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The Work Programme, people and economy: part 2

The second of a four part series on the government's controversial welfare reforms.

Deborah Padfield
3 February 2015

The workings of the Programme

Part 2 of the four-part article started yesterday. Next week, I will look at the perverse incentives built into the Programme's design and their implications for the people participating. 

What is the Work Programme?

People are referred to the Work Programme for two years. Some are categorised as unemployed (on Job Seekers Allowance, JSA). Some are unemployed because sick or disabled (on Employment & Support Allowance, ESA, plus a few still on the older incapacity benefits) but are expected within a year to become fit and to be moved to JSA. A smaller number are single parents of pre-school children (on Income Support, IS). Only the fittest of the people on ESA, those regarded as able to handle 'work-related activity', go on to the Programme. Those further from the job-market are placed in the 'Support Group' and are left alone save for periodic reassessment.

The Programme has four aims: to get more unemployed people (i) back to work (ii) quicker than previous programmes and (iii) for longer; and (iv) to reduce the back-to-work gap disadvantaging 'hard-to-help' claimants. It aimed for better results than Labour's New Deal and Flexible New Deal.

The programmes of both Labour and yet more so the Coalition have been heavily informed by the 2007 Freud Report. It was 'heralded as setting out the principles for welfare-to- work policies... outsourcing and competition; ‘black box’ delivery models in which the state allows providers complete freedom over intervention design; personalised support; and payment by results.' [TSRC]. For Freud, long-term unemployment and benefit dependence were the fruits primarily not of the job market, but of low skills and prevailing culture.

A system based on a presumption of robust self-reliance will require an entirely different set of rules than one in which significant parts of society are not given the opportunity of, or expected to, work. The difficult heritage of the passive labour market policies of the 1970s is one of welfare dependence rather than self-reliance. One of the objectives of this reform must therefore be to generate clear signals around independence, respect and mutual obligations. (Freud, p46)

It is a contentious view. TSRC (Third Sector Research Centre) believes that Freud's argument 'that enhanced conditionality and sanctions were needed to tackle the alleged behavioural causes of worklessness and the existence of a ‘dependency culture’' runs in the face of 'compelling evidence to the contrary '. That is one problem. Another is the question whether either the Programme or the work it produces is fit for purpose, if that purpose be building financial self-reliance and respect for self, work or the Programme itself. 

How does the Programme work?

When they sign on for benefits, most people spend some months (from 3 to 12) being 'supported' by JobCentre Plus (JCPlus) in their job-search or, for sick/disabled people, work-preparation. According to their age (under or over 25) and past record of claiming, and for some JCPlus' 'prognosis' of how quickly they will be fit for work, they are then transferred to one of the Programme's 18 'prime' providers, 15 of which are in the private sector. Within the Programme, people are correspondingly placed within one of nine Payment Groups, theoretically relating to the difficulty of placing them in work.

While on the Programme, jobseekers still have to sign on - usually fortnightly - at their local JCPlus. They retain an 'agreement' or 'commitment' with JCPlus binding them to weekly tasks such as looking for jobs and applying for jobs plus any activities 'mandated' by the Programme, including work-experience.

ESA claimants should be given activities individually tailored to their condition, from help with writing cvs through looking for jobs to work-experience placements. They are exempt from actually applying for work, though that is a rule sometimes breached. They are also subject to reassessment of their work-capability every few months. This intrusive and highly personal assessment—until recently run by Atos Healthcare—is known for its stressful impacts. When they are judged by JCPlus to become fit for work, they move on to JSA with its job-search requirements though for payment purposes, they stay within their original Payment Group.

Individual job-searches and applications can theoretically be monitored through Universal Jobmatch, though that is another Departmental disaster area. Failure to meet commitments result in sanctions: all (for JSA) or most (for ESA) payments are stopped for between four weeks and, at the extreme, three years. People must carry on fulfilling their 'claimant commitments' during the sanction; if they leave benefit before completing it, the sanction will restart when they sign on again.

The Programme has an 'allotted time' of two years for each person unless they achieve a 'job outcome' before then. Within those years, people moving in and out of short-term jobs return to the Programme when they lose work.

Providers were initially paid a small 'attachment fee' when people joined them, but this is being removed this year. Payment is therefore heavily reliant on 'job outcomes' - significantly more so than under Labour's New Deal and Flexible New Deal. 'Within Flexible New Deal the ratio between the initial joining fee, a successful transition into work and a sustained job outcome was roughly 40:30:30... whilst in the Work Programme the ratio is closer to 10:25:65, although it varies somewhat across the nine claimant groups.'

'Job outcome fees' are paid when people have been in work (self-employed or employed) for a total of three or six months according to their Payment Group. This time need not be consecutive; it can be accumulated from weeks or days in work and off benefit over the two years. This again differs from the consecutive employment used by the Labour programmes.

Once an outcome fee has been paid, people staying in work for further four-week blocks earn their provider a series of 'sustainment fees' extending beyond the two years. This must be consecutive, with no more than two-day breaks in work, but needn't be with the same employer. Thus providers are strongly incentivised to get people into any sort of work, however short-term, in the first two years, ideally building towards a less fragmentary work pattern by the end. Some—less than a third of—providers provide in-work training to help people sustain their employment. Levels of pay are irrelevant, provided they are high enough to get people off benefit. Outcome fees are fixed according to the Payment Group within which participants enter the Programme.

This is where 'differentiated equality' comes in: by paying providers more for clients in the Payment Groups supposed to present greater difficulty, equality of outcome should be achieved. 18-24 year-old Job Seekers thus earn smaller fees than older ones, who in turn earn less than ESA claimants and much less than those who have been on Incapacity Benefit long-term.

However, while set fees are payable for each person according to their Payment Group, Programme providers have full freedom to use the money as they think fit: its use is not tied to the individual claimant. This enhanced freedom again differentiates the Programme from Labour's creations.

Each of the Payment Groups contains a large range of work-readiness. The 'work capability assessment' dividing sick/disabled ESA claimants from unemployed Job-Seekers is tough, assessing many with significant disabilities as fit for work. It only addresses health-related disabilities, whether physical or mental. It can with difficulty include people with serious addiction problems but cannot touch those with non-medical difficulties such as illiteracy or innumeracy. Nor is it sensitive to conditions that, though severely disabling, are hard to prove or are on the medical fringes, such as pain, self-hate or lack of self-confidence. Claimants in any group can therefore have forbidding barriers to employment.

 

Part 1 you can read here.

Part 3 will look at the perverse incentives built into the Programme's design and their implications for the people participating.

Part 4 will explore the meaning and potential costs of 'success' and 'failure' for participants and asks us all to think again about the nature of our economy and our mutual responsibilities.

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