Work and Pensions CommitteeWritten evidence submitted by Serco Limited

The Governance of Jobcentre Plus

I. Serco thoroughly welcomes the opportunity to respond to this inquiry and to help the Department for Work and Pensions clarify the role of Jobcentre Plus (JCP) in what is a significant time for welfare reform.

II. We understand the motivations behind the removal of JCP’s executive agency status. The economic climate means that we all must focus on delivering efficient and cost effective public services, and we appreciate that JCP needed to contribute to the 40% cost reduction in the Department for Work and Pensions corporate centre. Serco believes that it is too early to draw definite conclusions about whether this structural change has realised the efficiencies the Department were aiming for, with it only being implemented in October 2011. We also believes that to effect real change there must also be several additional layers of service redesign, including in areas such as the customer journey, Key Performance Indicators and targets, partnership working with stakeholders and allocation of budget control. These are evidenced in more detail below. Serco further suggests that the parameters of this inquiry are quite narrow; in examining the role of JCP the Department must also examine its own position, considering whether a shift away from the current hybrid—a deliverer of some public services directly and procurer of others—towards a pure service commissioner is more appropriate. We would also welcome the exploration of alternative commercial models to underpin JCP, for example a public/private partnership running a JCP regional district.

JCP’s Employment Services

Approaches to identifying jobseekers’ needs and barriers to employment

III. As a Work Programme provider in two different regions of England, Serco’s frequent experience is that customers referred to us have not had their needs identified or their barriers addressed by JCP. Serco believes there needs to be an effective triage system at the beginning of the customer journey, which sits with Jobcentre Plus. This will quickly identify needs and barriers, such that the customer can be signposted to additional public services or referred to other services procured by the DWP. Understanding needs and barriers is fundamental to matching a jobseeker with sustainable work; it is crucial that the role of JCP is to place customers into long-term work rather than employment that will see the customer cycle between jobs and receipt of benefits over short periods of time.

IV. A customer-focused service such as this also supports the government and departmental agenda to increase efficiencies and decrease costs. Identifying needs and addressing barriers means that the appropriate intervention can be taken earlier; the longer someone is out of work the harder they are to support back into employment. The duration of unemployment also has a strong correlation with deteriorating physical and mental health, which whilst detracting from individual and societal wellbeing also bears a cost for other public services. An improved, upfront triage service would also see fewer customers returning to JCP, where an additional budget will be required to recommence support.

The effectiveness of the “Get Britain Working” measures

V. Serco welcomes the increased variety of support available to customers at Jobcentre Plus as a result of the Get Britain Working initiative. Serco believes that customer journeys need to be bespoke and responsive to individual needs and barriers, and the widening of service options by JCP goes a significant way to achieving this. Furthermore, choice and empowerment of the customer is fundamental to the success of a service, autonomy and control being essential to individual wellbeing and progression. Serco urges JCP to ensure that each and every customer is fully involved in discussions and decisions about their journey back to work including the selection, within eligibility criteria, of Get Britain Working options.

JCP’s role as a gateway to contracted-out services such as Work Choice and the Work Programme, including processes for referral and handover

VI. Serco strongly supports JCP’s role as a high street gateway to employment services. To improve the rate of Britain’s economic activity it is absolutely essential that there is an accessible and well known service open to all and free at the point of use. However, as we identified in paragraph III., if JCP is to fulfil the role of an effective gateway it must provide a fit for purpose and upfront assessment of individual need, followed by suitable signposting and delivery of procured services.

VII. Our frequent experience as a Work Programme provider is that customers are often allocated to an incorrect or inadequate benefit type for their needs due to poor upfront triage. This results in the referral of customers to us who have needs that Work Programme services are not designed to address. This is particularly the case with customers drawing Employment and Support Allowance. Serco recommends that JCP’s triage processes are improved to ensure appropriate onward referrals to other procured services.

VIII. To improve its role in handing over to Work Choice and Work Programme services, JCP must have also have a stronger focus on forecasting customer flows. Work Programme providers are able to deliver significantly higher performance if demand is predictable and staffing, budgeting and subcontracting arrangements can be adjusted accordingly.

IX. Serco believes that Work Programme performance would also significantly improve if referrals from JCP consistently included full information on the customer’s journey, together with the outcome of initial and on-going triage processes. We frequently have to duplicate Jobcentre Plus’ effort to gain even an initial understanding of individuals’ needs and barriers to employment. To mitigate against this, Serco recommends that the Department consider the introduction of a shared IT system across all employment services providers. We understand that this would be a significant change with cost implications; however, we believe that this would be more than recouped by the resulting efficiencies and increased performance.

JCP’s use of the Flexible Support Fund, including how spending decisions are made and evaluated

X. As with the Get Britain Working initiative, Serco welcomes the Flexible Support Fund as something that allows for greater responsive to local and individual needs and barriers. However, we are concerned that in evaluating outcomes there is no measure of its ability to support customers into sustainable employment. Serco would like to reiterate that the role of any employment service should go beyond securing job starts and should be to assist jobseekers into long-term work. Our experience in this market indicates that without metrics and targets against an outcome, it is unlikely to become an operational focus.

