Executive Summary

National Audit Office Value for Money Report

1. There are 9.8 million disabled people in Great Britain [Footnote 1] around one in six of the population. In 2004, of the 6.7 million disabled people of working age, 50 per cent were in employment compared to 75 per cent of the working age population as a whole. The Government has committed itself to increasing the employment rate of disabled people and to reducing the difference between their employment rate and the overall rate by 2006 and further by 2008.
    
2. This report provides an overview of the specialist employment programmes and schemes to help disabled people find and retain work and shows how they have evolved (Part 1). It also examines whether these are effective at getting disabled people into work and helping them sustain and retain employment (Part 2); whether they are accessible and of suitable quality (Part 3); and, considers whether the employment programmes and schemes are cost effective (Part 4).
   
   

   Disabled people face a range of barriers to finding and retaining work

3. Being in work can have many positive consequences for disabled people such as developing confidence and new skills, earning money, improving health, meeting people and generally being more integrated into society. Many disabled people face barriers to finding and retaining employment including negative employer attitudes. Employers often have concerns about the costs associated with employing a disabled person which they often perceive to be higher than they actually are and the need to make adaptations to premises, even though there is support available with such costs. Addressing employers' concerns will be essential if the Government is to achieve its aims in this area.
    
4. Lack of awareness of the programmes and schemes available to help find work is a barrier for many disabled people. A persons disability or health condition can also present an obstacle to retaining work, especially if the condition fluctuates, as it is not always possible to find work that can adapt to this situation. In addition, disabled people experience the same barriers to work as others, such as lack of qualifications and scarcity of jobs in their local labour market, although these can be accentuated if the disability or medical condition restricts access to certain jobs.
   
   

   The Department offers a range of support for disabled people

5. The Department for Work and Pensions (the Department) funds a broad portfolio of programmes and schemes to help disabled people find and retain work (Figure 1).[Footnote 2] These are managed by Jobcentre Plus an executive agency of the Department and contracted out to approximately 500 providers [Footnote 3] in the public, private and voluntary sectors. Disability Employment Advisers are crucial in guiding disabled people to the appropriate support, which includes Work Preparation, Workstep and the New Deal for Disabled People, or schemes such as Access to Work and the Job Introduction Scheme. Jobcentre Plus also manages the Disability Symbol.
   
   Figure 1 ("The department's specialist employment programmes and schemes for disabled people") is unavailable in this version of the executive summary.
    
6. Work Preparation and Workstep have evolved over the past 60 years in response to changing expectations about the place in society of disabled people. The New Deal for Disabled People was introduced in 2001. All now focus on helping disabled people to enter and progress within the labour market where possible. This is a departure from previous programmes such as the Supported Employment Programme (replaced by Workstep in 2001) which offered very few development opportunities. This new ethos is also reflected in the Departments Pathways to Work pilots, part of the Governments wider reforms of incapacity benefits, currently looking at ways of helping recipients into work.
    
7. Jobcentre Plus manages the programmes at a regional level to enable it to respond to varied needs across the country. There are also many government departments, agencies and voluntary sector organisations involved in employment-related support to disabled people, including the Department of Health, Department for Education and Skills and the Adult Learning Inspectorate.
    
8. The number of people receiving incapacity benefits has risen steadily since the mid-1970s but has recently stabilised. The number nearly quadrupled from 700,000 in 1979 to 2.5 million in 1997, and related benefit expenditure grew correspondingly. The growth in the caseload slowed significantly from around this time so that there are currently more than 2.6 million working age people [Footnote 4] receiving incapacity benefits [Footnote 5] at a cost of 12 billion. This is part of an overall sum of 20 billion paid on all disability-related benefits, including those not of working age, and those not associated with out of work benefits. While some of this additional expenditure is matched by a reduction in the number of people receiving other working age benefits and allowances, there remain strong financial and social incentives to ensure there are opportunities for disabled people to work if they can.
   
