move further away from the labour market, so it should not necessarily be fixed at any point in time; it should be reviewed from time to time, potentially. The method of assessment is important, too. Ms Jackson referred to people not necessarily declaring that they are homeless at Jobcentres. This was a comment that was made in Australia, in connection with the Job Seeker Classification tool that they use. It was based on a very short interview. People did not necessarily admit to having mental health issues or being homeless. We need to think quite carefully about how effective it is. Are we sure that it will deliver a much more targeted and focused use of resources?

Q514 Debbie Abrahams: Moving on to assessment for fitness for work, we heard some horror stories when we received evidence. One man who had been assessed as fit for work actually had cancer and died a few weeks after he was deemed fit for work. That was the evidence from a provider. I know things are improving, but it still far from perfect around the Work Capability Assessment. How can providers refer back into the system those beneficiaries who should not be there, who should genuinely not be there?

Mr Hoban: The challenge here is to ensure that we do get the Work Capability Assessment (WCA) right. We are ensuring people get the right support. You are also right; we are seeing improvements in that. There is still some way to go. I am the first to acknowledge that. It is that assessment and then the decision made by DWP staff that determines which group people go into, whether it is the fit for work group, whether it is the ESA WRAG (work-related activity group) group or the support group. If there is a view that someone’s condition does not enable them to benefit from the Work Programme, there is an appeals mechanism in place.

Q515 Debbie Abrahams: There is no direct referral then for the providers back into JCP, which has been suggested.

Mr Hoban: I can see the argument for doing it. Do not get me wrong. Equally, what I am also very wary about is making it too easy for providers to say, "I do not want to work with this person. Let’s pretend they are not fit enough for work." We have to have some checks and balances in this.

Q516 Stephen Lloyd: I understand that argument, Debbie, if I can chip in. There is some legitimacy to it but, by the same token, when we had a group of work providers in only the other day; we asked them very directly, "Was it getting better?" They said "Yes, it was." We also asked them very directly, "Are you all," and I include Shaw Trust in this, which is one of the charities, "still receiving referrals of people who are clearly not fit to work?" They all said yes.

I am very supportive of the model for payment by results, 100%; I have been in business for years before politics. My question to DWP is: why is there no payment by results mechanism for Atos, which does the WCA, either based on appeals or success, whichever way you define it? I am not clear that the same performancebyresults robustness that you have with the work providers is applied to the company that does the WCA. It is clear, though things are getting better, that they are not getting better quickly enough.

Mr Hoban: I do not want to go back to my first evidence session in front of the Committee.

Chair: But they are connected.

Mr Hoban: Absolutely. There are a couple of things I would say. The first is this: if we brought in a paymentbyresults mechanism for Atos, I am sure people would find ways in which they felt that the system was being organised to get more people declared fit for work, paying people for a process and something like that, where actually the outcome is, "What is the right prognosis for this person, based on the evidence that has been presented?" It is much better to be paid by the number of people you see, rather than setting any targets. Targets can be open for misinterpretation, manipulation and to distortion. I would be really uncomfortable about going down that route. Of course, where Atos fail to deliver the service we expect in terms of volumes, then there is a service credit that comes back for that.

The other thing I would say is regarding the ESA claimer group, PG 6. We are referring people to that payment group who are not necessarily fit for work now; if they were, they would actually be on JSA. What we are saying is that they would perhaps be fit for work in three months’ time, six months’ time, or up to a year’s time. What we are expecting the Work Programme provider to do is use that time to move them closer and closer to work. It is absolutely right that they are not fit for work the day that they appear, otherwise they would be on JSA. However, over the next period of up to a year, we expect them to be fit to work. Therefore, rather than wait until they are fit for work to get started, let us give them some help now that is appropriate to their medical condition, rather than write that year off.

Q517 Stephen Lloyd: I do take your point. I think that is a fair point. All that I would pass back is to urge that the DWP continues to keep a very, very close watch on the appeals process. If after Harrington, which I totally support as well, and after a lot of the changes that were put in, we are still getting a large number of successful appeals-if we define it that way, i.e. the appeal decides that they clearly were not fit for work-then I would urge that the DWP does not write off any further possible sanctions to improve the quality of outcomes. It was only two weeks ago that the providers were sitting in front of us. I think these are reasonably sensible people, even though I know that they would say it to a certain extent, I do not think the Shaw Trust or the CDG would. I do urge you as the Minister within the DWP to continue keeping a very close eye on the level of improvement or not.

Mr Hoban: Absolutely, Mr Lloyd. We are committed to continual improvement in the WCA. We have just appointed Malcolm Harrington’s successor, Dr Paul Litchfield. We have had Harringtons One, Two and Three; we will have Litchfield One and Two. I monitor this process very closely, because I want to make sure we get better outcomes from the whole WCA process.

Q518 Teresa Pearce: Minister, on the point you raised about the Atos contract: you said that if you set a target that would not be a very good thing, and that it is better for people to be rewarded or paid for the number of people they see. I think the point that Stephen was making was that yes, that is fine, but they need to get the decision right. There seems to be no penalty in there. In most contracts, you would be expected to get things right X amount of the time, and there would be a flex at the end to say "Okay, we accept that a few will be wrong." However, so many go to appeal. I know that Atos have been paid extra for the Harrington improvements, but it seems that it is a one-sided contract: if they do things better, they get more money, but if they do things worse there is no penalty that you can invoke. Would you look at that?

