Welfare-to-work Contents

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 text.

A more systematic, characteristic-based assessment

1.Providing unemployed people with the right help at the right time depends on understanding the barriers which are likely to stand in the way of them making a swift return to work. If the Department is to produce the desired step-change in helping long-term unemployed people back into employment, it is vital that we more fully understand which characteristics present the greatest barriers to working, and design and test more innovative and effective provision to address them (see chapter 6). (Paragraph 22)

2.Too often in the current system characteristics which are known to be strong indicators of the likelihood of long-term unemployment are not being identified early enough. This is largely due to the lack of a systematic and thorough assessment shared across the welfare-to-work sector. The time between now and the start of the new welfare-to-work contracts in 2017 is an opportunity to develop such an assessment. We strongly support the Department’s intention to do so. (Paragraph 23)

3.The Department must develop a new standardised assessment of claimants’ barriers to work, to be completed at an early point in claims by JCP. The new assessment should be based on a check-list of characteristics, including: illiteracy and innumeracy, and poor general educational attainment; employment history over the last four years; contact with the criminal justice system; physical and mental ill-health and disabilities; housing problems and homelessness; drug and alcohol misuse; and long-term caring responsibilities. The assessment should be reviewed every three months, to reflect the fact that these types of characteristics are not always immediately disclosed or easily identifiable, and to ensure that an effective service, tailored to a claimant’s circumstances, can be developed over time. It should be shared with all contracted providers and local partners at the point of referral from JCP. We recommend that a new assessment is in place at the start of the new contracts which will replace current Work Programme and Work Choice provision in 2017. We further recommend that the Department and contracted providers track the job outcomes of different groups of claimants, broken down by the characteristics identified in the assessment, and report this data to a What Work Centre, as recommended in Chapter 6 of this Report. (Paragraph 24)

Integration of employment support with related local services

4.One of the clearest conclusions we draw from the evidence to our inquiry is that employment support for long-term unemployed people with complex needs relies on effective integration with other locally-run services, including health, housing, education and skills, and support for alcohol and drug addiction and other indicators of a generally chaotic lifestyle. There are excellent examples of JCP, contracted providers, local authorities, and other local organisations working together in co-located teams, pooling resources to address these types of issues at an early stage in benefit claims, while maintaining a central focus on employment. DWP should more actively seek to establish integrated and co-located teams more widely across Great Britain. We recommend that the Universal Support Delivered Locally pilots be expanded beyond IT and budgeting support, to include more effective integration of housing, health, education and skills, and drug and alcohol teams in single locations, each contributing part of their budget, with a clear focus on employment as the ultimate goal. (Paragraph 33)

5.We welcome the establishment of the joint DWP/Department of Health Work and Health Unit as a first step towards integration of health and employment support. For integration to be effective, we believe that some pooling of budgets will be necessary. We recommend that the Health and Work Unit test the efficacy of allocating a small part of local NHS commissioning budgets to employment support in Universal Support Delivered Locally pilot areas. We further recommend that the Work and Health Unit prioritise integration of the NHS Improving Access to Psychological Therapies (IAPT) programme with employment support, to ensure that unemployed people with depression and anxiety disorders more consistently receive appropriate and prompt support. (Paragraph 36)

A separate, specialist, voluntary programme for disabled people

6.The Government has made reducing the “disability employment gap” a priority. The configuration of contracted employment programmes from 2017 should reflect this. A separate, voluntary employment programme, for people with substantial health and disability-related barriers to employment, should be retained. The specialist programme should continue to be delivered exclusively by specialist organisations at prime and subcontractor level. There is too great a risk that consolidating support for this group into a national mainstream programme, delivered via non-specialist prime contractors, will diminish the quality and effectiveness of support available. (Paragraph 45)

7.We recommend that the Department at least double the number of places available on the new specialist programme, compared to the current Work Choice programme. We appreciate that its budgets are under pressure, and that a Comprehensive Spending Review is on the horizon. We therefore recommend that, while DWP retain a level of upfront service fee in the new specialist programme, the level be reviewed in consultation with providers, with a view to reducing the upfront costs per participant of the new programme compared to Work Choice. (Paragraph 46)

8.The next specialist disability employment programme must maintain the strengths of Work Choice and address its flaws. We recommend the new programme must:

