Frank Field MP, on the key welfare reforms needed to fix ‘broken Britain’

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The Government faces a tough task in fixing ‘broken Britain’ by 2020, but an ongoing programme of welfare reform will give it a fighting chance of seeing through this task.

Its welfare reform programme since 2010 has helped the Government make some welcome progress. Record numbers of people are now in work and the welfare bill for households below retirement age is being brought back under control.

Much of this progress has been achieved through the Government’s welfare-to-work scheme, known simply as the Work Programme. It has helped large numbers of people move from out-of-work benefits into a job, and kept them there for at least six months. The Work Programme’s overall success rate is marginally better than those programmes it replaced, and at a much lower cost per person.

That’s the good news. But the flipside of this success is that the bill taxpayers previously were asked to meet for out-of-work benefits has been switched to in-work benefits. Many of the jobs into which people have been placed since 2010 pay low wages that are then only topped up to a more adequate minimum by support from the tax credit and Housing Benefit systems. The cost to taxpayers of these two wage subsidies has grown exponentially, not only since 2010, but over the past decade. Low pay has long characterised too many regions and industries in this country, and two thirds of Britain’s poor now work for their poverty. 

One challenge which the Government will therefore need to meet head on with its welfare reform programme, is to help low-paid workers raise their earnings. The aim here is to enable people to become financially independent, thereby minimising the need to draw benefit. With the new National Living Wage of £9 an hour by 2020, the Government has a proper wage floor on which it can build. But the desired outcome can only ever become affordable (i.e. be achieved without simultaneously costing jobs) if the Government tasks the Department for Business, Innovation and Skills, in partnership with businesses and trade unions, with raising productivity. Only by increasing productivity across the board, starting in low-paying industries, can real living standards be raised and sustained over the longer term.

A second major challenge for the Government’s welfare reform programme is to extend job opportunities to the least advantaged in our communities who are participating in the welfare-to-work scheme. Those with an illness or disability, but who would like to work, as well as those aged over 50, tend to be the hardest to help into the labour market. The Government’s welfare reform programme should therefore scale up the voluntary Work Choice programme which helps people with an illness or disability overcome some of the steepest barriers that stand between them and finding work. Such an effective programme, which has produced impressive results since being rolled out on a limited scale, should then form a main plank of the new Work and Health Programme which replaces all existing welfare-to-work provision next year.

Two further moves would enhance the job prospects of the least advantaged. Those private and voluntary organisations that are paid to deliver the main welfare-to-work programme should be given the chance to help the least advantaged as early as possible during a benefit claim, and the payments on offer to these organisations to help this group find and stay in work should more accurately reflect the challenges involved in addressing those difficulties which have prevented them from working. 

Moreover, a key reform to help claimants aged over 50 will need to involve Jobcentre Plus finding out during a first signing-on meeting whether they are equipped with the computer skills that are so necessary – not only to look for work, but to hold down many of the jobs that are available in today’s jobs market. Failure to do so can result in an extended period of time on the welfare rolls. Voluntary groups, mutual and social enterprises should then be invited into Jobcentre Plus offices to help this group of claimants develop their confidence and ability with the necessary IT equipment.

Here then are two of the key challenges confronting welfare reformers who have been tasked with fixing ‘broken Britain’. Success on these two fronts – raising productivity and real wages across the board, as well as guaranteeing the prospect of work for all – would represent major progress.

By Rt Hon Frank Field MP

Rob Gray, Business 2 Business, blogs on employment support going local

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One of the striking features of the recently released Department for Work and Pensions/ European Social Fund 2014-2020 tenders is the emphasis on supporting people to find employment in priority sectors. This welcome development is due to Local Enterprise Partnership (LEP) influence and in part, based on an appreciation that overall economic growth will be hindered if we do not ensure an adequate labour supply for locally important sectors that are predicted to grow.