Mr Hoban: One of the challenges, Ms Pearce, is that Atos can make a recommendation on which the DWP have to make a decision themselves. The decision on which group somebody goes into is not made by Atos: it is actually made by the Department, using recommendations from Atos, but also the medical evidence that GPs and others have requested. We should be clear where the decision-making focus is on this. The reality is that if you look at the drop­down menu that tribunal judges are completing, I think in about 0.4% of cases, the reason why the judge is overturning the Department’s decision is down to the quality of the Atos assessment. Actually, one of the principal reasons why decisions are being overturned is because more recent information was supplied by the claimant. Of course, neither Atos nor the Department has had a chance to see that before it is used.

Stephen Lloyd: But then that is a profound systemic problem for the DWP.

Chair: We could go on forever on this, and I suspect we might need an extra evidence session to do that.

Q519 Debbie Abrahams: I have just one final question, and it relates to the Work Focused Health-Related Assessment. You will recall that this was specifically about assessing how a claimant’s condition might be managed to help them find and stay in work. That was suspended by the DWP in 2010, and we wondered what the reason was for not reinstating it. Surely this will actually help providers with a more generic assessment about how people can find and stay in work.

Mr Hoban: It is a good question. We have looked again at whether this should be reinstated. My sense is that, at the moment, it would be duplicating what the Work Programme should be doing, which is trying to work out what someone can do and find the right job for them and their health condition. It is something that we keep under regular review and we will think about it again shortly. It has potential, but in a way it has been superseded by where we are at.

Chair: I would like to bring in Nigel.

Graham Evans: Just before he starts, Chair, I would just like to say that some of the examples used are the lowest common denominator. When people die of cancer, you will know from your background that sometimes it can be a long-term condition or a short-term condition. Some people die within weeks of diagnosis, so to use that as an example, I think it is-

Debbie Abrahams: Graham, to be fair, that was the example that G4S gave at the last evidence session.

Graham Evans: Tony Gubba, a well-known radio personality, died of cancer after a very short illness. He died within three weeks. The point I am making is that sometimes it is very difficult to diagnose.

Q520 Nigel Mills: Can I take you back to the black box approach, Minister, which we touched on earlier? Do you have any regrets about how that approach was set up?

Mr Hoban: First of all, it was my predecessor who established this.

Nigel Mills: Exactly. There is no blame for you.

Mr Hoban: I have reflected on this. I think it was the right approach. I think that it is right to give a group that are actually some very experienced providers the flexibility to determine what is right. Obviously it is underpinned by minimum standards. I did actually have the chance to look at the alternative to this in Australia. The element that is outcome payments is much lower than in the UK; they get more payments for inputs. I felt that one of the issues there was that it had almost squeezed out innovation and flexibility from the system. The alternative is to share best practice and have lots of rigorous evaluation to find out what works, rather than to be prescriptive. I do feel that local labour markets differ, and the nature of the people referred to the scheme differs. Therefore, I think it is right to experiment with different approaches, as long as they are successful.

Q521 Nigel Mills: The initial evaluation of the programme found that there was not quite the level of innovation going on that you were probably hoping for at the start. Do you think that the black box is now actually delivering that innovation and those new approaches that it was intended and expected to deliver?

Mr Hoban: I think what happened-and Julia might want to add some colour to this-is that at the start, there was quite a long mobilisation phase. A lot of people perhaps who were existing providers thought they could do what they did before and that that would be okay. I think that there was a bit of a shock to the system when they did not achieve the MPLs at the end of year one, and a real sense of "What can we do that is actually going to drive up performance?" I think that that has then led to quite a lot of innovation taking place.

When I was in Gloucester last week, I went to visit one of the providers there, JHP. They are now doing some very specific and intensive courses along a vocational pathway. That is different to what they were perhaps doing six months ago. You have got a lot of providers who are perhaps focusing on self­employment now. We have got one provider who is looking at a virtual adviser to deal with remote areas. There is a lot of innovation going on. You see a lot of innovation going on in the ESA area as well now, compared to what it was. I sense that there is a growing momentum as people think "What am I going to do to get to the next level of performance? What do I have to offer?" Julia, what is your view?

Julia Sweeney: The first year was very much scaling up and getting the service in place. Huge numbers of people were participating in the Work Programme at the end of the first year. We are seeing some real innovation in the skills area, particularly with blended funding, tailored routes into work and a link to local labour markets and local employers. There are some quite good examples coming up there. We are seeing very different models of employer engagement, and some interesting dimensions coming up there. In terms of structures, we are seeing innovation all the way from how the managing agent role works in some providers through to different supply chain relationships. They are all teaching us some very useful lessons about how the market operates. There is a lot of innovation on health. A lot of new approaches are emerging on developing local partnerships and starting to get in the door with LEPs (Local Enterprise Partnerships) and local partners and thinking about how services are tailored. We are also seeing some very different approaches on digital. These providers can do things with IT that we just cannot do within the Department, because of the scale of the build and the time that it takes.

I do think that we are seeing innovation. The critical question is whether innovation leads to better outcomes. For some, it certainly will. For the Department, understanding what is happening across 18 primes and 40 contracts and looking at what excellent looks like will give us some very good intelligence as we move into evaluation and think about what the next phase of delivery looks like.

Q522 Nigel Mills: So you are not sat in the Department, thinking, "If only we had a bit more power or a bit of a lever to encourage some providers to do things that they are not doing, or stop them doing things that they are doing?"

