Can the Work Programme work for all user groups? - Work and Pensions Committee Contents

List of conclusions and recommendations

In this List, conclusions are set out in plain type and recommendations, to which the Government is required to respond, are set out in italic type.

Minimum Performance Levels

1.  We are concerned about the appropriateness of the Work Programme Minimum Performance Levels (MPLs) and how they were calculated by DWP. They do not appear to be sufficiently responsive to the actual economic conditions in which providers are operating. The lack of realistic MPLs results in realistic assessments of performance being difficult and makes sanctioning primes, and therefore delivering and incentivising improved performance, harder to achieve. For the next round of Work Programme contracts, we recommend that DWP devise, in collaboration with independent experts, a new method of calculating and setting MPLs which are more responsive to the state of the economy; can be more transparently calculated and applied; and can be reviewed periodically during delivery. (Paragraph 28)

Work Programme statistics

2.  Our scrutiny of the Work Programme in the early months of service delivery has been hampered by a lack of transparent official data. Official job outcome data were not made available until some 17 months after service delivery began. After many months of being unable to provide figures, because DWP claimed they would be unverified and therefore unreliable, the publication of the first official figures was accompanied by the publication of unofficial figures by the Employment Related Services Association (ERSA). Although unofficial, these were frequently referred to by Ministers as an alternative to the official figures. Such an approach to statistics is unhelpful. (Paragraph 30)

3.  We were concerned that DWP had planned to release official Work Programme referral and job outcome data on a six-monthly basis, which we believed would have been inadequate for a programme of this size and importance. We therefore welcome DWP's recent decision to move from six-monthly to quarterly reporting of Work Programme referral and performance data. (Paragraph 31)

4.  The UK Statistics Authority has recently made a number of recommendations about improvements it would like to see DWP make to the statistics it publishes on the Work Programme and pre-Work Programme employment provision. We support the Authority's recommendations. We accept that it may not be possible for DWP to take all of the recommendations into account in publishing the next tranche of official Work Programme statistics in June 2013. However, we expect the clarity, interpretation and usefulness of subsequent releases to improve in response to the Authority's report and our own recommendations. (Paragraph 33)

Options open to DWP in the event of continuing poor performance

5.  We believe that shifting market share from the lowest performing to the highest performing prime in the same Contract Package Area could boost provider performance and should be implemented during 2013. However, the "market share shift" mechanism will need to be actively, carefully and transparently managed and applied by DWP. We recommend that, in response to this Report, DWP provide further information about the scenario modelling it has undertaken to assess the likely impacts on provider performance and service quality of shifting market share between primes. We also remain unconvinced that the early termination of a prime contract could be achieved without significant disruption to services and request further details about the research DWP has conducted to assess the feasibility of contract termination and its impacts on service delivery. (Paragraph 39)

6.  We are concerned that relatively highly-performing subcontractors may suffer as an unintended consequence of market share shift between primes or in the event of prime contract termination. We recommend that, in its response to this Report, DWP make clear how it will protect highly-performing subcontractors attached to poorly-performing primes in the event that the latter lose market share or have their contract terminated. (Paragraph 40)

Attachment fees

7.  Funding within the Work Programme has been considerably diminished by lower than anticipated levels of job outcome payments to providers in the first 14 months of delivery. Attachment fees are due to end in April 2014. We recommend that DWP review the balance between attachment fees and outcome fees, and consider retaining attachment fees, to protect delivery of services, including by subcontractors. (Paragraph 43)

Provision for unsuccessful participants

8.  The first cohort of Work Programme participants will reach the end of their attachment period from June 2013. DWP must set out as a matter of urgency the support that will be in place for participants who are unsuccessful in finding sustained work during their two years on the Programme. We recommend that all unsuccessful participants should have an end of Work Programme assessment. Specialist support must be put in place for those who have made little progress. Those who have made significant progress towards sustained employment should be permitted to voluntarily extend their attachment to the Work Programme. The period in which providers are able to claim job outcome fees in relation to these participants should likewise be extended. We also recommend that DWP consider the practicalities of assigning participants who have completed the programme without success, but are close to work, to one of the other primes covering their area. (Paragraph 46)