   

   Assessing the value for money of provision is difficult, but the longterm benefits appear to outweigh the costs of provision for many people

9. The programmes and schemes summarised in Figure 1 deliver important opportunities to disabled people but such support has a substantial cost. Estimating the value for money of the programmes and schemes is hard because progress against some of the objectives cannot be easily measured, for example, the ongoing emphasis on reducing social exclusion, or the impact on individual health.
    
10. Assessing the success of provision is made harder because data for some programmes and schemes is either incomplete or unreliable. Not all Jobcentre Plus regions know how much they have spent on some schemes, nor the exact number of participants, and departmental internal audit reports suggest that value for money may be compromised through marked variations in price or inexplicably high levels of use. For example, costs for support workers provided through Access to Work range from 6 to 46 per hour, and payments can be for up to 90 hours of support per week (where support is provided for working hours only).
     
11. An estimate of the average unit costs of providing the various programmes and schemes is at Figure 1. A simple comparison of these costs does not give an accurate picture of comparative value for money, partially because of the poor information held about some programmes but also because of the different nature of the programmes and the clients they serve. This ranges from those closest to being ready to work, in the case of the New Deal for Disabled People, to those further away from the labour market, in the case of Work Preparation and Workstep. The difference in costs also reflects the different nature, scale or intensity of assistance provided. There is also variation between programmes in the emphasis placed on sustaining employment over the longer term.
     
12. There are considerable differences in the actual unit price paid to individual providers of Work Preparation and New Deal for Disabled People. These vary widely because they are negotiated during the tendering of contracts. Workstep is more clearly defined and most providers have a contract for a pre-determined number of clients. They receive set payments for key stages from registration of new clients to progression into unsupported employment. Remploy Ltd the largest provider of Workstep is funded differently and receives a block grant.
     
13. The full administrative costs of contracting with over 500 service providers are not known, but the Department estimates that the New Deal for Disabled People alone has administrative costs in the region of 6 million per annum. In light of the Governments drive towards increased efficiency, a careful appraisal of the way in which tendering, contracting, ongoing administration and quality inspection are carried out is essential. We have highlighted a number of areas where the Department can reduce costs, increase efficiency and deliver higher quality services and better value for money (Figure 2).
    
                                
     
14. Remploy Ltd is funded by a block grant from the Government. It is the largest provider of Workstep and has an average unit cost in the factory businesses of 18,000. Given the decline of manufacturing across the UK it is unsurprising that older factories in particular find it difficult to compete effectively. Many Remploy businesses are not really sustainable in purely economic terms, although they offer a very supportive environment to their employees. Remploy Interwork, which places people primarily in outside employment with suitable support, appears to offer a more cost effective service at around 3,400 per person and accounts for three quarters of all progressions to unsupported employment. [Footnote 6]Although we accept that this model is not suitable for all Workstep participants, there remains substantial advantage in expanding this area of provision further, both in terms of reduced costs and the number of individuals who can be helped.
     
15. Calculations of the net benefit of the programmes are very complex and limitations in data, and the difficulty of estimating what would have happened to participants in the absence of the programmes, can make it impossible to quantify all impacts of a programme. However, we worked with the Department to develop an estimate of the programmes net benefits. From this, we estimate that a disabled person who moves from benefits into work will be somewhere between 18 per cent and 60 per cent better off financially. This depends upon their individual circumstances such as whether they have dependants and the number of hours they work. A disabled person moving into work is usually eligible to receive a range of support such as working tax credits and child tax credits making them better off in work. A single disabled person with no dependants who takes up a typical job [Footnote 7] as a result of one of these programmes could see their annual income rise from approximately 7,000 on benefits to around 11,000 in work.
     
16. Each person who participates in a programme or scheme costs the Exchequer money from the cost of delivering and administering the programme. When moving into a job they save the Exchequer money through reduced benefits and generate money through payment of taxes and national insurance. Their work also makes a contribution to the wealth of their employers and the country as a whole. For example, for the New Deal for Disabled People the estimated net benefit to the economy is in the region of 400 per job entry in the first year. The longer a person remains in work the more the economy benefits. We have not been able to estimate additional costs and benefits such as improved social inclusion, alterations in health and use of NHS resources and travel costs but these are all additional factors in understanding the total impact of the Departments programmes and schemes.
    