Julia Sweeney: Our leverage is quite strong. The Minister talked at the beginning of this session about the capability that we have within the contracts to leverage good performance, to shift work, and to take work away from people if they are not delivering. This is a very responsive contract. We have very open relationships with providers. At account manager level, we are working very closely with chief executives of the primes, and performance managers are in delivery areas all the time. We know exactly what is happening, we know what good looks like, and we share that information around the network. Primes do so themselves: we have a number of networks where we sit down with primes and their partners. I think there is a very dynamic relationship across this market. It is an exciting time for the market. We have got new entrants and new structures. We have got people coming into the welfare­to­work area who have not worked with us before. It is a very rich learning experience for the Department, as well as an opportunity to drive good outcomes for customers.

Q523 Nigel Mills: I take the point that if they are not meeting targets you can do nasty things to them. However, it is possible, is it not, to meet the overall target but not be performing very well for some particularly hardtoreach parts of the cohort that you have. In that situation, it would be much harder to take any action; you could not divert people away from them in that situation. Do you think that there was actually a case for having some standard in there that said, "Actually, you need to do at least this for everybody?"

Julia Sweeney: That standard exists.

Mr Hoban: There is a minimum standard in place. We have agreed that with each of the providers, and that is something we monitor compliance with. Do not underestimate the power of focus on some of these payment groups. Talking to the primes who have been very focused on the JSA 18-to­24s and the 25­pluses is very interesting. As we talk more about ESA claimants, you start to see a real focus on that from the primes. I think that we do need to make sure that primes are held to account for every payment group, not just through principal payment groups.

Q524 Nigel Mills: I am sensing that you are happy that the black box is working. Do you think there is a case for any independent oversight, outside of the Department, on what primes are doing? Perhaps some independent quality inspection or something?

Mr Hoban: If you think about the participant’s experience, when they go to their prime or their subcontractor for the first time, they will be told what they should expect to see by way of service. They have an opportunity to raise complaints, and there is an Independent Case Examiner who will adjudicate on those complaints. A lot of the evaluation we do is also independent as well.

Q525 Chair: How would a contractor be held to account? If a contractor decides to just look at part of the cohort and ignore all the rest, as long as they are getting just enough people into jobs, there is nothing else you can do because of the black box.

Mr Hoban: We do take the compliance with minimum standards very seriously, Dame Anne, and we do audit those. Julia, do you want to talk a bit about that process?

Julia Sweeney: The minimum standards articulate the level of service that a customer can expect from a provider. They are shared with that claimant as they move into the programme. Actually, if you go around and look at either primes or their subcontractors, those standards are quite explicitly there in the workplace and on websites. There are customer feedback boards, and they change and enhance those in response to customer feedback in the main. Performance managers and our assurance team audit those standards, so we can be assured that people are seeing their advisers regularly and that they are getting that service level.

Q526 Chair: We know that is not happening. We have heard of somebody who sees their advisor for half an hour every week-great-and someone who has to phone up their adviser and does so every couple of months to ask and beg for an appointment. Is that the black box? That does not suggest that there are any minimum standards.

Julia Sweeney: Minimum service levels are not exactly the same across each prime contractor. If they are not being met, then the claimant has a very clear route to escalate that complaint. It is probably important to note that complaints are almost always resolved locally, which means that they are resolved to the satisfaction of the claimant. We have very few getting to the Independent Case Examiner, and, in fact, we have had none adjudicated on as upheld. I think that says something quite positive about the experience people are having within the programme.

Chair: It may be that the claimant does not know what the obligation of the provider is.

Mr Hoban: However, Dame Anne, the claimant does get details of what the minimum service standard is when they sign on to the Work Programme. When they go and see their subcontractor or their prime they should be given those details. There should be very clear standards set at that point.

Glenda Jackson: I have not heard that. I have got constituents who did not even know that they were on the Work Programme.

Q527 Jane Ellison: Rather than use anecdotal evidence, is it possible to supply the Committee with some data around this?

Mr Hoban: Yes, absolutely3.

Jane Ellison: That would be very helpful.

Chair: That would be useful, so that we can see how different they are in different areas. It is quite difficult to know how they can be so different.

Mr Hoban: No problem at all.

Q528 Sheila Gilmore: Some of the examples that you have been giving are very interesting. Is there an independent research project going on in parallel with all of this, and is that going to be published? What is being described here, frankly, does not look like what the Work Programme was-the idea of having a hub with all sorts of services together is fantastically good, but that is not the same as the Work Programme with its chain of suppliers and so on. Is somebody doing research, so that that will be published?

Mr Hoban: We are awash with evaluation, which will be published. This almost goes back to the point about the black box. People have different models for the provision of specialist services. Some might all be in one location, and some might do it a different way. It depends on their business model and their approach.

Q529 Sheila Gilmore: So it will be published?

Mr Hoban: Yes, the evaluation will be published, absolutely.

Q530 Sheila Gilmore: The supply chain was one of the things that was said to be important from the outset. When the BBC surveyed third sector organisations that were listed as contractors on the Work Programme by the DWP, they had responses from 184 organisations. 40% said they were not part of the Work Programme. Of those who were in the Work Programme, 73% said that they had had fewer referrals than expected, and 41% had received no referrals. Were a lot of these organisations simply used as bid candy in the first place?

Mr Hoban: I do not think that there is any evidence to suggest that. We talked about the mobilisation phase earlier on, and we talked about the ramp­up of ESA volumes. A lot of these are specialist contractors that the Work Programme providers had lined up. As the programme has evolved, the nature of the relationship between primes, subcontractors and specialist provider services has evolved. Some services have been provided in house that might have been subcontracted before. There is a mix there, but one thing I do take comfort from is the last stock take of subcontractors. We have actually seen an increase in the number of voluntary and community sector organisations taking part, and they still by far make up the biggest chunk of subcontractors in the programme.