To ensure that providers take account of LEP data, the Invitation to Tender documents specify that providers are expected to conduct research on the labour market in the LEP area they are tendering in. Although many providers will have their own sources of labour market information (LMI) data, it is crucial that they make reference to the LEP’s priorities as described in the LEP’s Strategic Economic Plan and any supporting documents such as local growth strategies.

Providers are used to being required to take account of LMI but this time, providers are expected to demonstrate that they can establish explicit links and strong working relationships between themselves and employers in priority sectors. This is a greater challenge if the LEP’s priority sectors are predominantly comprised of small and micro-sized employers. Engaging smaller SMEs and micro-businesses is challenging because they:

  • tend to offer single vacancies rather than multiple vacancies making it less cost effective for providers to engage them;
  • need new staff to have particular attributes to meet the demands of working in a small business;
  • want to interact on an informal, one-to-one basis with providers, which can be time consuming and difficult for providers to handle alongside the more formal systems they use with larger employers;
  • have limited capacity to provide supervisory support to new staff and therefore may want providers to provide supplementary in-work support to their learners; and
  • often need additional support themselves, for instance with recruitment and induction processes as they rarely have HR staff and formal management systems in place.

There are approaches that work, as described in one of my publications: Engaging Micro-businesses: A guide for learning providers delivering skills provision for unemployed adults NIACE, 2012. But these approaches take time because they are dependent on building personal trusted relationships and, whilst feasible, they are unlikely to be ever as cost effective as supplying a few large employers.

Due to its origins in supporting disadvantaged people to find employment in the inner city of Leicester, Business2Business (B2B) has always needed, and benefitted from, strong relationships with nearby, small, hospitality and manufacturing employers; two of the priority sectors in Leicester and Leicestershire LEP area. The active involvement of Veejay and Varsha, B2B’s Managing Directors, within the local business community has enabled B2B to further diversify its links with small employers as B2B itself has expanded to deliver employment programmes across Leicestershire and beyond.

Alongside engaging employers, it will also be vital to engage participants to help them see the value of working in a priority sector. The most motivated participants are often those who most look forward to working in a particular role or occupation. Utilising sector awareness resources, incorporating employer talks and providing workplace tours and tasters are some examples of what providers might do to inspire programme participants. 
Albeit challenging, the potential benefits of succeeding will be huge. Providers will have helped disadvantaged adults enter the sectors, which LMI suggests are expanding and which are vital to the local economy. For participants, this implies a lower risk of a return to unemployment and opportunities for in-work progression. For local economies, it offers a boost by eliminating labour supply constraints in every priority sector. Because labour supply interventions have never been as focused, the magnitude of this boost, might pleasantly surprise us all.

Blog by Rob Gray, Strategy & Policy Development, Business 2 Business

Tony Wilson, Learning and Work Institute: Together we’re stronger

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Last week we launched the Learning and Work Institute.  After announcing our merger at the IntoWork Convention, this month we’re formally bringing together the expertise of Inclusion and NIACE to create a new organisation that builds on our strengths – around researching and sharing what works, influencing policy, developing new thinking and helping to implement new approaches.

And with the dust now settling on the Autumn Statement and spending review, it feels like this couldn’t come at a better time.  For ERSA members, its all change. We don’t know how much money will be going to new employment support provision but it’ll be a much more complex and fragmented system of provision in the future. However there is no space for low performance, the government’s ambitions are greater than ever: to see through its welfare reforms, implement Universal Credit, achieve full employment and halve the gap in employment for disabled people. 

Can the government transform the labour market and welfare system while the DWP reduces its spend on programmes and changes how those are delivered?  In our view, probably not – even allowing for the new money for Jobcentre Plus.  But the ambitions on employment and disabled people are the right ones, and we think that together we can go a long way towards achieving real change.  In our view, there are three priorities:

First, making localisation work.  This hasn’t always been a smooth process but there are clear successes that we can build on.  Ingeus and the Big Life Company delivering in Manchester; PeoplePlus delivering MyGo; APM in London; and so on.  In my view the big prize of devolution still eludes us – a proper local integration and alignment of objectives, governance, funding and delivery.  But we are now learning enough to have a good go at setting out how we can and should achieve that integration.  We at Learning & Work are evaluating all of the programmes mentioned above and many of you are delivering them.  Together we can develop the framework for localisation that will mean that we can invest more and achieve more for those furthest from work.  Indeed one of our first publications, Local People, Local Growth, sets out the need for a new focus on outcomes in order to make devolution work effectively.