    

    What is working well with delivery of the programmes and schemes
     

17. The Department reports that it is on course to meet its target for increasing the employment rate of disabled people. [Footnote 8] In its 2004 Autumn Performance Report, the reported rate rose from 48.9 per cent to 50.1 per cent, and the gap between the rate for disabled people and the overall rate fell from 25.6 per cent to 24.6 per cent. A further one million employers were brought within the scope of the Disability Discrimination Act during the year.
     
18. The Department is well informed about the barriers to employment experienced by disabled people. The Department has commissioned extensive research and literature reviews looking at the barriers disabled people face. In each Jobcentre Plus office we visited we met experienced Disability Employment Advisers who had a detailed understanding of the barriers clients faced. A sound understanding of the problems is essential as there is no such thing as a typical client.
     
19. There is a wide range of support and options available across the programmes and schemes. The programmes offer support for a broad spectrum of needs from clients who need a high degree of assistance with building self confidence and learning key skills (available from Work Preparation) through to those who need minimal support to find work (via New Deal for Disabled People). There is some overlap between the programmes, as shown in Figure 3, which can cause some confusion for clients and providers alike. However, under its 2004 proposals in Building on the New Deal, the Department wants to move towards offering a flexible menu of provision across the programmes, offering a more tailored approach to clients.
    
    Figure 3 ("A guide to the overlap of the key programmes and schemes") is unavailable in this version of the executive summary.  
     
20. Jobcentre Plus has committed and experienced staff to advise disabled people about the programmes that best suit their needs. Advisers in local Jobcentre Plus offices play a crucial role in assessing the level of assistance a disabled person needs and are responsible for guiding them to the most suitable support. Depending upon the significance of the barriers to work faced and level of help needed to find a job, either an Incapacity Benefit Personal Adviser or Disability Employment Adviser is available. Incapacity Benefit Personal Advisers work with Incapacity Benefit clients to help them progress into employment. They can also refer people who may have significant barriers to work, and require more long- term personalised support, to a Disability Employment Adviser. We found that Disability Employment Advisers endeavoured to carve out suitable packages of support for clients from the programmes available. Many had strong ties with local employers, as well as voluntary and community sector organisations.
     
21. Many of the clients participating in the programmes are positive about their impact. The clients interviewed for this report on the whole were positive about their experience of the programmes in which they were involved either Work Preparation, Workstep or New Deal for Disabled People. In 2003-04, these programmes helped around 24,000 people into mainstream employment and provided supported employment for 27,000 people.
     
22. Providers had many positive things to say about current provision. We consulted widely with interested parties from the Department, provider groups and the voluntary and community sector who informed us of what, in their experience, are the particularly effective elements of current support and what areas need improvement (Figure 4). Good points included the client focused nature of Workstep, the flexibility of programme delivery for the New Deal for Disabled People and the opportunities for work experience provided by Work Preparation.
    
    Figure 4 ("Feedback from stakeholders about what does and does not work with the programmes") is unavailable in this version of the executive summary.
     

    Where more progress is needed
     

23. The programmes only support a small number of people who could potentially benefit. In 2003-04, there were more than 2.6 million people of working age on incapacity benefits. In comparison, around 125,000 were involved in one or more of the Departments programmes. Whilst not everyone in receipt of incapacity benefits will be able to work, many with the right support would like and be able to. Reasons for low levels of participation could include lack of awareness of the support available, fear of approaching the Jobcentre Plus in case benefits are reduced and lack of confidence to take up the help available. There are also budgetary constraints that limit the number of places and support available.
     
24. The number of progressions from Workstep into unsupported employment is low. Some 1,900 people progress into unsupported employment each year - an average rate of eight per cent. We found that in the three years since April 2001, a third of Workstep providers with clients in supported placements did not progress a single person into employment, and that 25 Workstep providers had registered no new clients since April 2001. There is also insufficient attention paid to client development. Our review of recent Adult Learning Inspectorate inspection reports found only 22 per cent of Workstep providers had satisfactory individual development plans in place for their clients.
     