Work Programme Plus payment model

9.The Work Programme’s innovative differential payments model has not had its intended impact on the behaviour of providers. Payment groups based largely on benefit-type have not provided an accurate proxy for the level of support required by individual participants. There are too many payment groups in the current model, with financial differentials which do not adequately reflect the relative likelihood of providers achieving an outcome for individual participants: this is both unnecessarily complicated and ineffective. There is a confusing array of referral points at which claimants are referred from JCP to the Work Programme, and many claimants would benefit from earlier referral. We welcome DWP’s acknowledgement of some of these issues and support the Department’s intention to address them in Work Programme Plus from 2017. (Paragraph 62)

10.We recommend that Work Programme Plus participants be segmented into three payment groups, based on an assessment of characteristics known to affect likelihood of long-term unemployment, as recommended earlier in this Report:

11.We strongly support the Department’s intention to reconfigure the payment-by-results model for Work Programme Plus: it must more directly incentivise providers to invest in support to tackle participants’ more challenging barriers to working. The payment model should continue to have a very strong payment-by-results element and retain the focus on sustained job outcomes, but the new model must address the current under-investment in participants who are furthest from the labour market. We therefore support DWP’s intention to introduce an “accelerator” payment model. We recommend that accelerator payments be applied in relation to the intermediate support and intensive support groups described above, based on the best available evidence on what constitutes average, good and exceptional job outcome performance in relation to these groups. We further recommend that a service fee, set at 30% of the job outcome fee, be introduced for participants in the intensive support group. (Paragraph 64)

Clearer, simpler (and generally earlier) referral points

12.Estimating the optimal point at which to refer claimants from JCP to contracted employment programmes is difficult. It must be carefully considered to minimise “deadweight” spending (money spent to help claimants back into work, where they would have done so without any intervention). It must be based on assumptions about claimants’ likely period of unemployment, and the added value, above an estimated “non-intervention level”, of the contracted support available. We are likely to return to this issue later in this Parliament, perhaps by commissioning research into whether it is possible to challenge the Government’s current deadweight assumptions and make a case for much earlier referral to particular types of contracted employment support for particular types of claimants. However, there is already a strong case for generally earlier referral to contracted providers. For Work Programme Plus, we recommend the simple referral system set out below:

A single set of clear and measurable minimum service standards

13.The changes to the payment model set out in this Report will be a more effective way of incentivising providers to provide support for people who are facing greater challenges in returning to work; but more should be done to ensure that all participants in Work Programme Plus receive an adequate level of service and are not “parked”. (Paragraph 69)

14.We reiterate the recommendation of our predecessor Committee: the Department must establish a single set of clear and measurable minimum service standards, applicable to all providers, and to which all Work Programme Plus participants are entitled. (Paragraph 70)

Learning from devolved approaches

15.Devolution of contracted employment programmes to local authorities has a number of potential benefits: effective integration of employment support with related, locally-run services; greater investment to support particular disadvantaged groups, according to local priorities; and shaping of employment programmes to match the needs of local labour markets. A process of devolution has already begun in Greater Manchester and London and it is likely in other cities with elected mayors in the future. It is imperative that DWP draws out and disseminates learning and best practice from innovative approaches being taken in devolved areas now and in the future. (Paragraph 76)

Transparency of referral and job outcome data below prime level

16.In the interests of transparency in contracted public services, and to facilitate sharing of learning and best practice, we recommend that DWP does not impose, and restricts prime contractors from imposing, restrictions on subcontractors publishing their own Work Programme Plus referral and job outcome data. (Paragraph 81)

Innovation and learning “what works”

17.DWP should more actively promote the conditions for innovation and learning in employment support. We make three recommendations to achieve this:

18.DWP deserves credit for implementing a programme which, in general, produces results at least as good as previous programmes for a greatly reduced cost per participant. It has also established a stable GB-wide welfare-to-work infrastructure and brought about efficiencies in DWP’s procurement and contract-management. It is vital that the Government continues to encourage, facilitate and invest in new and more effective approaches; it must not be forgotten that, notwithstanding the relative successes, nearly 70% of Work Programme participants are still not achieving the desired outcome of sustained employment. We owe it to the 70% to do much better. We intend to keep a watching brief on DWP’s efforts to support this group and we may return to this issue later in this Parliament. (Paragraph 87)