The role of JCP in the Work Programme

9.  Improving local relationships between JCP and Work Programme staff is rightly considered a priority by DWP. We observed an improving relationship in Brent but the evidence from the official evaluation suggests a varied picture across JCP Districts and clearly more progress needs to be made. Local JCP managers must take responsibility for ensuring that the message gets through to frontline staff that good working relationships with their Work Programme counterparts are essential. (Paragraph 59)

Conditionality and sanctioning of Work Programme participants

10.  We are in favour of conditionality where it supports the policy intention of encouraging participants' effective engagement with the Work Programme. However, we are deeply concerned by evidence of the inappropriate use, or threat, of benefit sanctions against Work Programme participants and the initial findings of the official evaluation, which suggest that the processes for the application of conditionality and sanctions do not yet work effectively. We recommend that DWP conduct a review of Work Programme conditionality and sanctioning activity as a matter of urgency, with a view to ensuring that the processes are clearly understood by participants and consistently applied by both Work Programme and JCP staff, and that it publishes its findings by the end of 2013. (Paragraph 60)

Employer engagement

11.  We believe that providers should do more to prepare jobseekers for real vacancies and should desist from simply deluging employers with a random selection of CVs and poorly prepared candidates. Excellent examples exist of employers engaging effectively with Work Programme providers, in particular Transport for London's systematic engagement with all six primes operating in the capital. We recommend that DWP and the Employment Related Services Association (ERSA) encourage approaches such as these. (Paragraph 73)

12.  General awareness of the Work Programme amongst employers appears to be low. We recommend that DWP work with the welfare-to-work industry to promote the Work Programme to employers as a potentially effective recruitment partner and that DWP and ERSA produce a national action plan for engaging employers in the Work Programme before the end of 2013. (Paragraph 74)

13.  At a regional level evidence suggests that collaborative approaches, where providers work together to create employer engagement strategies, are most effective. At a local level, providers should make effective use of the experience and contacts of local stakeholders, for example by meeting regularly with local authorities and local business groups such as Chambers of Commerce, to identify employers' recruitment needs and prepare Work Programme participants for identified future vacancies. (Paragraph 75)

Accuracy of the Work Capability Assessment

14.  Providers reported some improvement in the accuracy of the Work Capability Assessment (WCA) but we also heard some quite shocking examples of participants referred to the Work Programme who had clearly been incorrectly declared fit for work following a WCA. We recommend that DWP work with providers to agree a process by which participants whom providers believe are clearly unfit for work can be referred back to Jobcentre Plus. We agree with the Minister that the process will require checks and balances to ensure that providers cannot simply refer back any participant whom they "do not want to work with". (Paragraph 84)

The Work Focused Health-Related Assessment

15.  We repeat the conclusion reached in our July 2011 Report on the Incapacity Benefits reassessment; a separate component of the Work Capability Assessment, which could focus on health-related or workplace interventions, and which might support claimants with health conditions and disabilities into work, would be particularly useful for people moving off Incapacity Benefits. We believe that, if this had been in place when the Work Programme was implemented, it could have provided a better assessment of benefit claimants' readiness for work and might have prevented inappropriate referrals. Based on the limited information which DWP has made available, its original decision to suspend the Work Focused Health-Related Assessment, and its recent decision to continue its suspension until at least April 2016, seem regrettable. We recommend that DWP provide a fuller explanation of its reasoning for its latest decision than was provided in its Written Ministerial Statement of 25 April 2013, and that it publishes the external evaluation. (Paragraph 87)

