Work Programme: early signs of progress?

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.

PARTICIPATION LEVELS VARY SIGNIFICANTLY AT A LOCAL LEVEL
For a fair comparison of local participation levels, we have compared data on the numbers of Work Programme participants who receive JSA, against the total numbers of people receiving JSA, to create a ‘participation rate’.

Regionally, participation levels in the programme vary pretty significantly, with the highest levels in the north east and Yorkshire & Humber (in both, 35% of all JSA claimants have been referred) and lowest levels in the south west (27%) and east midlands (26.5%). Although this will partly be driven by the level of long-term claimants in these areas, it also suggests that in some areas the programme has taken longer to get up to speed.

Locally, the differences are more marked. The map shows the Work Programme participation rates by local authority, and tables 2 and 3 show the ten local authorities with the highest and lowest participation rates.

Percentage of JSA claimants referred to the Work Programme – local authorities ranked across England. Source: DWP – using data from June 2011 to January 2012.

The map (above) and tables (below) show participation rates among local authorities vary from 46% (Kensington and Chelsea) to 12.6% (West Dorset). Areas with the highest participation rates (shaded dark blue on the map) tend to be urban; with 19 of the 20 highest rates in urban areas, including five each in London and the west midlands. At the other end of the scale, participation rates tend to be lowest in rural areas (shaded yellow on the map); 18 of the 20 lowest participation rates are in rural local authorities.

In the areas with the highest participation rates (i.e. where a greater % of JSA claimants are also on the Work Programme) there tends to be a greater proportion of jobseekers who are long-term unemployed (a priority group). However, the variation in long-term unemployed levels does not explain the differences in participation rates across local authorities, suggesting that in many areas, particularly rural, the programme faces additional challenges in making a sufficient impact on long-term unemployment.

WHICH GROUPS ARE IN THE WORK PROGRAMME?
Participants by age – one of the primary aims of the Work Programme is to respond to the challenge of youth unemployment, and the national breakdown of participants by age band seems to follow this goal.

Across England, the three youngest age groups (18-24, 25-34 and 35-44 year olds) each accounted for more than 20% of all people on the Work Programme. However, comparison against JSA levels suggests that the youngest age group (18-24 year olds) is slightly under-represented in the programme, with 25% of all referrals aged 18-24, below the 29% of all JSA claimants aged 18-24.

Participants with disability – there are 4,760,000 people of working age across the UK who are available for and want to work (including those unemployed, and those economically inactive by would like a job). Of this group, 27% (1.3 million) are disabled, which is broadly consistent with the Work Programme statistics identifying 30% of all participants with a disability.

Participants by gender and ethnicity – the Work Programme statistics show that the levels of participants by gender and ethnicity are broadly what we would expect given data on JSA claimants. Across England, 70% of Work Programme participants are male and 30% female, which reflects the distribution of JSA claimants (67% male, 33% female).

Also, 76% of participants are from white ethnicity groups and 19% from black and ethnic minority groups (the remainder did not state their ethnicity), again matching JSA data showing that 74% of claimants are from white ethnicity groups, and 19% are from BME groups.

VERDICT SO FAR
The Work Programme is a central pillar in the government’s policies to tackle long-term unemployment, handing over delivery of welfare to work programmes to a raft of commercial, public and VCS organisations. The sheer scale of the programme – now accounting for up to half of all those on JSA if recent trends have continued – means that its success or failure will have long-term implications for those hit hardest by the economic downturn.

The data available shows that in some areas, particularly rural, the programme has taken longer to get up-to-speed and faces additional challenges in making a sufficient impact on long-term unemployment. New results from DWP are expected in August, which will show whether these areas are starting to catch-up.

The official results on outcomes – how many people are successfully finding sustainable work – will only start to appear in the autumn. However, initial suggestions are that 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.

• Stefan Noble, Emma Plunkett and Tom Smith are based at Oxford Consultants for Social Inclusion.