25. The Department needs better management information for Work Preparation and Workstep in order to evaluate their effectiveness. At present there is very limited data about clients, making it difficult to establish whether the programmes are meeting the needs of different groups. The Department also holds little information about the type of support providers offer and therefore struggles to manage their performance. The management information available for New Deal for Disabled People is much stronger and the programme has been the subject of ongoing evaluation. The Department has undertaken some analysis of New Deal for Disabled People but the analysis for the other programmes is at a very early stage.
     
26. Many Remploy factory businesses are currently not providing value for money. In 2003-04, Remploy received 115 million, of which 95 million was spent on business activity. Many of its businesses are in the traditional manufacturing industries which are generally in decline. They struggle to be competitive, which means funding per head in some businesses (average 18,000) is disproportionate to the average salary (11,000). To maintain productivity, some factories may be reluctant to lose their most efficient employees, which contradicts the objectives of Workstep, the programme under which they are funded. In 1998, Remploy established its own recruitment services - Remploy Interwork which has proved to be much more successful at progressing disabled people into unsupported employment. It accounts for 73 per cent of all progressions from Workstep.
     
27. Jobcentre Plus has quality monitoring arrangements in place but limited resources mean inspections of providers are not always undertaken to plan. Small teams at Jobcentre Plus regional level monitor the quality of Work Preparation and Workstep provision. However, due to limited time and resources, providers are not visited as regularly as they should be. Teams also reported having little power to require providers to meet their contractual obligations or improve the quality of provision because contracts are rarely withdrawn. Shortages of programme providers in some areas can also limit this option. Since 2002, the Adult Learning Inspectorate has inspected Workstep providers, which has added more weight to the process of quality assuring provision, but latest figures suggest 53 per cent of providers are classified unsatisfactory.[Footnote 9]
     
28. The programmes focus mainly on finding work due to limited resources and difficulties targeting disabled people already in work. Not enough is currently done to help disabled people stay in employment, although there are pilots looking at retention activities. Few of the programmes and schemes with the exception of Access to Work are geared towards helping disabled people retain work. [Footnote 10]The New Deal for Disabled People is designed to provide active support to participants who find work and can help them retain work for at least the first six months. Workstep can also be used to help with retention, but we found little evidence of this happening. Disability Employment Advisers and Incapacity Benefit Advisers both stressed the importance of supporting disabled people worried about being able to maintain their jobs, but said they receive little recognition, if any, in the Jobcentre Plus performance regime for this work, which can be time consuming. The Departments for Work and Pensions and Health have launched pilots, such as the Job Retention and Rehabilitation pilot in 2003, to look at the effectiveness of different types of support at helping sick and disabled people remain in work.
     
29. Jobcentre Plus has a national employer engagement strategy, but not all jobcentre Plus areas are active in developing contact with employers. We found patchy evidence of its effective implementation at the frontline. Relations between Jobcentre Plus, programme providers and employers are vital to successfully supporting disabled people into employment. Approaches varied considerably in the Jobcentre Plus offices we visited, with some very actively involved in engaging with employers by running special events to draw them in but others having limited contact.
     
30. Disability Employment Advisers have a crucial role to play, yet their training is ad hoc. There are between 500 and 700 Disability Employment Advisers, although Jobcentre Plus does not know exactly how many or how they are being used due to regional autonomy and rationalisation. There is currently no integrated training strategy for Disability Employment Advisers although the Department informs us that a new, more structured learning and development routeway will be introduced in autumn 2005. We found some Advisers experienced delays in accessing the training that it is available and had to take on caseloads of clients with limited preparation for the role. However, Jobcentre Plus only recruits internally to the post and newly appointed Disability Employment Advisers usually have an experienced Disability Employment Adviser on hand as a mentor.
    