Q531 Sheila Gilmore: So you are not of the view that the work is not feeding down, then. You think it is feeding down. So why do some of the subcontractors not actually have any work?

Mr Hoban: I am not saying that it is feeding down. I am saying that some subcontractors may have come in at the start of the programme, and the primes may have felt "I do not need that service anymore." Alternatively, because the level of ESA volumes at the start was so low, it might not have been economic to refer people to a particular specialist subcontractor. I think that the supply chain is changing; it evolves. I was talking to primes who have taken people out of their supply chain because they were not performing, or they were not able to offer a service at a reasonable price to the contractor. There is a whole batch of reasons why people who might have been in at the start are no longer in now.

Q532 Sheila Gilmore: What action can the DWP take against them if they are not passing on the work, and if you are satisfied that it is not for one of these good reasons?

Mr Hoban: They are not required to pass on work. It is a black box. Ultimately, they have to decide how they get the job outcomes. That is what they are being paid for, and that is why we set up this programme of payment by results. They have to decide what the best way to deliver better job outcomes is. One of the messages that is coming out to me from the way that providers are responding to increasing ESA referrals is that, where there are specialist services there from subcontractors, they will tap into them. Julia talked about the managing agent model earlier-G4S are an example of that-all of their work is subcontracted. In some supply chains, there may be a changing roster of subcontractors, depending on the performance.

Q533 Sheila Gilmore: Some small organisations have gone out of business. Some were told-at least locally, although this may have changed again-that with the coming of the Work Programme, the previous funding that they had had, say, through local authorities was not going to be forthcoming. I know that this happened in Edinburgh. People who were doing employability services previously under various programmes, including some funded locally by local government, were told that since there was now the Work Programme, the local authority would no longer be funding that kind of activity, because it was all supposed to be done under the Work Programme. They have lost the funding that they may have had through the local authority, and if they are not getting contracts or not getting as much as they had expected through the Work Programme, then they are actually losing business.

Mr Hoban: I cannot be held accountable for the actions of local authorities, but I do think that there is a real challenge here. The payment by results model we use in the Work Programme does present some real challenges to contractors of all types and sizes. One of the things that I sense when talking to a range of providers is a move from previous funding models-where there is much more paid up­front and much more paid for progress measures or particular interventions-to a payment by results model has been quite challenging for a lot of organisations. Of course, what we cannot do is guarantee a certain level of referrals into the Work Programme. We cannot stop people getting jobs before 12 months, simply to keep rolling the referrals up.

Glenda Jackson: But you have said on more than one occasion that there has been an increase in the ESA claimants.

Mr Hoban: Yes, absolutely.

Q534 Glenda Jackson: Do you have any theory as to why that has happened?

Mr Hoban: As the policy has bedded down, we have been able to release people with a longer prognosis onto the Work Programme. The original stage was people who volunteered, who received ESA, were put onto the programme: people who had been through the IB reassessment process could volunteer to be on the Work Programme. Now we are referring greater volumes, as we refer people who have got a prognosis of up to 12 months on to the Work Programme. We are seeing that policy shift getting more volumes through. I was thinking more particularly about the JSA volumes, over which we do not have control.

Q535 Sheila Gilmore: If most of the work is done by a subcontractor, and they get somebody into work-or if all of the work is subcontracted, in effect-is it right that the prime still gets the large chunk of money for, it would appear, not doing a lot?

Mr Hoban: The prime then pays the amount that is owed under its contractual obligations to the subcontractor. When subcontractors entered into commercial negotiations with the prime, they agreed their payment mechanism, and that payment mechanism varies from contract to contract. You will have some who effectively bear the exact end­to­end risk that the prime was, who will be paid on a payment by results basis. You have some specialist Tier Two providers who are paid on a call­off basis, paid for a service that has been delivered. There are some commercial negotiations between the primes and their subcontractors.

Q536 Sheila Gilmore: Does this come back down to the question of whether there is really equal contracting? For a lot of organisations, this did appear to be the only show in town. It was "take this or leave it." If you are paying, let us say, £13,000 for somebody who is hard to place, at the end of the day somebody gets all of that money for them being hard to place. If the work is done primarily by one subcontractor-I know there is an example in my constituency, which works with people with mental health difficulties-most of the heavy lifting is done by that organisation, but they do not get most of the fee. They get about half of the fee.

Mr Hoban: There is a commercial negotiation here. The prime will not get any payment if the organisation is not investing enough in getting somebody into work. It is actually in the prime’s interest to ensure that there is fair recompense for the work that is being put in: otherwise, people will not go into work, and they will not get any money at all. I think there is a commercial negotiation here to be had. I think one of the challenges, though, Ms Gilmore, is how we ensure that people who are subcontractors in this programme have the management capability and financial capacity to enter into some of these contracts. I know that a number of primes have done some good work with subcontractors to help boost that capacity and to manage that risk. This is not a risk­free operation, as I am sure you appreciate.

Graham Evans: I think you have largely answered this, Minister, but when we had evidence from G4S-who subcontract to their primes-they said in their evidence that a lot of the third sector providers are just no good. As you have said, it is a commercial decision whether you want to put yourself into that arena.

