"The Department for Work and Pensions has made a
significant effort to learn the lessons of previous welfare to work
programmes. It is too early to judge the success of the Work
Programme, which will depend on whether the Department can get more
people into work than previous programmes.
"The Department has set providers stretching performance
targets and it needs to ensure that they do not cut corners to stay
in profit, such as targeting easy to reach people, reducing service
levels or treating sub-contractors unfairly."
Amyas Morse, head of the National Audit Office, 24
January 2012
The Department for Work and Pensions has introduced the Work
Programme quickly, in just over a year, and this has had benefits,
but the speed with which it was launched has also increased risks,
according to the National Audit Office. The Department and
providers have made assumptions about how many people the Programme
will get back into work but there is a significant risk that they
are over-optimistic.
The Programme, which replaces virtually all of the existing
‘welfare to work’ schemes, has a number of innovative design
features that address weaknesses in previous schemes. Providers are
paid primarily for the results they achieve in supporting people
into employment so what the provider earns is tied to performance.
Providers will receive higher rewards for supporting harder to help
claimant groups into work and are paid partly out of the benefit
savings they help to generate. There is more potential for
competition between providers.
However, assumptions about the feasibility of the Programme
might be over-optimistic. The NAO’s analysis suggests that 26 per
cent of the largest group of job seekers in the Programme will get
jobs, compared to the Department’s estimate of 40 per cent. Some
contractors in areas of high unemployment may struggle to meet
nationally set targets. It is possible that one or more contractors
will get into serious financial difficulty during the term of the
contracts. Today’s report also points out that no alternatives to
the Programme were considered as part of the business case, nor was
it piloted to test assumptions.
It has so far cost £63 million to terminate existing welfare to
work contracts, including contracts with ten providers that went on
to win contracts for the Programme. Two former contractors have not
yet agreed settlements.
The IT project to support the Programme was not fully functional
when the Programme was launched. A consequence is that the
Department will not be able, until March 2012 at the earliest, to
carry out automatic checks to confirm that people who find work
have stopped claiming benefits. The Department needs to ensure that
improvements to the IT system are delivered on schedule. In the
meantime, there is an increased risk of fraud and error going
undetected.
Fewer clients than expected are being referred onto the
Programme as part of the ‘harder-to-help’ category. Some have been
found to be ‘fit for work’ and switched into other categories and
it is taking the Department longer to process assessments and
appeals. As a result, some sub-contractors are frustrated at the
speed with which clients have been referred to them.
Publication details:
HC: 1701, 2010-2012
ISBN: 9780102977073