Secondly, doing what works.  Through the Fit for Purpose project, we worked with many ERSA members to research what works and then set out how government and the industry could transform support for disabled people and those with health conditions.  The new Health and Work Programme gives us the opportunity to fix many of the problems that have beset the Work Programme in supporting these groups – around the funding model, how participants access support, needs assessment, integration with health and other services, and often the quality and appropriateness of the support being delivered.

And finally, filling the gaps in what we know.  The last few years have also demonstrated that we often don’t know what works, or don’t know well enough.  We called for an innovation fund to help to fill these gaps, and to put rocket boosters behind what have so far been incremental and often small scale trials.  It’s great news that the new Work and Health joint unit will have a fund of over £100 million to do just this.  We want to work with you on designing and implementing these new ideas – around supporting those at risk of leaving work, intervening earlier for those off work, delivering more specialist and integrated services, and improving access to wider support (in particular apprenticeships, traineeships and advanced learner loans).  

It’s clear now that the next few years are going to be tough – for providers, for public servants and for those out of work and claiming benefits.  But we want to be ambitious for the future, and together we can achieve so much more than we can apart.  Just as we did as Inclusion and NIACE, we want to work with ERSA and all of you to achieve real change.

By Tony Wilson, Director of Policy and Research, Learning and Work Institute 

Aaron Henricksen, Serco: A new perspective for employment support

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As new ideas take shape and plans are developed for introducing a more focused work and health programme, a recent Serco – LGC roundtable was a timely and lively discussion, which provided  insight into the opportunities for co-design and co-development of services as well as the challenges and priorities faced by local authorities in different parts of the country.

Certainly, the move away from a national work programme to a more localised form of delivery represents a significant change to what has gone before. It’s also becoming clear that a more coherent and joined-up service model to maximise the employability of individuals and to address severe health and psychological barriers to employment within local communities will require a new and altogether different mindset.

Future success will depend on the effective identification, selection and marshalling of a multitude of national, regional and local resources to ensure all local interventions deliver the desired outcomes. And that’s not just a case of localising existing forms of intervention; there needs to be fresh thinking and new ways of working. As was evident from the roundtable discussion, for example, there is a widely shared view that a much more joined-up approach to vocational skill interventions is essential within any programme that aims to improve employability and support sustained employment of individuals.

To some, such new levels of integration and collaboration may be seen as laudable on paper but problematic in practice. But it’s not idealistic so long as the new service delivery model has shared objectives that meet the requirements of a multitude of stakeholders on the one hand and the precise needs of local people on the other – with everyone working towards the same shared goals.

The challenge, therefore, is for a local authority to harness its existing resources and local knowledge as effectively as possible in an ever-changing and ever-tighter financial environment. It then has to bring together the diverse skills and expertise of different external parties in a way that reflects the shift of emphasis and new objectives for employment support.

Working with a facilitating partner that has the experience of managing complex multi-function contracts will certainly help in that process. It’s important to remember, though, that it’s not a case of simply replacing existing employment services. It’s much more a case of embracing the precise needs and unique characteristics of the local area and then fine-tuning service delivery to deliver tangible benefits from truly integrated and targeted interventions.

Follow the link for details on the Serco – LGC roundtable discussion with local authorities and health professionals.

Blog by Aaron Henricksen, Business Director, Serco Welfare Services

This blog was first published on 21 January via www.lgcplus.com

Matt Stokes, Nesta, on the Living Map of Jobs Innovators

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If we want more innovation in employment support, we must take time to look sideways – to understand what others are doing, to take inspiration from across the field, to go out of our way to share both our successes and our failures. This core belief is what originally inspired us at Nesta, back in 2012, to create the Living Map of Jobs Innovators, a guide to some of the most exciting things going on in the world of employment support.