Mr Hoban: There is a real challenge to anybody. Some private sector providers may not be any good, either. I think that a number of contractors who have been long­established players in this market have found the transition from the payment by input to the payment by result quite challenging, and have taken some time to adjust to that different model. Any organisation taking part in this needs to have financial strength and the capacity to manage what are risky contracts.

Q537 Chair: We need to move on. I was going to ask about the Merlin Standard. It seems as if it is a toothless animal that really does not do very much. Have you thought about giving any more powers to Merlin assessors, to be able to fine primes who treat the subcontractors unfairly?

Mr Hoban: I think the Merlin Standard is setting some very clear standards around the relationship that there should be between a prime and a subcontractor. We have taken some steps to strengthen that: Michael O’Toole, who is the crown representative for the voluntary and community sectors, is now sitting on the board that supervises this. We do monitor compliance with it as well, which I think is important. In terms of future development and penalties, I will think about that one. Julia, do you want to talk a bit more about the Merlin approach and whether it could be strengthened?

Julia Sweeney: Yes, I can do. I think Merlin has been a relatively effective instrument, actually. The formalisation of the relationship through the sector has been really helpful. The board is active. We recently had an organisation achieve "Excellent" on Merlin for the first time, so it shows that that process is driving up standards. We have also had an organisation fail, which will as a consequence need to be reassessed. I do think that we are using the breadth of the standard, and the work that Michael will do with us will be very welcome. The sense I get from the industry and industry representatives is that this is a good mechanism that is providing a good structure around our subcontractors.

Q538 Chair: There is presumably no penalty on the organisation that failed? They just get the chance to take the test again, if you like?

Julia Sweeney: There is a penalty therein, because they have to pay for that test.

Q539 Chair: How much do they have to pay?

Julia Sweeney: I cannot remember the exact amount. I can drop a note to the Committee if you would like.4

Chair: I get the sense that, if something seriously needed to be dealt with in terms of the relationship between primes and subcontractors, Merlin would not be there to step in and help.

Julia Sweeney: I get the sense, when I visit subcontractors and primes on the Work Programme, that relationships through the supply chain are pretty good. This is a very collegiate delivery organisation when you look across supply chains. There is a very strong focus on delivery, and a very good, healthy sense of competition in terms of delivering well. I think that Merlin is part of that infrastructure that allows people to have that relationship. There have been particular instances in which your witnesses have felt things are not working, and we would be very happy to look into those. However, the general sense I get from the network and the industry is that Merlin is broadly a good thing.

Mr Hoban: Without wishing to make policy by anecdote, I have done two roundtables in recent weeks with the voluntary and community sector: one down in the South West and one organised by the National Council for Voluntary Organisations (NCVO). Merlin did not crop up as an issue in either forum.

Q540 Teresa Pearce: I just wanted to talk a little bit about the Work Programme data. It was something like 17 months before we received any: it was November 2012. Was there a reason for that delay?

Mr Hoban: First of all, when we publish data, we need to make sure that we have got a reasonable picture. I do not mean "a good picture", but a proper representation. There is a requirement for validation, and, of course, the vast majority of people who join the scheme would not be able to qualify for a job outcome until at least six months have elapsed. Doing it much earlier would not have-

Teresa Pearce: But 17 months is a long time.

Mr Hoban: Absolutely, and I think that there was some discussion about that. The publication date was set before I arrived in the Department. We are now moving to publication on a six monthly basis. The next set of results will be published on 28 May, and it is right that there should be timely data on this.

Q541 Teresa Pearce: You said earlier that you are "awash with evaluation", and you also mentioned that you get management information. Is there no information there that would be easily shared and that would help? The reason I ask is that six monthly reporting-given the size and the importance of this programme-might be too infrequent. Some of the evidence that we have heard is that people within the supply chain believe that more transparency of data would help with good practice sharing and innovation. Contrary to what you have said, Ms Sweeney, some of the sub-contractors have said that they have not seen very much that is new in the Work Programme, and that everything is the same old stuff that they have seen before. What they are asking for is more information, so that when there is innovation, it can be spread.

Mr Hoban: There are two things in there. In terms of quality of evaluation, that is published, and there is a regular cycle. There seems to be lots of different evaluations being published over time. On the performance information, primes are able to-and should-share data within a supply chain on outcomes. I think that most providers do that, and some actually enable their subcontractors to access that data on an almost daily basis. That provides a spur there. Primes do organise opportunities through which they can share data and experiences within their supply chain.

I share your view about the frequency of publication of data. I would like to move to a much more regular publication of data, but we do need to make sure that it is properly validated and verified. There are some reports and checks that need to go through that, but I want to see more data published on a timely basis.

Q542 Teresa Pearce: Would you support the publication of data for outcomes below prime contractor level?

Mr Hoban: I think that that happens already, or should happen already, certainly within the supply chains5.

Q543 Teresa Pearce: A prime might say that if there is somebody out there who is doing fantastic stuff, they want to be able contract with that organisation as well. If they do not know, it is kept within that supply chain. Does it not help, in business, to know exactly what is working and what is not?

Mr Hoban: One of the things that struck me about this-and I know you will have had a flavour of this from the evidence that you have got-is that this is a pretty incestuous industry. They know each other very well, and they all seem to have worked for each other or contracted with each other before, so I think that they know what is happening. That is one of the reasons we are setting up the best practice group, to help promote that sharing and get good practice out there. It absolutely should not be the preserve of the primes, but should be promoted more broadly.

