Can the Work Programme work for all user groups? Government Response to the Committee's First Report of Session 2013-14 - Work and Pensions Committee Contents

Appendix: Government Response


The Government welcomes the first report of session 2013-14 which considered whether the Work Programme works for all claimant groups.

The Government launched the Work Programme nationally in June 2011, ahead of schedule. The Work Programme is the biggest payment by results employment programme Great Britain has ever seen and along with the introduction of Universal Credit is the focus of the Government's drive to tackle long-term unemployment.

The Committee's report is supportive of most of the principles of the Work Programme but highlights some areas where the Committee have concerns. This response attempts to address those concerns.

Minimum Performance Levels

[Paragraph 28] 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.

The Department commissioned an independent review of Work Programme performance measures, led by Paul Lester CBE.

In his report, published on 27 June 2013, Paul Lester recommended that the Department should publish performance expectations alongside the performance achieved by cohorts at the 24 month stage. He recommended that these performance expectations should be derived from the same information as contractual Minimum Performance Levels; however, they should not change the contractual expectations under which providers operate.

DWP agrees that this will give a clearer representation of provider performance as the current measure (in year job outcomes as a proportion of in year referrals) is driven by referral volumes and is therefore skewed by fluctuations in referral rates and other seasonal influences. Measuring cohort performance confirms the underlying trends and enables performance comparison at points throughout the two year period that each claimant may receive support from their provider. This enables a more accurate assessment of performance improvement over time and by cohort to be made.

The Department is considering how it will incorporate these suggestions into future contractual arrangements.

Work Programme statistics

[Paragraph 33] 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.

We have requested a formal assessment of the Work Programme statistics by the UK Statistics Authority beginning in November 2013 to seek accreditation as National Statistics. The UKSA has agreed that this approach is reasonable and their Monitoring Report provided advice on specific improvements that could be made. We have already taken account of most of their recommendations and we are working with the National Statistician's best practice unit on the presentation and commentary in the First Release. It has always been our intention to look at ways we can improve these statistics in light of feedback from users' experiences, including those from this committee.

Options open to DWP in the event of continuing poor performance

[Paragraph 39] 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.

The Department is determined to drive-up performance to support as many people into sustained work as possible, to deliver best value to the taxpayer, and will use all the contractual means available to do so. The Department has reviewed market shares, based on performance delivered during the 12 months ending 31 March 2013, and adjusted shares accordingly from August 2013. This allowed sufficient time for the technical changes needed to effect the shift. Moving more referrals to the better-performing provider in an area clearly increases the proportion of people likely to gain employment, whilst giving the poorer-performer some breathing space (through lower referrals) and a strong incentive to improve. It is up to providers to ensure they have the resources in place to handle increased referrals and maintain service standards.

Contract termination remains an option available to the Department should a provider fail to improve sufficiently. This option has been examined closely, together with appropriate contingency and continuity arrangements. The Committee will appreciate that these arrangements are highly sensitive commercially, and for the present are hypothetical so must remain confidential.

[Paragraph 40] 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.

The Department requires all Work Programme prime providers to adhere to the Merlin Standard which requires them to treat their subcontractors fairly, and that includes operating a clear and reasonable process to allocate market share within their supply chains. By definition, market share shift will reward higher performing providers; those that lose market share must manage the impact on their supply chain in accordance with Merlin and their disputes process as necessary. This may involve managing referrals or terminating sub-contracts depending on the level of performance delivered, but it will be for the prime provider to determine how any loss of market share is managed. Beyond that, the Department cannot interfere in commercial relationships, but would point out that it would not be in the interest of any prime to penalise their good performers. Equally, highly performing sub-contractors will always be attractive to other primes and so even if a poorly performing prime lost their contract they would have a reasonable prospect of joining another supply chain.

Attachment fees

[Paragraph 43] 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.

Work Programme providers are paid in the main for the results they achieve, and where providers have delivered lower performance than originally anticipated it is right that they are paid less, just as they should be paid more if they deliver higher than expected performance. This is how a payment by results programme drives performance and protects the tax payer, and is a clear improvement on the programmes of the past. That said the Department monitors provider finances and the incentives available in the payment model, in order to protect delivery of services. We will continue to keep these factors under review, and can make changes if we believe them necessary.

Provision for unsuccessful participants

[Paragraph 46] 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.

From June 2013, the majority of JSA claimants returning from the Work Programme are being referred to the Mandatory Intervention Regime (MIR), an intensive Jobcentre Plus regime.