Three years later, we’ve relaunched the website as a tool for the sector to continue this journey. It is completely understandable that such change does not come quickly.

When we first launched the Living Map, there was widespread concern about unemployment, under-employment and youth unemployment, and the growth of insecure and low-paid work.  We argued that existing models weren’t enough to tackle these problems, and that there was an acute need for innovation.

Today, some of those challenges (like youth unemployment and low pay) remain, while others are thankfully less pressing (like unemployment, which never reached the levels feared). And new priorities have come to the fore – the “low-pay-no-pay” cycle, the disability gap, inadequate support for people with long-term health conditions and lack of career progression to name a few.

The website has a great new look, a better user experience and loads of new innovators. You can browse, search, and filter by theme, beneficiary group or evidence level. So whether you’re looking for innovations addressing the future of work; innovations helping people in rural communities; or innovations that have a robust evidence base, you can find them with the click of a button.

We hope the Living Map will be a useful resource for people working in, and interested in, the employment sector in a number of ways.

Firstly, we want to see more sharing of good practice and innovation within the sector and across sectors, and the Living Map is our way of encouraging collaboration. The Living Map can help organisations work with one another, inform their own practice and ultimately increase their impact.

Secondly, we want people who are commissioning and referring people to services – Jobcentres, hospitals, prisons, local authorities, schools, charities, prime contract holders for example – to have a resource for finding innovative programmes..

Thirdly, we want to encourage greater collection and use of evidence. It’s essential today that we really understand the impact of what we’re doing, rather than relying on goodwill and gut feeling, and we hope to foster that culture by making clear where innovations sit on Nesta’s Standards of Evidence. (We’ve done this based on publicly available information, so please inform us if we’ve got something wrong!)

And finally, we want to uncover more great innovations, increasing their visibility and helping us understand where innovation isn’t happening. We can’t do that alone, though, so we’re inviting you to suggest your own innovations – you can do so through this quick form.

This Map is far from finished – it never will be – and we need your help to grow it. Take a look around the site, leave comments, share your experiences and get in touch with us. Your input will make the Living Map a vibrant, active community through which the sector as a whole can become more innovative and ultimately improve the experience of all who come into contact with the system.
 

Matt Stokes, Inclusive Economic Growth, Nesta

Kirsty McHugh blogs on the Spending Review

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After the dust settles…

It always takes a while for the dust to settle after any Budget or Spending Review and this year’s Osborne offering is no different.  As employment support providers, large and small, digest the Autumn Statement a number of elements are becoming increasingly clear.

First, the days of large consolidated outsourced programmes are over – at least for now.  What we have on offer from the DWP is a highly targeted Health and Work Programme focused on jobseekers with health conditions, disabilities and those who have been out of work for two years plus. This is much slimmer nationally commissioned provision than the sector has been accustomed, although many will be hoping that combined authorities might want to pitch in cash too.

We are also seeing a move from the DWP as monolithic commissioner.  We already knew that there would be devolution of commissioning in Scotland and co-commissioning in Greater Manchester.  We now know that this will be joined by co-commissioning in London and ‘co-design’ in a number of other areas.  Although very far indeed from the full devolution of employment support for which some councils and others have been calling, it does inject some necessary local authority input into the mix.

As widely predicted, health and employment has been the focus of the announcements.  Much of this is welcome. The commitment to funding health and employment innovation pilots is positive, as is the news of an additional £600 million in spending on mental health services, including talking therapies.  Lack of access to CBT and similar approaches has been a major problem for many jobseekers and their providers around the country – let’s hope the Dame Carol Black Review, due to report in the New Year, picks up the baton on this too. 