Q544 Teresa Pearce: One of the other points that was raised was that, if the Work Programme is going to succeed, people need to believe in it. People need to think that it is worth engaging with. If information could be given outside of the supply chain to, say, local authorities, MPs and local opinion formers, that would be a good way of raising the profile of where there is good practice. At the moment, they feel constricted by the way that the data is collected and published.

Mr Hoban: I have two points on that. First of all, where something is part of National Statistics, it cannot be shared until it is published. Those are the same rules that govern a whole host of National Statistics that are produced. However, I have seen two really good examples of primes engaging with their local Members of Parliament and local partners. I have seen it in Hampshire, where A4e have a good and effective way of engaging with MPs: not necessarily sharing performance data as such, but actually talking about the type of people they help; the people they work with; some success stories; and innovation. I know that in the South West, one provider-I cannot remember which-wrote to MPs in the South West. Steve Webb gave me a copy of the letter he had got from the prime. There are ways in which primes and subgroups can engage with their local communities without having to breach national statistics rules, and I would encourage them to do that. Sometimes, I think that the work that they do is one of the best kept secrets.

Q545 Teresa Pearce: I have visited my local work provider, and also engage with them as an employer. That was not a wholly satisfactory experience, I have to say, although I think that was down to one particular person there rather than the whole organisation. The voice that seems to be missing in all of this is the individuals on the Work Programme. Would you not want to systematically survey people when they are on the Work Programme? Earlier, you quite passionately described people who are really far away from the workplace, who have just been dumped and left. Confidence is a really important issue for them, and it needs to be a really personal service. We need to know what is working and what is not. For those of us who have been in work for a long time, it is hard to imagine what that must be like. Surely having a systematic survey of satisfaction levels of people who are on the Work Programme would be a good way to find what, for them, is working.

Mr Hoban: Julia touched on this earlier on, and I have certainly seen this in practice, when I have been out and about meeting providers. There is a lot of work that providers do to establish the views of people using their service. There is a lot of interest in really good outcomes; a lot of interest in customer experience, and in the quality of the interaction between advisers and claimants. This is all looked at carefully by providers. Of course, there are routes where someone who is unhappy can raise a complaint about their service, but I think that the best test is whether people are getting into work or not.

Teresa Pearce: Well, I think that is the outcome that we all want.

Q546 Graham Evans: There is some evidence that officials within the DWP are hostile about the working relationship between Jobcentre Plus and Work Programme providers. We have been told that Jobcentre Plus sometimes fails to pass on basic information, such as homelessness, telephone numbers, and the like. What can be done to improve that basic flaw of communication?

Mr Hoban: The relationship between Jobcentre Plus and the Work Programme is really important. Earlier on, we touched on post-Work Programme returns. When I talk to Jobcentre Plus staff, it is interesting that they now see the merits of a very strong relationship with Work Programme providers. That has helped to provide them with a real incentive to improve that relationship. Neil Couling, who became the Director of Work Services towards the end of last year, has taken this on as a priority. He has set out a series of measures that we should be taking to improve the quality of that relationship: warm hand­overs, if that is something the Work Programme provider is looking for; co-signing, and co-location. There is a real emphasis on raising the quality of the relationship between Jobcentre Plus and the Work Programme providers. The conversations I have with providers would suggest that good relationships are in place, certainly at a district level. I think we need to do a bit more with local officers the quality and consistency of that relationship.

Q547 Graham Evans: The key ingredient for this to work is the engagement with good quality employers. There is evidence to say that employers are not aware of this scheme, or in many cases, that there is an unwillingness to engage. Organisations such as Transport for London do a fantastic scheme, because they can plan for the future in terms of recruitment. Is it possible for the Department to look into engaging such organisations as Transport for London, and to get more people like that to work closer with Jobcentre Plus? Speaking personally, I did a jobs fair, and I am currently working with Jobcentre Plus in Runcorn and Northwich. In my experience, they are a very easy organisation to work with: the key thing is getting employers to engage with their Jobcentre Plus. Is there more that can be done about that?

Mr Hoban: Let’s look at the Work Programme and employers first, and then move on to Jobcentre Plus. The issue of engagement between the Work Programme and employers is a challenge. Different Work Programme providers have different approaches, so some will focus predominantly on SMEs rather than larger employers. Some employers-particularly big employers with a national recruitment model-find it difficult to engage with the Work Programme. Some of the Work Programme providers themselves are actually working on this, and finding a common sales force, or a common point of contact between the Work Programme and national employers, to increase their engagement. There is more we can do on that. The CBI are very supportive of the Work Programme, and are continually seeking ways in which the relationship between the Work Programme and large employers can be strengthened. Sometimes Work Programme providers find large employers to actually be quite difficult to work their way through: "Who is responsible for recruitment for your shop?" "Oh, I don’t know. I think it is someone in London, or someone here." There is a two­way process there of improving engagement.

On Jobcentre Plus, one of the things I am keen to do-as is Neil Couling, the director-is to actually improve the quality of our engagement between Jobcentre Plus and employers. We have got an excellent National Employer Service Team. It manages 200 accounts. I opened a Premier Inn last week in Waterloo, which just recruited 1,100 people. We have a very close relationship with Jobcentre Plus, and I did find the right people to work for that business. There are some real success stories there, and I am keen to make sure every employer has a Premier Inn level of service. We are taking steps to raise that quality of engagement. Like you, Mr Evans, there are some excellent examples of really good engagement with Jobcentre Plus and employers. People forget, I think, what Jobcentre Plus can offer. Of course, before Christmas, we launched Universal Jobmatch. Two million people are registered with Universal Jobmatch: they have their CVs, their experience and their skills on there, ready to be matched with good vacancies.

