August 1, 2012

It’s controversial and has already grabbed headlines for the wrong reasons – but is the Work Programme actually working? Stefan Noble, Emma Plunkett and Tom Smith crunch the numbers

The Work Programme launched in June 2011 with the aim of helping 2.4 million people into work by 2016. The scheme opens up welfare to work initiatives to private, public and third sector contractors and is specifically focused at ‘harder to reach’ participants – those who have been, or are likely to be, out of work for the longest.

Those receiving Jobseeker’s Allowance (JSA) or Employment Support Allowance (ESA) are referred to the Work Programme after being on JSA or ESA for a certain length of time (which varies based on the benefit, and person’s age). In England only, those who receive Income Support (IS), or who receive incapacity benefits and have not yet been reassessed for ESA, are also eligible to volunteer for the programme.

WHO IS DELIVERING THE PROGRAMME?
The Work Programme is currently delivered through 40 contracts held by 19 prime contractors, and a much larger group of sub-contractors. The majority of primes are commercial organisations (84%), but voluntary/community sector organisations make up the biggest group of sub-contractors (48%).

IS PAYMENT BY RESULTS WORKING?
The programme is based on payment by results, with providers having flexibility over delivery. With a small ‘start up’ fee for each participant, the biggest payments are based on results, with a ‘job outcome payment’ if participants are in work for two to six months, and a ‘sustainment payment’ for those who find longer term work. In essence, the contractors take on the cost of running the programme, with the main payments from DWP only made on the basis of clients finding long-term jobs.

The official results on outcomes – how many people are successfully finding sustainable work – will only start to appear in the autumn. However, statistics obtained by Channel 4 News suggest that one of the largest contractors, A4e, has so far struggled to keep people in work, with only 3.5% of referred clients so far in long-term jobs – well below the minimum contract terms set by government.

It is too soon to draw hard conclusions from this data – the programme has simply not been going long enough to have many people in long-term jobs. However, if contractors are finding it more difficult than expected to place clients – a plausible scenario given the deepening recession – there are real questions over how long contractors can afford to carry the up-front costs of running the programme before dropping out or trying to renegotiate. We suspect that number-crunchers in government and the contractors will be frantically burning the midnight oil in order to provide answers.

The payment-by-results element has also attracted controversy, with A4e losing its contract on a different DWP back-to-work programme following allegations of fraud and inadequate paperwork to evidence placements into sustainable jobs.

THE SIZE OF THE PROGRAMME
The first data from DWP (published at the end of May) identified that 475,000 people participated in the Work Programme over the period from the start in June 2011 to January 2012. The monthly referrals to the programme hit an early peak in July 2011, in part due to transferring all New Deal claimants, but has since settled down to 50-60,000 per month.

To illustrate the sheer size of the programme, by January 2012 the 475,000 participants accounted for up to one-in-seven (14%) of all people on out-of-work benefits, and those receiving JSA benefit who were referred accounted for up to one-third (32%) of all JSA claimants (due to the flow of claimants on and off benefits, it is not possible to identify whether Work Programme participants are still receiving benefits until outcome data is published).

If the referrals trend into the programme has continued at the same rate, we might expect up to half of all JSA claimants to now be on the programme (as of July 2012) – we’ll know more when the next DWP statistics are published in August.