Alternative models for jobseeker segmentation and differential pricing

16.  There is growing evidence that the Work Programme is failing to reach jobseekers with the most severe barriers to employment. We recommend that DWP review Jobcentre Plus processes for identifying jobseekers with severe barriers to employment, such as homelessness and serious drug and alcohol problems, as a matter of urgency. It should also review its processes for communicating these barriers to Work Programme providers. Where appropriate, we recommend that these types of jobseekers are more consistently allocated to the JSA Early Access group, where they will attract a higher level of funding than those in the mainstream JSA groups. (Paragraph 104)

17.  There was consensus amongst witnesses that benefit type is a poor proxy for the level of jobseekers' needs and the relative cost of supporting them into work. In the longer-term, in preparation for the next round of Work Programme contracts, we recommend that DWP consider whether a more thorough assessment of jobseekers' individual barriers to work, possibly along the lines of the Australian Jobseeker Classification Instrument, should be the basis of a future needs-based differential pricing structure. (Paragraph 105)

18.  We recommend that DWP assess how a needs-based differential pricing structure might determine the level of up-front funding and the types of services required by jobseekers referred to the Work Programme and whether alternative funding models, which reward providers for achieving milestones along the way to employment, should apply to jobseekers who are furthest from the labour market. (Paragraph 106)

Funding the Work Programme

19.  The Government's intention was to fund the Work Programme, in part, from future benefit savings accrued from placing long-term jobseekers into sustained employment. We were supportive of this in principle and therefore do not believe it is appropriate, during a period of high unemployment, for the Government to retain the savings accrued as a result of the Work Programme's early under-performance. We recommend that the ring-fence around the Work Programme budget is extended to encompass alternative provision to address long-term unemployment. Part of the unexpected shortfall in Work Programme spending should be utilised to extend the Work Choice programme, to further increase resources for Access to Work, and to extend the attachment period for participants who make real progress but complete two years on the Programme without achieving a sustained job outcome. (Paragraph 110)

20.  Jobseekers with the most severe barriers to employment are often not ready to engage effectively with the Work Programme. DWP should use part of the shortfall in Work Programme spending to pilot additional pre-Work Programme provision to prepare jobseekers, such as homeless people and those with serious drug and alcohol problems, for effective engagement with the Work Programme. In commissioning this provision, DWP should draw on the expertise of specialist providers, many of which have not been involved in Work Programme delivery to the extent anticipated (see paragraph 162). We recommend that additional support is in place by early 2014. (Paragraph 111)

The "black box" approach

21.  We support a "black box" approach to service delivery; however, DWP must be clearer that this means that providers have the freedom to innovate and personalise services, free from government prescription. Despite minimal evidence of substantive personalisation thus far, we believe that a prescription-free approach is preferable to a centrally-prescribed, process-driven system, which might stifle the potential for innovation and be an inefficient use of DWP's resources. (Paragraph 119)

Minimum Service Standards

22.  We believe that the "black box" needs to be balanced by clear and measurable minimum standards so that participants know what to expect and the minimum level of service they are entitled to receive. Currently prime providers' Minimum Service Standards vary greatly in detail and measurability. Some Minimum Service Standards are so vague as to permit providers to virtually ignore some participants if they so choose. We understand the difficulties of establishing a single set of standards which could be applied by all providers but we believe it is achievable. For example, it would be perfectly possible for all providers to be required to have a face-to-face meeting to assess all participants' needs; to produce an employment action plan within a certain timeframe; and to have a face-to-face follow-up meeting, also within a specific timeframe. We recommend that DWP develop a core set of basic minimum standards applicable to all providers, and to which all Work Programme participants are entitled. (Paragraph 124)

Assuring service quality

23.  Much of the evidence we received suggested that Work Programme advisers are highly-skilled and dedicated to supporting long-term jobseekers into sustained employment. However, with average caseloads of between 120 and 180, Work Programme advisers are being forced to prioritise whom they support. We recommend that DWP and the welfare-to-work industry devise ways of bringing Work Programme caseloads down. (Paragraph 131)