JSA and ESA claimants returning from the Work Programme have a thorough assessment interview with Jobcentre Plus to understand how best to build on their time on the Work Programme, and continue to move them closer to the labour market and towards long term sustainable employment. At their first appointment they have to agree a back-to-work plan laying out what they are required to do.

All claimants receive flexible support tailored to their individual needs. This is underpinned by a core regime of face-to-face meetings and a tough sanctions regime for those who don't take necessary steps to prepare for work.

JSA claimants who need it are subject to a more intensive regime. Jobcentre Plus provide this intensive support, which involves more frequent meetings with advisers and increased use of mandation, to the vast majority of JSA claimants returning from the Work Programme.

Those claimants who have proven that they are closer to the labour market, for example those who have had significant periods of work experience while on the Work Programme, will require less intensive support than those who haven't, which is why not all JSA claimants are referred to MIR. It is right to target additional resource at those who need it most, which is why we assess claimants and provide extra support to those with greatest needs.

Conditionality and sanctioning of Work Programme participants

[Paragraph 60] 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.

The Department has already tackled concerns about conditionality and sanctions.

Work Programme providers have the freedom to deliver services in the way they believe will lead to the best outcomes. This includes the flexibility to make activities mandatory if they choose to. When a participant fails to comply with mandatory activities the provider is expected to inform Jobcentre Plus promptly, so Jobcentre Plus can consider applying sanctions.

This innovative approach caused issues that were identified very early on in the programme. A Task and Finish working group conducted a full review of the process and systematically identified solutions that are now in place. These included:

  • Improved guidance
  • Workshops for providers/Labour Market Decision Makers (LMDM)
  • The introduction of electronic referrals from providers (still rolling out)
  • Regular analysis of decisions made to improve consistency of decision making
  • The centralisation of LMDM work.
  • The introduction of a Provider Direct Service for providers which has reduced the nugatory referrals by an estimated 50%
  • In order to ensure that our LMDM do not impose inappropriate sanctions they have the regulatory guidance in the form of the Decision Makers Guide - a document which is published internally and externally
  • Additionally we provide our LMDM with procedural guidance on how they should interpret the regulatory guidance
  • We have standardised Learning and Development programmes for LMDM to train them comprehensively on this work
  • We have introduced a Labour Market Decision Making Quality Assurance Framework that will ensure a robust process of checking a proportion of all LMDM work - identifying any inappropriately imposed sanctions and addressing any training needs of our staff.
  • Finally all claimants that receive a sanction, whether ESA or JSA, can request that the decision is firstly explained to them in detail so that they understand why the decision to impose a sanction has been taken. If they are not happy with the explanation then they can ask that the decision is formally reconsidered. At the end of the process the claimant can ultimately appeal the decision

A senior Steering Group continues to work collaboratively to ensure continuous improvement in this area.

The Department will of course keep these arrangements under review.

Employer engagement

[Paragraph 73] 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.

Work Programme providers have a range of relationships in place with employers, varying from strong strategic arrangements with national employers to tactical delivery focussed around one particular customer. Providers have the flexibility to deliver support tailored to the needs of each individual that prepares them specifically for the kinds of vacancies available in the local labour market as opposed to the more generic training delivered in the past. Providers have recognised the importance of better vacancy sourcing; job matching and in-work support to performance improvement and the achievement of sustained outcomes.

A base lining exercise was also conducted across all Jobcentre Plus Districts to identify good practice in effective collaborative working with providers. This confirmed that there are local agreements in place, where for example details of vacancies are made available to Work Programme providers via Universal Jobmatch; joint recruitment open days being held and resourced as well as providers being included in the membership of local Employer and Partnership forums.

[Paragraph 74] 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.

Work Programme providers are responsible for promoting and publicising the programme to ensure effective engagement with key stakeholders, including employers.

Whilst awareness amongst employers of the services available to them is relatively low, DWP is reviewing its employer engagement approach to enable more appropriate support to employers, including awareness of key programmes such as the Work Programme. This approach is due to be introduced across Jobcentre Plus during the summer.

In order to include Work Programme providers as a partner, JCP activities include:

  • Inviting Primes to District Employer & Partnership forums;
  • Agreement, in some locations, to share vacancies where an employer has 20 or more vacancies;
  • Successful partnership activity on large-scale recruitments;
  • JCP facilitated partnership forums at each LA level have representation from providers.

The Department is working with ERSA, National Employer Service Team and the CBI to improve employer engagement.

Accuracy of the Work Capability Assessment

[Paragraph 84] 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".