Q548 Graham Evans: You mentioned CBI. I think it would be common sense for the local Chamber of Commerce to work with the local Jobcentre Plus. Those two organisations are respected within the community, as far as I am concerned. Marrying those two together and having them work closer together might be one way of helping things along.

Mr Hoban: Absolutely. We have a really good relationship with the British Chambers of Commerce and local chambers. We have some very good partnership managers in place, whose role is to build links with local employers. The British Chambers of Commerce have very helpfully promoted schemes like the Youth Contract, the Wage Incentive and the Work Programme in their publications. We have signed a series of memoranda of understanding with trade associations. The IGD did a fantastic "Feeding Britain’s Future" event last year, giving young people the opportunity to work in the food business. This was partly as a consequence of a desire on their side-supported by Jobcentre Plus at a national and local level-to identify young people to take part in that scheme. It is a multi­channel engagement, and I would like to get it to as many employers as possible and really spread the good news about what Jobcentre Plus can do.

Q549 Teresa Pearce: On the issue about employers, engaging employers is really key. Particularly for small employers, taking on anybody is a risk, and they see it as a risk. Taking on somebody with complex needs, or who has been very far away from the workplace or maybe previously had an alcohol problem, is a bigger risk.

You said to me once before that you cannot be responsible for what the media writes, but as the Minister, you can be responsible for how your Department presents facts. I would just ask you to bear in mind that, when negative stories come out from the Department in the press about people who have been on benefit for a long time, it actually increases the discrimination against that person getting a job, because the employer reads the paper too. It is very hard for people who have had problems and who are trying to overcome them to get over that hurdle. You said to me once before that you are not responsible for what is written in the paper, and I accept that, but you are responsible for how your Department sometimes spins information. I do not believe that has happened on your watch, but it did happen previously. I would just ask you to please bear that in mind.

Mr Hoban: One of the things that, as a Department, we are very keen to do is to get some really good news stories out there about people who have faced challenging circumstances and have got into work. It incentivises and motivates people. If you can read a story about someone who has perhaps been out of work for 10 years getting a job, then you think "Well, why can’t I do that?" The press team in the Department spend a lot of time getting stories into our local papers about good news, and using case studies. I am very keen that Work Programme providers and Jobcentre Plus find good examples where someone has overcome some quite tough circumstances to get into work, because that can be very motivating.

Chair: I was about to say: if you can get good news stories into the press, please tell us. We would all like to know how.

Mr Hoban: Our finest minds are working on it, but it actually does work. Local newspapers are much better at this than national newspapers. On the point about employers, the Federation of Small Businesses make the point to me frequently that actually smaller employers can be much better at accommodating people with more complex needs. They are less likely to have a rigid recruitment process that weeds people out. They are likely to be more flexible, and they will take a view on circumstances.

At one of the roundtables last week, I was talking to Nacro, who are trying to get employers to think very carefully about whether they have a box on their form asking for a CRB (Criminal Records Bureau) check. They are asking "Does your business actually need to have a CRB check for someone to be employed in it?" They are really pushing that challenge, because some of those ways they use to weed people out act as a real barrier to people with all kinds of challenging circumstances getting into work. I went to visit Freshfields, the law firm, a few weeks ago. I was looking at a project they were running with Business Action on Homelessness, and I started realising that a number of people on that programme, in that room, were ex­offenders. I asked Freshfields about this. I said "You’re a big law firm and you’re taking these people on", and their argument was "If we can do it, everyone else can do it." I think it is about positive stories, not just about employees, but about employers who are prepared to take a risk and take somebody on.

Teresa Pearce: I look forward to more positive stories about strivers.

Chair: We took some very good evidence from Timpson about their ex-offenders scheme. It was absolutely excellent.

Graham Evans: On the good news that Timpson were doing in prisons, the press went "Timpson teaches prisoners to cut keys in prison." The press will never give you anything.

Q550 Nigel Mills: I have worked quite closely with A4e, one of the providers in the East Midlands, who have an operation in my constituency. The other provider in the Midlands have their nearest operation 10 or 15 miles away. It seems much harder to get them to work with local employers who are more spread­out, perhaps away from where their location is. Is that something that you have seen as a general experience, that if there is a local branch it is easier for them to work with employers, and the further away they are from a provider, the harder that is?

Mr Hoban: Sometimes that is the case. I do not know if there is any evidence to back it up. For a number of people who arrive in work, travelling to an employer can be an issue, and it may be easier for them to get to work if the job is a mile down the road rather than 10 miles down the road. Sometimes it is a response to circumstances, and the ability or willingness of jobseekers to travel, and also the travel arrangements that are in place. We were talking about joint working earlier on, and cooperation. I think I am right in saying that Amazon have a big warehouse in the West Midlands. Providers, JCP and Amazon work together to provide the transport to get people to work. That is a really good example of partnership working in practice, but I think that sometimes providers do find jobs that are convenient for jobseekers.

Q551 Nigel Mills: One issue I have locally is that I have a proposed new supermarket turning up, which-as you can imagine for a new Morrisons in a market town-is not wonderfully popular. One idea I put to them was if they promised to take 20% of their new employees from local long-term unemployed people, perhaps working with the Work Programme provider, that might be a way of being more socially useful to the area. Sadly, they have not bothered to reply to me on that. Do you think there is actually a role, working with other Departments, to say whether big new developments should be trying to link in planning conditions and trying to recruit the long-term unemployed as part of the Work Programme?