However, the devil will, as ever, be in the detail. The contract sizes for the Health and Work Programme promise to be far smaller than something like the Work Programme.  We also do not yet know the funding model.  Programmes which are wholly payment by results have not proved the most effective for these groups. This is particularly the case if the government wants the experts involved – and it would be hard to see how the provision will work if they are not.  In addition, we don’t yet know how government intends to assess and segment jobseekers to determine who should receive different types of service  – a prerequisite underpinning of good employment support.   

There is also great concern about what this might all mean for jobseekers.  From the Statement it appears that the government expects jobseekers a long way from the labour market, but who do not have an obvious health issue or disability, to stay with a much overstretched Jobcentre Plus for two years before being offered any specialist support.  So much for the principles of early intervention or invest to save.  We already know that many people cycle in and off benefit for years without acquiring the requisite consecutive amount of time unemployed to trigger referral to intensive employment support.  This is likely to be even more the case going forward.

It’s also worth noting the complete lack of any mention of youth unemployment in this week’s announcements.  Youth unemployment, as we know, tends to be politically attractive – ministers want to be seen to ‘do something’ about our young people languishing out of work. This time however there was nothing.  We know that Matt Hancock is chairing a cross government ‘Earn or Learn’ taskforce looking at putting meat on the bones of the Youth Obligation. However, I do not believe that simply sending Jobcentre Plus advisers into schools or taking young people out of eligibility for Jobseekers Allowance will solve the problem of structural youth unemployment – good quality employment support needs to be part of the mix too.

So, in conclusion, the wheel has turned.  Instead of the large consolidated programme envisaged by Lord Freud and implemented by Chris Grayling, we appear to be heading back to a world of lots of smaller programmes. The Work Programme, Work Choice et al will trundle on for some years yet; the Health and Work Programme will come into effect by 2017; ESF funded provision, whether DWP, SFA or Big Lottery Fund, will start next year.  The Scottish Government will do its own thing; joint authorities in many areas similar.  And the sector will survive on the mix of national and local contracts, corporate money, sponsorship, earned income, trusts and foundations  – depending on their sector – as it always has done.

Employment support providers will continue to serve jobseekers despite government retrenchment and ERSA is going to help them.

Kirsty McHugh
Chief Executive, November 2015

Mark Cosens, i2i, blogs about whether there should be one main employment programme or two

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These are the personal views of Mark Cosens MA MIEP @MarkCosens. Mark works for Inspire 2 Independence (i2i). i2i’s latest report on DWP Future Commissioning can be found here: http://www.enteri2i.com/metadot/index.pl?id=13716;isa=DBRow;op=show;dbview_id=2210

The two main employment support programmes, Work Programme and Work Choice, in the UK are coming to their contractual end. This is a time for the government and DWP to reflect on what they have learnt over the previous five years, and develop support that can build on this knowledge. One of the biggest questions is whether to keep two programmes, dividing jobseekers with severe disabilities onto one, and the remaining long term jobseekers onto the others, or develop one programme, that can be adapted to the needs of all those on it.

The biggest programme in town, the Work Programme, has so far helped 731,000 jobseekers into work. In its early days, Work Programme received heavy media criticism, but the programme was new, benchmarks were arbitrary, there was a steep recession and too few people had actually been on-programme long enough to register any ‘outcomes’ in DWP statistics, which is normally when a jobseeker has been in work for at least 6 months. Four years on, overall performance is strong. Latest DWP figures (September2015) show there are now more Work Programme participants achieving sustained job-outcomes than through any previous, comparable programme.

However, recently, referrals have fallen dramatically, falling by 70% in some places, and people on the programme are now mostly the ‘hardest to-help’ (over 2/3 have health conditions). These factors, along with a 100% Payment-By-Results (PBR) funding model, mean that some providers are starting to fail commercially, some are closing offices or reducing services to part-time hours and some are being consolidated in mergers and acquisitions. Ironically, despite overall success, too few people are now joining to make Work Programme operationally viable.

The second biggest employment support programme is Work Choice, which helps jobseekers with disabilities and more severe health conditions. Although a much smaller, voluntary programme, with 114,000 referrals to date, it offers ‘supported employment’ for disabled people as part of a more specialised/prescribed programme of delivery.

