The Work Programme, people and economy part 3 - exploring outcomes

If you incentivise private companies to achieve X, Y and Z, they will inevitably find the easiest and lowest cost way of achieiving it. That is not necessarily the desired social outcome.

Deborah Padfield
12 February 2015

How successful is the Programme?

Let us put this in context. The Commons Public Accounts Committee tells us that 'The Department estimates that around 90% of people claiming benefits will move into a job within a year, with the remaining 10% moving on to the Work Programme. All participants on the Work Programme can therefore be considered hard to help.' Nevertheless, I was initially staggered by the poverty of expectation for these people.

The National Audit Office (NAO) says the Department's minimum performance level (MPL) for jobseekers aged 25+ is a job outcome for 33% on the WP. For new ESA claimants (harder to help than JSA, but not so hard as those longest on incapacity benefits), it was initially 22%, recently revised downward to 13%.

Of people completing the Programme, 27% of adult jobseekers have achieved the target, and 11% of new ESA claimants. It is expected that later 'cohorts' will do better. However, since 2012, people on ESA with 12-month prognoses (ie not expected to be fit for work for a year) have been sent to join the 3- and 6-month-prognosis people originally on the Programme. This must pull down the achievement figures as they come to the end of their two years. The NAO anticipates that their job outcome success rate will be 7%.

My surprise at low expectations is not shared by others. Witnesses to a 2013 Work & Pensions Committee inquiry "agreed that MPLs had been set at unrealistic levels. Ian Mulheirn of the Social Market Foundation was 'baffled' by how DWP had calculated the performance targets. His view was that the MPLs set for the Work Programme were 'macho' targets, designed to show that DWP was being tough on private sector providers. He believed... a large margin was added to the MPLs on the basis of 'pure faith that the Work Programme was brilliantly designed'."

Look again at those outcomes. The gulf between minimum and actual performance levels for adult jobseekers is not huge. That for new ESA claimants is significantly greater. Indeed, data on Programme claimant groups between 2011 and June 2013 consistently shows a pecking order of success, ranging from the most-successful JSA 'early access', whose participants have volunteered to join the Programme early, to the pitifully unsuccessful ESA claimants previously on Incapacity Benefit. As the TSRC comment, had the differential payments for each group properly incentivised attention to those claimants, outcome rates should have roughly matched expectations for each. That is not the case. 

Inequality of outcome: the 'rational response'

The inequality of outcome for claimants with bigger problems is not accidental. It is built into the WP's contractual terms.

All work programmes run the danger of 'creaming' and 'parking': selecting the most work-ready and sidelining those least likely to be successful. The Programme's emphasis on outcomes heightens this risk unless first, the payment system sufficiently incentivises attention to the hardest-to-help groups and, secondly, the groups be sufficiently homogeneous that people will not be selected within them.

Unsurprisingly, 'Work Programme providers with long-standing experience of welfare-to-work provision argued that such practices [as creaming and parking] were not just endemic but that they could also be seen as a rational response to the current payment by results model and its misalignment with the actual support needs of individual claimants across and within the claimant groups.'

In practice, payment is skewed in the opposite direction: towards those most likely to achieve outcomes.

"The spending prime contractors allocate to harder-to-help payment groups has reduced by on average 54 per cent per person from their original bids... Compared to an average of £1,360 when they bid, [a cross-section of] contractors now expect to spend £630 per person on new Employment and Support Allowance claimants. This amount is lower than their expected spending per person – £870 – for the largest Jobseeker’s Allowance payment group." [NAO]. These are averages, and different providers have different practices, but in a July 2014 statement, Work & Pensions Committee chair Margaret Hodge was forthright: the fall from £1360 to £630 per person was  'completely unacceptable'. "The fact the Department cannot force contractors to spend more highlights a considerable weakness in its governance of the programme." In November 2014, the Public Accounts Committee agreed about the problem.

