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There is a risk that providers of the Government’s new Work Programme might focus their attention on jobseekers who are easier to place in work, at the expense of those who face greater challenges to finding jobs, according to a report published today by the Work and Pensions Select Committee.

The report, Work Programme: providers and contracting arrangements, also warns that the £5 billion Work Programme presents significant financial risks for the Government and its service providers.  The Chair of the Work and Pensions Committee, Dame Anne Begg, said:

"We welcome the fact that the Work Programme will offer financial incentives to encourage service providers to support jobseekers who are harder to place in work. However, we remain concerned that these providers may still focus their efforts on the jobseekers who are easiest to help at the expense of those who face greater challenges, such as those with long-term health conditions. We also believe that the programme does not address the risk that there may be discrepancies in the quality of service offered within different regions.

 The financial stakes within the Work Programme are very high. Service providers, including many voluntary sector organisations, may find it challenging to remain financially viable under the payment model, and the Government could face significant costs if delivery were to collapse in a particular region. There are many uncertainties around the programme, and our report makes a series of recommendations which would help to ensure that the Government can adapt to the reality of the programme once it is up and running.”

The report welcomes many of the Work Programme's design principles, which continue the direction of the previous Government's employment programmes, particularly the Flexible New Deal.

Implementation

The programme will be implemented nationwide from June 2011, and will replace the range of existing programmes to help benefit claimants find jobs. It will be delivered on a regional basis by a framework of prime contractors, the majority of which will come from the private sector. These prime contractors will be paid by the Government based on their results in achieving sustainable employment for jobseekers. Prime contractors are expected to subcontract service provision to specialist local organisations, including voluntary sector providers.

Conclusions and recommendations

The Committee's report includes the following conclusions and recommendations:

Support for all jobseekers, including the hardest-to-help

• There is a risk that, even under the payment-by-results model, Work Programme providers might focus on the clients they assess as being easier to help. The Committee recommends that the Government keeps the payment model under review and assesses the outcomes for all participants.
• Participants in rural or remote areas or areas where job opportunities are few should not be neglected, and the Government should act to address any such disparities.

Financial risks for prime contractors and the Government

• The Work Programme creates a significant financial challenge for prime contractors. This might lead to some clients receiving lower quality support and to significant costs to the Government in responding to service failures. The Government should put contingency arrangements in place to ensure the continuity of provision for clients.
• Government payments to prime contractors should not be capped in the current economic conditions, but they should be kept under review to ensure that prime contractors do not make excessive profits if circumstances change.

Relationship between prime contractors and subcontractors

• The Department for Work and Pensions (DWP) should remind prime contractors that a key aspect of their role is to bear financial risk, rather than passing it on to subcontractors disproportionately.
• Contracting arrangements need to ensure that subcontractors are fairly managed and that prime contractors are able to hold subcontractors to account for poor performance. The DWP must establish robust and independent arbitration and sanctioning arrangements through the Merlin Standard. 

Transitional arrangements

• The committee welcomes the extension of mainstream employment support from April until June 2011, but regrets that the Government did not provide detailed financial information in relation to the transitional arrangements at an earlier stage.
• The committee is concerned that employment services for disabled people were the only services that were excluded from the list of programmes that were extended.

Monitoring and evaluation

• The Government must ensure that transparent performance data is publicly available and should commission a full independent evaluation of the programme.

Further Information

• About Parliament: Select Committees
• Topics: Employment