By 2017 Work Programme and Work Choice will end and providers are waiting to hear what government plans to implement to follow on.

Retain two main programmes
One idea is to move jobseekers receiving Employment Support Allowance (ESA) who would have been referred to Work Programme onto Work Choice, to therefore create a larger Work Choice and smaller Work Programme. This would mean continuing with two programmes in an era of austerity, which may not be a realistic prospect and it is questionable whether there would be too few jobseekers to fill two programmes. Work Choice would be expensive to expand and Work Programme relies on some economies of scale to be viable. It also isn’t clear that the provider-base could adjust to a wholly revised market-structure.

One main programme
An alternative is to merge Work Choice into an ‘evolved’ Work Programme. This would simplify services for participants, employers and stakeholders (including commissioners). It would be crucial not to lose health-expertise and ‘supported’ employment’ but they could be written into an enhanced specification requirement to explicitly cater for participants with deeper support needs. The best of current Work Choice providers could also win some contracts/subcontracts under the new programme. In my view, this would unify the sector, consolidate it around lower jobseeker volumes and send a more inclusive message. Additional incentives could be built-in to increase volunteering within the new programme (Work Programme already has an element of volunteer participation for certain ESA groups). For people with the severest of disabilities, DWP could expand eligibilities for an expanded Specialist Employment Support programme and flexibility would still remain to carry out complementary co-commissioning (with Local Authorities, Housing Associations, NHS…)

It’s crucial that DWP should bring the successful provider-base together to deliver an enhanced service. I believe this would be stronger under one main programme that is financially viable to operate. It is doubtful that Work Choice could be dramatically expanded and still perform for a much broader cross-section of harder to help jobseekers. Many Work Programme providers are doing their best to develop health expertise. An improved, combined programme, with an updated funding mechanism, stronger specification around health and enhanced minimum service standards would enable much more to be achieved, including for those with health challenges and disabilities.

Dr David Webster argues that its time to abolish benefit sanctions

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Any opinions represented within this blog are the authors and do not represent the views of ERSA.

We are ceaselessly told that benefit sanctions are a vital element in the working-age social security system. But are they? Until the later 1980s there was very little use of anything that could be called a sanction. Unemployment benefits were seen as part of an insurance scheme, with insurance-style conditions. Accordingly, as of 1986, 98 per cent of ‘disqualifications’ (as they were called) from unemployment benefit were aimed simply at avoiding giving an incentive for people to make themselves unemployed, through voluntarily leaving a job without good reason or losing it through misconduct. The maximum length of disqualification (applying since 1913) was 6 weeks.

‘Sanctions’ are almost entirely a development of the last 25 years. In pursuit of the notion of ‘active labour market policy’, the British state in a series of steps, under both Tory and Labour governments, has turned unemployment insurance into a penal system in which claimants found guilty of ‘transgressions’ (the DWP’s own word) are punished by removal of their benefits – an event that happens over a million times a year.  These ‘transgressions’ are almost exclusively very minor matters, such as missing a single interview with a Jobcentre or Work Programme contractor, or not making quite as many token job applications as the Jobcentre adviser demands. By no stretch of the imagination could they be held to make much difference to the claimant’s prospects of employment.

But the financial penalties are anything but minor. The scale is more severe than that available to the magistrates or sheriff courts (£286.80 – £11,185.20 compared to £200 – £10,000). Claimants are often reduced to hunger and destitution by the two-week ban on applications for ‘hardship payments’, and the hardship payment system itself is designed to clean people out of all resources. Moreover, this penal system lacks the safeguards which protect offenders in the mainstream judicial system. Decisions on guilt are made in secret by officials who have no independent responsibility to act lawfully, but are mere agents of the Secretary of State, currently subject to constant management pressure to maximise penalties. The claimant is not present and is not legally represented. The punishment is applied before there has been any hearing. If they get a hearing (and even before the obstacles introduced by Mandatory Reconsideration only 3 per cent of sanctioned claimants were doing so), then it is only long after the punishment. Unlike a magistrate or sheriff, the official deciding on the penalty does not have to vary it in the light of social or medical reports on its impact on the claimant or their family.