To try and improve the accuracy of initial WCA decision-making and reduce the number of cases which proceed to appeal, a number of innovations have been trialled within DWP. These include encouraging benefit applicants to submit all the available evidence at the beginning of their claim rather than only producing it for the appeal hearing; and strengthening the reconsideration process so that more decisions are reconsidered, with additional information if available, by Decision Makers and healthcare professionals, before proceeding to appeal.

The Department is currently exploring whether we can more effectively identify and segment those claimants who are likely to be particularly difficult to help back into sustained employment. This work will inform how best we can support these claimants through the Work Programme, and other available support. The timescale for this work is Autumn 2013.

The Work Focused Health-Related Assessment

[Paragraph 87] 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.

The work-focused health-related assessment (WFHRA) was introduced in October 2008 as part of the Work Capability Assessment (WCA) process. The intention behind the WFHRA was to allow claimants to explore, with an independent healthcare professional (HCP), barriers to employment which would not have been discussed in the WCA face-to-face assessment.

External evaluation found that the WFHRA was not delivering the intended outcomes and feedback from advisers was that they were of limited use. Therefore, the WFHRA has been suspended since June 2010. The latest decision to suspend was intended to give time to consider the WFHRA in the context of Universal Credit (UC) and align with the expiry of the existing Atos contracts.

Professor Harrington's second independent review of the WCA made recommendations about smoothing the claimant journey, particularly the "baton pass" between the WCA and Personal Advisers (PAs) in DWP Operations or Work Programme providers.

We have been piloting an approach to this in Handsworth and Worthing Benefit Centres (BC) and all of their linked Jobcentres to improve communications and the process within DWP. A further pilot will start soon in Wrexham BC.

The pilot has been designed to:

  • Improve the understanding of all parties involved in the end to end ESA process by closer working and sharing of knowledge and skills;
  • Ensure better sharing of WCA outcomes between ESA Decision Makers and PAs; and between PAs and Work Programme Providers;
  • Better explain to ESA claimants what it means to be in the Work Related Activity Group and for those disallowed ESA the support available on JSA ultimately to support the transition back to work;
  • Improve the claimant experience and facilitate a smoother transition from the WCA to work.

Alternative models for jobseeker segmentation and differential pricing

[Paragraph 104] 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.

The Department is currently exploring whether we can more effectively identify and segment those claimants who are likely to be particularly difficult to help back into sustained employment. This work will inform how best we can support these claimants through the Work Programme, and other available support.

The challenges of identifying people as homeless are acknowledged by the Department and we want to see if there is more we can do in respect to the guidance and/or support available to Jobcentre Plus advisers. We are exploring this through consultation with the key stakeholders: homelessness support organisations, service users and Jobcentre Plus practitioners. This will inform the design and development of research activity that will be delivered over the summer.

[Paragraph 105] 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.

The Department is always keen to improve the design of future employment programmes and will be exploring how different approaches to segmentation can better align the rewards offered to providers to the investment required to help a claimant back into sustained employment, to inform future contractual arrangements.

[Paragraph 106] 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.

The Department is always keen to improve the design of future employment programmes and will be exploring how different payment models can drive the delivery of particular results for particular claimant groups.

Funding the Work Programme

[Paragraph 110] 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.

All in-year underspends are returned to Her Majesty's Treasury.

[Paragraph 111] 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.

There is no shortfall in Work Programme expenditure to be spent. The Department has set up a Best Practice Group with members drawn from a wide range of specialist organisations to identify and promulgate best practice in supporting the most disadvantaged into work.

Also, the Department is currently exploring whether we can more effectively identify and segment those claimants who are likely to be particularly difficult to help back into sustained employment. This work will inform how best we can support these claimants through the Work Programme, and other available support.

In addition, since April this year the Department started piloting an additional job outcome payment for claimants who have recently undertaken or are still undertaking treatment for a drug or alcohol dependency. This pilot will test whether increased incentives within the Work Programme result in improved employment outcomes for this hard to help group.

Minimum Service Standards

[Paragraph 124] 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.

We undertake monthly compliance monitoring in each contract to ensure compliance with Minimum Service Levels (including when support is being delivered by sub-contractors). If the report highlights any areas of non-compliance then the Department will take steps to ensure that providers offer the necessary levels of support.

We have set up a best practice group, independently chaired by Andrew Sells. This will look at several issues, including the quality of Minimum Service Levels, to see what can be done to make them more transparent and measurable. The group was set up in March 2013 and will run for a year.

The design of the Work Programme gives providers the flexibility to design a unique and innovative approach to supporting individuals into sustained employment. This approach means it would not be feasible to centrally set Minimum Service Standards applicable to all providers.

Assuring service quality

[Paragraph 131] 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.