    

    RECOMMENDATIONS

    
    
31. The Departments broad portfolio of specialist employment programmes and schemes for disabled people is designed to support a wide range of needs within the resources which the Department is able to devote to these activities. It supports only a small number of people who could potentially benefit. Too little is understood about the effectiveness of much of the provision. Success in helping disabled people obtain work can have enormous impact for individuals and, given the costs of incapacity benefits some 12 billion in 2003-04 could save substantial amounts of public money in the long term. On the basis of our work, we consider the Department and programme providers should work together to implement the following recommendations:
    
    1. The Department should rationalise the programmes to provide a more flexible modular approach. Some of the Departments current programmes have evolved over the past 60 years and could benefit from rationalisation, which would make them easier to explain to potential clients. For example, it is not clear that there is a need for the three different programmes each managed and costed differently. In its report Building on the New Deal the Department proposed to move towards a flexible, modular approach based on client needs and our work suggests there is strong support for this approach for this client group.
       
       
    2. The Department should improve substantially its data collection and verification systems to allow it to monitor services and assess whether they are meeting the broad range of needs of disabled people. The Departments knowledge and understanding of what providers deliver is poor, largely because management information, especially for Work Preparation and Workstep, is of insufficient quality and some is held only at the regional level. Improving the information held would help the Department better track the needs of this disparate client group as well as identify if the support needed is reaching them and whether there are any gaps in provision. The Department should ensure that existing channels such as provider forums are fully used for sharing and disseminating good practice across Jobcentre Plus offices and between programme providers.
        
    3. The Department should achieve enhanced efficiency through better contracting. The Department can improve the quality and price of the services it purchases through proper benchmarking, open competition and appropriate use of its power as a bulk purchaser. The Department should, wherever possible, reduce unwarranted variations in price and minimise its own contracting and administration burden while securing higher quality products for reasonable prices.
        
    4. The Department should consider placing greater emphasis on longer term sustainability of employment for Workstep and the New Deal for Disabled People. This might include revising the payment and outcome measures and offering better incentives for providers who deliver quality provision and progress clients effectively. Some clients need higher levels of support and this could be factored into payment mechanisms for Workstep - possibly creating an expectation that levels of support and the payment for them will tail off over time. We also recommend that the Department should review the duration of contracting arrangements to allow for more certainty for higher performing providers and termination of those performing poorly.
        
    5. Jobcentre Plus should look at how to better resource its quality management arrangements for all of the programmes in order to drive up the standards of provision. Jobcentre Plus quality and performance management teams now adopt a risk-based approach to monitoring providers of both Work Preparation and Workstep, but limited resources mean some are not visited as regularly as expected. Other than inspections of Workstep providers by the Adult Learning Inspectorate, little is currently done to encourage healthy competition and raise standards amongst providers because Jobcentre Plus set their standard as contract compliance, which fails to promote and drive up provider performance. A more open discussion of quality indicators, including publication of progression figures expressed as a percentage of the contract value, may help to drive up performance. Such an approach may also encourage the spread of good practice.
       
    6. Jobcentre Plus should provide greater support and training for Disability Employment Advisers. The role of the Disability Employment Adviser is crucial to the success of the programmes. They play a key role in assessing the clients needs and subsequently routing them to the programme that best meets their requirements. However, training for Disability Employment Advisers is currently undertaken on an ad hoc basis and is not always available at the right time. Jobcentre Plus recognises the current approach to training creates a problem for consistency and will be introducing a new learning programme for Disability Employment Advisers in autumn 2005.
        
    7. The Department should focus more resources on helping people stay in work and build upon the findings from current pilots. There is insufficient support available except Access to Work to help to retain in work those disabled people who are concerned about losing their jobs due to their disability. Workstep is designed to help with retention, but we found little evidence of this happening. The job description for Disability Employment Advisers has recently been revised to include responsibility for helping clients remain in employment by working together with the client and employer. If it decided to apply its resource in this way, by providing more support to help disabled people remain in work, the Department could reduce future demand on the existing programmes and keep down the expenditure on disability benefits. More support for disabled people already in work could also offset the perceived extra costs under the Disability Discrimination Act of employing a person with disabilities and make employers more likely to employ more disabled people.
       