Given these characteristics, it is not an accident that the sanctions system is producing injustice on a huge scale and causing massive damage to the poorest in our society. Voluntary sector organizations regularly say that in their experience sanctions make it harder for sanctioned claimants to get work and that the threat of sanctions undermines everyone. The sanctions juggernaut is out of control.

Punishment belongs in the judicial system. We need to abolish benefit ‘sanctions’ and return to first principles. These include recognition that people are entitled to unemployment benefits when they are unemployed because they pay into the system when they are in work; and acknowledgment that the claimant’s own strategies for finding work must be respected. Employment services are not actually different from any other product: the jobseeker doesn’t have to be forced to use them if they are offering something worthwhile.

David Webster’s written and oral evidence to the House of Commons Work and Pensions Committee inquiry into Benefit Sanctions beyond the Oakley Review is at http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/work-and-pensions-committee/benefit-sanctions-policy-beyond-the-oakley-review/oral/17289.html and his other papers are at http://www.cpag.org.uk/david-webster

David Webster
Honorary Senior Research Fellow
Urban Studies
University of Glasgow

Mark Cosens from I2I questions whether there will be a Work Programme Plus or a new start for employment support?

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As we bid farewell to 2014, listen to intensified talk of devolution and anticipate a 2015 general election, more questions than answers arise around the future of ‘employment support’ services.  Even the fact that we are now using the term ‘employment support’, instead of ‘welfare to work’, indicates that significant changes are already underway.

As we reflect on the current situation, unemployment is down and employment up, which in no small measure is thanks to tens of thousands of dedicated individuals and teams delivering the Work Programme.  However, youth unemployment remains an immediate and long-term concern, and extended unemployment persists for many with deeper and more complex challenges yet to overcome. And the employment, health, housing, criminal rehabilitation and skills systems remain frustratingly disjointed. (Please sort out data-sharing protocols DWP! Please align skills incentives! And please do more than just talk about co-commissioning).

As we look to 2015, some might say that the whole system is in desperate need of reformation. And perhaps even Jobcentre Plus itself.  Because, while Jobcentres are good at moving people off-benefits and have some dedicated, caring and very effective personnel, they simply cannot deal with the needs of employers in a way that the new Universal Credit regime increasingly requires.  Indeed, Universal Credit shifts where the whole operational focus needs to be (for both Jobcentre Plus and third party providers). Currently, Jobcentre Plus just doesn’t provide the in-work-support, skills or ‘progression’ services and yet, these will be vital future focal areas for achieving redefined objectives around ‘sustainable employment’.

As people move into work but not ‘off of benefits’, the current Jobcentre Plus KPIs become increasingly meaningless. In addition, a general slowdown in social mobility (of both individuals and families) and a fast- growing skills deficit, are further compelling reasons for whole-system reform.  On a practical level, can Jobcentre Plus really hope to cope with the deepening demands of the ‘hardest to help’ in our society while cutting Disability and Lone Parent Employment Advisors and operating tighter and tighter jobseeker support services?  So cue the opportunity to now outsource more of the people-facing elements of Jobcentre Plus ‘employment support’ services and to upgrade the financial incentives for charities, public bodies and private providers to provide these services (PBR in its current application just isn’t the intended panacea)).

In future, third party providers should be able to deliver employment programmes much earlier in a jobseeker’s journey (from day one across all cohorts). Jobcentre Plus should look more like a ‘community hub’, making day-one and detailed assessments of jobseeker needs and then immediately streaming them.  The Jobcentres should only handle day-one-assessments, initial streaming, ongoing benefits claims and the administration of sanctions, with only a core management team overseeing specialist and mainstream outsourced provision.