24.  We understand the policy intention of randomly allocating Work Programme participants to one of the two or three prime contractors operating in each Contract Package Area (CPA); it ensures that each prime operating in the same area receives an equal number and similar mix of participants and therefore allows their performance to be more easily compared. However, we recommend that DWP explore options for introducing an element of choice of prime contractor for participants, particularly where it can be clearly demonstrated that specialist services which would benefit an individual participant are not offered by the prime to which they have been randomly referred but are available via one of the other primes operating in the same CPA. (Paragraph 132)

25.  There appears to be insufficient focus on, or responsibility for, Work Programme participants' satisfaction with the support they receive. We recommend that DWP require all prime providers to introduce standardised participant satisfaction surveys at appropriate intervals during each participant cohort's two-year attachment to the programme, including immediately after their initial attachment and at the end of the two-year attachment period. These surveys should form part of DWP's assessment of prime providers' effectiveness. It is important that the surveys ascertain how well participants understand: the purpose of the Work Programme and differentiate it from Jobcentre Plus services; why they were referred; and the level of service to which they are entitled. DWP should also be alert to the possibility that some participants will register their satisfaction with the programme merely because very little is expected of them and they are required to attend appointments with their adviser infrequently. Surveys must be designed to draw out these kinds of nuanced responses. (Paragraph 137)

26.  We welcome steps taken by the welfare-to-work industry to professionalise its frontline workforce through accreditation and continuing professional development. We recommend that DWP and ERSA continue to move towards greater professionalism in the welfare-to-work sector, by encouraging appropriate training and accreditation for all frontline advisers, for example through the Institute of Employability Professionals and other specialist organisations. (Paragraph 138)

Availability of speciality support

27.  We believe that reporting of official Work Programme data at prime level only is inadequate and does not allow us to make an assessment of the effectiveness of the whole market. In the absence of transparent official data on Work Programme referrals below prime contractor level, we cannot assess with any certainty the level of specialist subcontractors' involvement in Work Programme delivery. (Paragraph 160)

28.  We recommend that official Work Programme data show both job outcomes and referrals at subcontractor as well as prime contractor level. It is fundamentally important to know which organisations are most effective at supporting the long-term unemployed back into work; it would facilitate effective scrutiny, and help the welfare-to-work industry to establish optimal supply chains, if this information were transparently available. (Paragraph 161)

29.  Much of the evidence to this inquiry suggests that specialist providers are not involved in the Work Programme to anywhere near the extent anticipated. There is also evidence that some voluntary sector providers are funding specialist Work Programme provision from their own resources, including from charitable donations. This needs to be taken into account when calculating the overall cost of the Work Programme, including in comparison to previous welfare-to-work schemes. It may also indicate that the specialist support some jobseekers need is not available within all supply chains to the degree envisaged. DWP must ensure that it draws more extensively on the expertise of specialist providers so that the Work Programme meets the needs of participants with complex barriers to work effectively. It should also use part of the unspent Work Programme budget to commission the specialist pre-Work Programme provision for particularly disadvantaged jobseekers that we recommend earlier in this Report. (Paragraph 162)

Regulating supply chain relationships: the Merlin Standard

30.  The Merlin standard's current remit does not allow it to address subcontractors' grievances in relation to lack of referrals and the alleged imposition of unfair financial terms. We repeat our 2011 recommendation that Merlin's remit should be extended to address such issues and that it should be given more "teeth", with the power to impose financial penalties on primes which treat subcontractors unfairly. The Merlin standard's scope should also be extended to include the assessment of other stakeholders' satisfaction with the behaviour of prime contractors. We recommend that the Merlin process include an assessment of the levels of satisfaction of Work Programme participants, local authorities and local employers with the service provided by Work Programme primes. (Paragraph 167)

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Prepared 21 May 2013