       RECOMMENDATIONS CONTINUED
       
    8. The Department should develop a better understanding of the needs of disabled people and analyse further how the programmes and schemes address these needs. Whilst the Department has commissioned extensive evaluation of the New Deal for Disabled People, it should continue to evaluate the effectiveness of the other programmes and schemes at meeting the needs of disabled people and preparing them for long term sustained employment. This should cover the costs and benefits of the programmes to help quantify their impacts.
        
    9. The Department should review the costs of support under the Access to Work scheme and also examine whether such high levels of public sector use is appropriate. It should consider developing a framework arrangement or approved list of suppliers so as to make use of its large user buying power and reduce the huge variation in costs for similar services and resources. We also support the Prime Ministers Strategy Unit recommendation that the Department evaluate the impact of restricting or removing access to the Access to Work scheme by central government departments given its widespread use by the public sector.
        
    10. The Department should re-engineer the profile of Remploy businesses to improve overall value for money and should ensure support is in place from Remploy Interwork or jobcentre Plus to help those individuals affected find alternative employment if necessary. Many of the Remploy businesses are not currently sustainable and are unlikely to be so in the future. The average cost per person in a Remploy business is disproportionate to the average salary and there is little scope for improvement in the traditional manufacturing businesses. There have been few progressions from Remploy businesses into unsupported employment, which is not in keeping with the current aims and objectives of the Departments programmes to progress all those people for whom it is appropriate.
         
    11. The Department, in consultation with programme providers, needs to develop a clearer strategy for engaging with employers at a local level. Engaging effectively with employers is important to the success of the programmes and schemes and more generally to ensuring disabled people are well integrated into the workplace. Although we found different approaches, such as active marketing of individual clients to specific employers and broader awareness-raising of employers legal responsibilities, constraints on time and resources mean not all Jobcentre Plus offices are able to work with employers as much as they would like.
         
    12. The Departments programmes are not the only source of support for disabled people wanting to find work. The Department should work with local authorities and voluntary and community organisations to gather information about the range of support available. Due to lack of co-ordination there are risks that services are duplicated and gaps occur in provision. We support the Strategy Units recommendation that a comprehensive on-line directory of services should be developed covering provision from all sectors, not just Jobcentre Plus.

32. ---

    1.  [back from footnote 1] The latest Department for Work and Pensions estimate, based on data from the Family Resources Survey, using the Disability Discrimination Act (DDA)definition of disability to define a disabled person.
        
    2.  [back from footnote 2] Disabled people also participate in mainstream provision such as Work Based Learning and New Deal for Young People.
       
       
    3.  [back from footnote 3] A range of organisations that offer disabled people services funded by the Department for Work and Pensions under one or more of the specialist programmes including assessment, preparing for work, finding work and in-work support.
       
       
    4.  [back from footnote 4] Pathways to Work: Helping People into Employment. The Governments response and action plan. June 2003. CM 5830. (This report refers to 2.7 million people of working age receiving an incapacity benefit. The Department confirms the actual figure is 2.63 million).
       
       
    5.  [back from footnote 5] Incapacity benefits refer to Incapacity Benefit, Income Support on grounds of incapacity, and Severe Disablement Allowance.
       
       
    6.  [back from footnote 6] These costs refer to direct costs to the Department for Work and Pensions. There is funding available from other sources.
       
       
    7.  [back from footnote 7] An individual working 38 hours per week, 5.44 per hour. Ashworth et al (2003) New Deal for Disabled People National Extension: First Wave of the First Cohort of the Survey of Registrants. No.180 Department for Work and Pensions.
        
    8.  [back from footnote 8]People with a Disability Discrimination Act defined disability and/or a work-limiting disability as defined on the Labour Force Survey.
        
    9.  [back from footnote 9] 53 per cent refers to the period June 2002 to May 2005. The Adult Learning Inspectorate have carried out over 100 inspections. 98 inspection reports were published by the end of May 2005.
        
    10.  [back from footnote 10] Retention refers to keeping someone in pre-existing work, whereas sustainment refers to keeping someone in a job found during a programme.