The effectiveness of JCP’s relationships with other key stakeholders, particularly local authorities

XI. Serco’s welfare to work delivery model is based on bringing existing service deliverers and other stakeholders together to achieve a common aim—support long term unemployed people into sustainable employment. Our experience and wider market observations demonstrate that improved working relationships, which may involve knowledge sharing, reciprocal referral arrangements or even the joint procurement of services result in more efficient, cost effective delivery with increased performance. An effective employment service must at a minimum have a full and nuanced understanding of the local labour market—size of employers, dominant and growing sectors, skill demands, demographics of the workforce and economically inactive—in order to identify and address barriers, and place customers in to sustainable employment. This understanding is significantly improved through the engagement of sector-wide stakeholders, as well as stakeholders related to single customer groups (single parents, those aged 16–24 and ex-armed forces, for example). Serco’s experience of receiving customer referrals from Jobcentre Plus is that engagement with the Probation Service is in particular need of improvement.

XII. Serco suggests that Jobcentre Plus revisits its role as a key stakeholder in employment services in light of the government’s localism agenda and introduction of community budgeting. There must be change at both the national and local level of JCP to achieve this, to grant individual and regional groups of Jobcentres more autonomy to participate in community budgeting, and to recognise at a local level that there must be a step change in the way JCP works with stakeholders. Serco welcomes JCP’s involvement in the pilot areas.

XIII. Whilst our suggested changes have so far focused on JCP’s existing remit, it is also imperative that its role is reviewed in the context of the introduction of Universal Credit. The Department for Work and Pensions must seriously consider what shape the required post-employment support for recipients of Universal Credit will look like, and whether this will sit with Jobcentre Plus. Serco suggests that this would be a significant expansion of JCP’s current role, and would need to be supported by robust staff training and the procurement of an additional and comprehensive menu of support options available to customers.

JCP’s Role in Relation to the Rights and Responsibilities of Benefit Claimants

The level and appropriateness of JCP’s use of benefit sanctions, including differences of approach between JCP Districts

XIV. As a Work Programme provider we fully support benefit conditionality. We believe that sanctions can be an effective method of increasing full engagement with employment services, facilitating jobseekers’ progression towards sustainable employment. Our experience is that sanctions have more impact and are better understood by the customer if they are imposed as soon as possible after the related behaviour; however, there is often a long lag time between our sanction requests and JCP action. Serco welcomes the significant improvement in this with the introduction of the electronic Decision Making and Appeals process, yet suggests that if benefit sanctions are to remain within JCP’s remit processes undergo further review. We would also suggest that the Department consider a restructure where the ability to sanction transfers with the customer to contracted providers, such as those delivering the Work Programme.

Supporting a Flexible Labour Market

JCP’s effectiveness in matching jobseekers to suitable job vacancies, including through the introduction of Universal Jobmatch

XV. Serco’s observation of thousands of customer journeys over the past seven years is that far too many individuals are placed into unsuitable work by JCP that, due to their needs and circumstances, is not sustained. As we have evidenced in various paragraphs above, it is crucial that the role of JCP is to place customers into long-term work rather than employment that will see the customer cycle between short term jobs and receipt of benefits. To satisfactorily fulfil this role, Serco believes that JCP must introduce more effective upfront diagnostics so each customer’s needs are understood and sustainable jobs can be sourced.

Whether JCP is sufficiently focused on sustained job outcomes as well as off-benefit flows and how this is, or should be, measured

XVI. Serco does not believe that JCP is sufficiently focused on sustained job outcomes. Whilst there are very significant benefits to there being a variety of different programmes, options and providers within the employment services market, delivery at all stages must take a fuller view of the customer journey. All providers and programmes should have a common aim and related common performance measurement of sustained job outcomes, such that the entire customer journey has the same emphasis. JCP’s current off-benefit targets create a disconnect in this regard. As we noted earlier now submission., our experience indicates that without metrics and targets against an outcome, it is unlikely to become an operational focus. Serco is pleased to see that the merits of taking a view of the full customer journey are recognised by the Total Place Community Budgets initiative, and refers the Select Committee to the following link for further evidence: http://communitybudgets.org.uk/understanding-the-as-is-position/

The Impact of Benefit Reforms

XVII. Serco welcomes the introduction of Universal Credit, and as a Work Programme provider we will work hard to ensure it is a success. It is encouraging that with an increased emphasis on making work pay there will be an added incentive for customers to find work. The online aspect of Universal Credit should also reduce the time Jobcentre Plus spends administering benefits, allowing it to have a fuller focus on employment support. Serco would like to note however that Universal Credit will significantly alter the customer journey, and consequently service delivery will need to change and meet new needs. Serco requests that JCP take a proactive role in interacting with Work Programme and Work Choice providers so a co-ordinated response to these changes can be made, particularly over the years when Universal Credit is being introduced.

Summary

XVIII. In summary, Serco would like to stress that JCP must refocus its role on delivering sustained employment outcomes. As we have evidenced, this will reduce inefficiencies and cost and allow the adage of JCP as a revolving door to be lost. This can be achieved through a much improved diagnostics process for each customer, and a change in the performance management regime of individual jobcentres and the organisation as a whole. Increased performance across the whole customer journey would also be realised if the flow of information from JCP to contracted provision was improved.

Serco is very aware that JCP’s remit must change with the current wide ranging welfare reform. We see this as a significant and positive opportunity, with the potential for timely proactive engagement with community budgeting to ensure a joined up approach to delivering employment services.

Serco would also like to reiterate opportunities for the Department for Work and Pensions to consider in the future. In particular, these are: the change in the Department’s own role towards pure service commissioner; alternative commercial models to underpin JCP; the introduction of a common IT system across all employment service providers; the transfer to contracted provision of the power to impose benefit sanctions; and the engagement of the wider employment services market and related stakeholders in the delivery of Universal Credit support.

24 May 2013

Prepared 27th January 2014