Each ‘Jobcentre’ (would we call them that anymore? How about ‘Health, Employment and Learning Places (HELPs!)?) should deal with the ‘whole person’ under one roof, via a local partnership; offering access and informed signposting to a fully outsourced and locally-assembled set of holistic services pertaining to; employability, skills, health, money/budget/debt management (including better-off-in-work calculations), offender rehabilitation, housing, substance dependency, troubled families, volunteering and local, innovative initiatives designed to engage, motivate and offer specialist and employer-responsive support.

Change is needed. Without substantial redesign, can the ‘employment support’ system really be considered as ‘fit for purpose’?

Tim Riley from CESI outlines a way to ‘fix’ the Work Programme funding model for ESA claimants

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Last week, Inclusion published a new report, Making the Work Programme work for ESA claimants,  which sets out the problems with the funding model for Employment and Support Allowance (ESA) claimants and what could be done to fix it. The report is a part of a wider project called Fit for Purpose, supported by 22 organisations and looking at the future of employment support for people with health conditions and disabilities.  The final report will be available in the summer.

Specifically, we argue that a toxic mix of a weak economy, low referrals to the programme, changes to the rules on who is referred, under-performance and setting the targets too high in the first place have combined to lead to big shortfalls in funding and support for those on the programme. 

Our calculations suggest that around 11% of ESA claimants that are required to take part in the Work Programme would have achieved a ‘job outcome’ if the Work Programme had not been introduced. The DWP, however, set their estimate at 15%.   These targets have been missed in every contract, and as a consequence – because the Work Programme is a ‘payment by results’ programme – funding to support ESA claimants has been substantially lower than anticipated.

Of course, you could see this as a policy success: performance has been below expectations but the DWP has not had to pay so much to providers – so the risk of failure has been successfully transferred away from tax payers. But this would be a pretty short-sighted view.  The state still picks up the tab through the benefits bill, and lower funding means more people out of work for longer and receiving less support. We estimate that the money available to providers to deliver services to ESA claimants (based on DWP spend on ESA customers) is likely to be about 40% lower than was originally planned, with DWP likely to spend on average £690 per ESA claimant compared to an estimated £1,170 when the programme was designed. And this is going to get worse: as of April 2014 there are no more ‘attachment payments’ paid to providers when customers join the Work Programme, meaning that at current performance the DWP will pay providers on average only £550 per participant – which needs to cover two years of support.

When these figures are grossed up, taking into account lower referral numbers as well as lower performance, we estimate that the Government will invest less than half of what it intended to on supporting ESA customers through the Work Programme – with spending around £350 million compared to the £730 million expected.

In the event, we find evidence that Work Programme providers are actually spending a bit more than they receive from DWP on ESA participants, in order to maintain some levels of service.  In effect they are cross-subsidising from outcome payments for Jobseeker’s Allowance participants. Whilst this may be helping to paper over the problems with the payment model, it is clearly neither satisfactory nor sustainable in the longer term.

Our report sets out an alternative model that we argue should be implemented for the remainder of the programme. This new funding model is based on four key assumptions:

  • That spending should be restored for new participants to the same level as was originally intended – but foregoing the ‘savings’ that have already been banked by the Government;
  • That in return for increasing funding we should expect increased performance;
  • That the model should remain strongly outcome-based, so that risk is shared between the taxpayer and those providing services – in our proposal, around three quarters of funding would be linked to jobs; and
  • That funding should be highest for those that need the most support (and specifically, those who used to claim incapacity benefits).

Our proposed payment model is below. 

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* Same overall levels as current model, but paid over 9 months after job outcome payment.

Without reform, in our view the funding model for the Work Programme is set up to fail ESA claimants, particularly those joining over the next two years.  Whilst we and many others are rightly thinking about what should come next with ‘Work Programme Mark 2’, it is critically important that the Work Programme Mark 1 works for ESA claimants. Our report shows the failings of the current payment model for ESA groups, and a way forward that is achievable and would cost no more than the Government had planned.

Blog Post by Tim Riley, Centre for Social and Economic Inclusion