The inequality is systemic. Within JCPlus, Disability Employment Advisers are far more readily available for job-seekers than disabled people: the ratio of claimant to Adviser is 140:1 for JSA and 600:1 for ESA according to the Work & Pensions Committee, which also notes a heavy imbalance in access to personal advisers between JSA and ESA claimants. In another 2014 report, on ESA, the same Committee highlights the significantly higher numbers of JSA than ESA claimants on JCPlus' specialist disability work programme Work Choice.

Responsibility for contractual weaknesses

Vilifying Programme providers is simplistic. It is the rationale and responsibility of private sector companies to deliver profit. Meanwhile, voluntary sector organisations need to work within budget. The 'absurdly' optimistic minimum performance levels set by the Department made it impossible for providers to reach their expected incomes; meanwhile, falling unemployment levels have reduced referrals, again reducing income. "The Department expected to pay contractors £1.7 billion between June 2011 and March 2014. It actually paid contractors £1.4 billion (83 per cent) because there were fewer outcomes than expected." In 2013, "Total profits were 57 per cent lower than they originally expected... Prime contractors told us that they considered the Work Programme was currently viable, but that they had concerns about the future." [NAO]. And the Department has moved the goalposts, as for example in adding the harder-to-help 12-month-prognosis ESA claimants without explaining how this was viable under an unchanged contract.

Our hearts need not bleed. Further contractual weaknesses result in payment of substantial unearned sums to providers. In respect of poorly devised 'incentive payments', in "2014-15, the Department estimated that it could pay contractors £31 million, with its total potential exposure up to 2017-18 of almost £61 million. If the Department had a more accurate measure of performance, payments would be £6 million in 2014-15 and £17 million in total." [NAO]. A further £11m has probably been paid for 'sustainment payments' that could not be validated.

These are significant errors, though unsurprising given the Department's general record; in October 2014 the NAO criticised its weak programme management and over-optimistic timescales in relation to Universal Credit. The Public Accounts Committee's November 2014 report on the Programme is similarly critical. The Work & Pensions Committee commented, unfavourably, that the Programme's "delivery began just over a year after the announcement of the policy and within six months of the publication of the final Invitation to Tender." Nor is the Department quick to learn from experience. It did not accept the validity of an October 2014 NAO recommendation that it "should avoid rolling out future programmes before it has had time to develop contracts and the performance framework." Its cautious approval of the new Child Maintenance scheme's implementation is in refreshing contrast.

Critically, it is the least powerful who pay the price. In the context of the Programme, that includes both those who fail and many who do get work.

Responsibility for weak outcomes

People are put on the Programme when JCPlus judges that they are ready for work or soon to be so. We are repeatedly told that job opportunities are rising fast. Yet it is assumed that the majority will fail. "Even if primes [prime providers] meet their contractual targets, a large proportion of Work Programme participants will reach the end of their two-year attachment period without finding sustained work. Primes accepted that the proportion was likely to be 60–70% of participants," comments the Work & Pensions Committee.

There are two possibilities - or a mixture. Perhaps it is participants who fail. That is the basic rationale of the Freud report. Government releases are subtler than tabloid stories of 'scroungers'. Nevertheless, the language is of failure of responsibility and 'something for nothing'; about lack of motivation and engagement or inadequacy - being the 'hardest to help'.

Alternatively, primary responsibility could lie with the Programme. In her July 2014 statement, Margaret Hodge said she was "angry that the Department has failed the vast majority of those referred to the Work Programme from employment and support allowance, one of the ‘hard to help groups’- with 89 per cent completing the programme without finding and staying in work."

So we have to ask what help people actually receive. Now we're back to questions of 'creaming' and 'parking', for it depends who you are. And even superficial glances at those whom the Programme dumps, and at the nature of work on offer, highlight an obvious further - or prior - question: is this the right kind of Programme, with the right kind of outcome?


You read part one of this series here, and part two here. Part four will explore the meaning and potential costs of 'success' and failure' and ask all to think again about the nature of our economy and our mutual responsibilities.

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