The Restart Scheme is helping long-term unemployed people into work but will cost the government more per person than originally anticipated, according to the National Audit Office (NAO).
Restart, which launched last year, aims to provide up to 12 months of support for people who are long-term unemployed, helping them return to work. The Department for Work and Pensions (DWP) established the scheme to help people made unemployed by the COVID-19 pandemic – £2.9 billion of funding was announced in November 2020 and it launched in June 2021. Restart was initially targeted at people required to work as part of their Universal Credit claim and who had been unemployed for between 12 and 18 months. By May 2022 these criteria had been expanded to include those who, on average had fewer barriers to work.1
DWP now estimates that Restart will achieve £2.44 of social benefits per pound spent, down from £3.80 per pound expected in the business case. However, the NAO report concludes that DWP’s approach was dictated by the need to build providers’ capacity quickly amidst the pandemic, and the Department could not significantly reduce costs per person when that capacity was no longer needed.
Shortly after the launch it became clear that far fewer referrals to the scheme were being made than expected. In response, DWP widened eligibility criteria, but still only half as many people as anticipated were participating. The lower demand was partly due to unemployment being lower than expected in the immediate aftermath of the COVID-19 pandemic, and partly because DWP’s work coaches referred fewer eligible Universal Credit claimants to Restart than expected. Restart is now expected to assist 692,000 people rather than the 1,430,000 originally estimated.
DWP employed the services of eight contractors across 12 areas in England and Wales to provide tailored support to participants. The NAO found that DWP emphasised cooperation and building capacity to encourage providers to be ready to meet the expected level of demand following the COVID-19 pandemic, which meant DWP had to focus less on competition on price and performance.
DWP had not planned how to manage the contracts in the event of demand for Restart being so much lower than it expected. Between December 2021 to July 2022, DWP renegotiated the contracts in response to the lower demand but was unable to achieve a significant reduction in price. Despite being well prepared for the renegotiations, DWP could only make limited savings because providers had entered fixed-term contracts (such as rents on large properties) and DWP could not easily set up alternative provision without disrupting the service to participants.2
The lower number of participants meant that DWP would expect to pay £1.71 billion if it did not renegotiate the contracts. DWP renegotiated a further £27 million reduction in expected costs and now expects to pay £1.68 billion in total if the expected number of participants find work. This takes the average expected cost of Restart, per participant, from £1,800 to £2,429. This is greater than comparable programmes such as the Work Programme (£1,760 per person) and the Work and Health programme (£1,560 per person).
DWP has made significant improvements to how it manages employment support contracts, although payment by results, (the system used by the DWP to pay providers) does risk providers focusing more on people that are easier to help. Recognising this, DWP introduced new customer service standards. Although providers’ performance against these is improving, our report finds that providers have mostly failed to meet the standards.
Restart providers are having more success in getting people into work than DWP had expected. For participants starting by September 2022, DWP expected 31% to eventually achieve a ‘job outcome’ of earning the equivalent of 16 hours a week on the National Living Wage for 6 months. As of September 2022, DWP estimates that Restart providers were on course to deliver this for 36% of participants. However, this strong performance is at a time of generally low unemployment and until DWP completes its evaluation, it will not be clear how many of these people would have found work anyway.
DWP is likely to use an employment support scheme such as Restart again in the event of another economic shock. The NAO recommends that the DWP should learn from Restart and work to reduce the cost of scaling up and scaling down employment support every time there is an economic shock. It should start to put in place preparations for its next employment programme now so that it can improve its scenario planning for contracts, make for a better customer experience and develop its contract management.
“The Restart scheme is proving successful in tackling systemic barriers facing people who are long-term unemployed. Fewer people than expected have required support leading to a higher cost per person than previous comparable schemes. For the future, DWP should look at how its contracts with employment support providers can be scaled up and down to respond to economic shocks, while controlling costs.”Gareth Davies, the head of the NAO
Read the full report
Notes for editors
- Between January and May 2022 the eligibility criteria for Restart were widened to include: anyone who had spent nine months on the Universal Credit Intensive Work Search Regime; claimants with some self-employed earnings but who were not “Gainfully Self Employed”; some Income Based Jobseekers’ Allowance Claimants, and people who has spent time on other Universal Credit work regimes.
- In response to the lower demand for Restart, DWP renegotiated the contracts to ensure Restart service provision was maintained at the required level of quality; reduce the risk of disputes with providers which could potentially escalate to legal challenge; and to reduce the risk of individual providers seeking separate individual and unplanned renegotiations.
- Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.