Mr Hoban: Absolutely. There is a lot of focus on this. Developers can meet their Section 106 obligations through recruitment. I had a very good session with Land Securities, who seem to be redeveloping the whole of Victoria Street (in London SW1, near to Parliament). They have actually said that their subcontractors must recruit people from the local labour market and train them up, including those who have been long-term unemployed. They work with homelessness projects like the Passage as well, so I think people can make that contribution.

The other thing I would say on Morrisons is that last week I was in Gloucester, and I met Morrisons. They are building a new supermarket in the Railway Triangle. Richard Graham, the MP for Gloucester, will tell you all about this. They are committed to taking people on from the local community. I think a number of supermarket chains are doing this. Tesco are doing that for regeneration stores that they are opening. There is a lot of interest, I think, and employers are now increasingly seeing themselves as having an obligation to the community that they serve. If they recruit people from the local community, then local people will come and shop with them as well. I think we will need to make sure that we get the long-term unemployed and youth unemployed into those opportunities, too.

Q552 Sheila Gilmore: There is nothing new about that, and neither is it necessarily something that has to be tied to the Work Programme. One of the things we heard about yesterday was the Wembley hub, which was the result of a Section 106 and was a partnership between mainly JCP-because it predated the Work Programme, although they had got in Work Programme providers as well-and the local council. Yes, it was a Section 106. Yes, funding had gone into it. And councils have been doing this up and down the country, long before the Work Programme was implemented.

Mr Hoban: I am not saying that this is in any way new or revolutionary. I am saying that it is happening, and that more employers are interested in this. I think often councils saw Section 106 agreements as an opportunity for more infrastructure, and now skills training is an opportunity there, which I think is a good thing to be celebrated.

Q553 Sheila Gilmore: Are there still sometimes some obstacles raised that you cannot do that for procurement reasons? You sometimes hear people say "Oh, but we can’t"-

Chair: The biggest problem is often that they put certain restrictions on the qualities and qualifications they are looking for, which rules out the local unemployed people.

Mr Hoban: I think that Land Securities have a very good model of overcoming that quite happily. They are asking their contractors to recruit people with no skills and train them up, which I think is a really positive example for developers to follow. It can be done, with a will.

Q554 Nigel Mills: Obviously, this whole programme has been quite a radical change, with the payment by results and things. We are now nearly two years in. Are you now thinking that there is anything you wish you had done differently or added, or wish you could change as part of this programme, that would make it more effective, especially when other Government Departments are looking at similarly structured programmes?

Mr Hoban: I have looked at this quite carefully in the few months since I took on this role, and recognised the interest in payment by results across Government. I think, actually, it is a very bold and imaginative scheme. I think there are some really good features in there. When I have talked to other Ministers elsewhere-in other governments, not just in the UK-and have met work programme providers in Australia and my opposite numbers in Australia, I come back feeling reassured that we have made the right decisions and that we have got the right design. Going back to Ms Pearce’s comment, I do wish that we had more data from the outset. That is something that we are tackling now. One of the things that came out from Australia, although I am not sure I want to go down this route of being dictatorial, was that they insisted on the same IT system for every provider to collect data. I think that is a better and more efficient way of doing it. But I am very keen that we use data to talk about the benefits of the scheme, and also to enable us to manage the scheme and drive through continued performance improvements.

Q555 Nigel Mills: But you are not thinking that there should have been more providers in each area, or more or less competition?

Mr Hoban: One of the things that has struck me is that this has brought new people into the market: Ingeus, Maximus, G4S, Serco. There are people in the supply chains who are new to welfare-to-work programmes in the UK. You will always see different models with different strengths and weaknesses. We moved from a situation where the Department manage, I think, nearly 500 contracts directly to them managing, effectively, 40 contracts. That enables us to keep the focus on driving up performance, in a way that we were perhaps unable to before.

Q556 Debbie Abrahams: Just for clarity, really, in relation to a statement I made about the oral evidence that was given by some of the providers around the Work Capability Assessment: in response to a question about seeing any improvements in the Work Capability Assessment, the particular provider gave this example. "We had a client who was terminally ill with cancer referred to us whose life expectancy was shorter than the work-ready prognosis." I just wanted to clarify that. That is from the transcript of the oral evidence. There is still improvement to be made there.

Mr Hoban: Certainly, someone with terminal cancer should be referred, pretty much automatically, to the Support Group. I am surprised and disappointed that they were in work-related activity group.

Chair: I think that that was the point: there was no mechanism to refer them back. They clearly were not meant to be there, and if they do not turn up, they get sanctioned.

Mr Hoban: It is a good point about the referral mechanism.

Q557 Chair: Thank you very much for coming along this afternoon. It has been a long session, but, I think, a very useful one. You have clearly settled into your job over the months since we have seen you last, so thank you very much. We will now use the evidence we have received to write a report over the Easter recess, and we will be publishing some time after that. Thank you again, and let us bring the meeting to a close.

Mr Hoban: Thank you very much.

[1] Now the Jobseekers (Back to Work Schemes) Act 2013.

[2] Disability Discrimination Act 2005.

[3] Details of the Minimum Standards are published on the Department’s website at: .

[4] Note by witness: The unit cost is £8,584 per assessment.

[5] Note by Witness: I can confirm the Department does not publish data relating to job outcomes (or any other performance data) achieved by individual sub-contractors within Prime Provider supply chains. As the Minister for Employment states, Primes share this information across their own supply chains.

Prepared 20th May 2013