Compliance Monitoring Officers (CMOs) provide assurance of service delivery at individual claimant level to ensure there is effective and available specialist provision available, to meet the needs of their caseloads, particularly for those with more severe barriers to finding employment

[Paragraph 132] 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.

Random allocation is a fundamental design principle of the Work Programme and it is integral in ensuring fairness amongst providers across a Contract Package Area and in the Performance Management System and operation of Market Share Shift. The Department is currently undertaking a scoping study to assess whether it would be feasible to pilot elements of claimant choice in driving improved employment outcomes in the Work Programme; it will need to be balanced against the requirement to maintain business stability and the focus on performance.

[Paragraph 137] 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.

The Department has set minimum performance standards that providers are expected to deliver and will hold providers to these through robust performance management activities; including monthly Performance Review meetings, compliance and assurance checks, processes to validate payments and analysis of feedback on participants' experience of provision. Compliance against the Minimum Service Levels for individual participants is monitored through a monthly random sample of 1,000 cases. Individual case records are assessed in terms of quality of provision delivery, with providers required to address any shortcomings identified

The Department has commissioned an independent evaluation of the Work Programme which includes conducting two national surveys of programme participants. Results from the first of these surveys will be published in autumn 2013 and will include feedback from participants relating to their understanding of the programme, why they were referred and whether they understood it to be mandatory or not. The survey will also provide feedback on the nature and value of the support participants have received, including the frequency of contact, types of support being offered, comparisons with Jobcentre Plus support and details of any sanctions incurred by failure to participate. Another survey will be conducted with the same group of participants when they have completed the full two-year period in early 2014.

The Department has introduced a complaints process whereby individuals who feel they have not received adequate support or are otherwise dissatisfied with their provider, should first raise their complaint directly with the provider through their formal complaints process. If individuals have exhausted the provider's complaint process and are still unhappy they can escalate the issue to the Independent Case Examiner (ICE). The role of ICE is to act as an independent referee for people who may feel that Government agencies or businesses have not treated them fairly or have not dealt with complaints in a satisfactory manner. We have also put a clause in all contracts that if a provider fails to resolve a complaint about their service and the Independent Case Examiner finds them to be at fault then they may be required to pay costs of up to £5,000.

[Paragraph 138] 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.

The Department welcomes the Committee's comments, whilst noting that the training and accreditation of front line advisers is ultimately a matter for providers.

Availability of speciality support

[Paragraph 161] 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.

We cannot accept this recommendation for a number of reasons. The primary reason is that different subcontractors offer varying levels of support to Work Programme participants. Some deliver end to end support and some deliver short specialised one off support.

All official statistics on the Work Programme are verified by the Department, currently this is for the 40 prime contracts. To provide this level of statistics for the 800 subcontractors would be impractical.

[Paragraph 162] 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.

For the Work Programme to be successful we expect providers to tap into the experience, knowledge and specialist skills of local and specialist organisations partners. In fact the latest stock-take of the Work Programme supply chain shows that 43% are from the voluntary and community sectors, and charities.

As stated previously, Ministers have commissioned a Best Practice Group, with significant input from the voluntary and community sectors and charities, to identify and promulgate best practice in supporting the most disadvantaged.

There is no Work Programme underspend available to the Department.

Regulating supply chain relationships: the Merlin Standard

[Paragraph 167] 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.

The Merlin Standard is a relatively new measure and continues to evolve. The Committee will want to note that the Department, the Merlin Advisory Board and emqc Ltd (the Merlin Standard Assessment and Accreditation Service Provider) will, later this year, be seeking views and information on the experience of stakeholders during the first two years of the operation of the Standard. Responses, including those of the Committee, will help inform the evolution of the Standard and help tackle the myths and misunderstanding that persist.

The Merlin Standard is a measure of excellence in the management of supply chains and, whilst the Standard would expect lead/prime contractors and their potential/actual subcontractors to negotiate acceptable contract terms, the Standard in itself cannot prevent organisations from signing up to terms that they later regret.

DWP is aware of suggestions that the Merlin Standard does not have teeth. DWP does not accept this assertion and points out that Work Programme Primes are contractually required to comply with the Merlin Standard from day 1 and throughout the period of their contract. This includes that funding arrangements should be fair, proportionate and not causing undue financial risk for SCPs, and that pre-contract agreements are followed post-contract with any changes explained and agreed.

Should a Prime fail to meet these conditions on reassessment they can face sanctions, and may ultimately lose their contract.

DWP also feels that the Committee will want to note that each assessment is paid for by the Prime provider and reassessments are not discounted. Also, to receive additional referrals under Market Share Shift, the Prime contractor must have attained accreditation.

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