The Work Programme
The Work Programme is the Government’s replacement for Labour’s Flexible New Deal which in turn was preceded by various New Deal programmes. The new programme will have three new features which are distinctive and potentially positive. First, it will operate a single programme for multiple client groups but with three different major fee rates. Providers running the programme will receive fees for helping clients into sustained work with the regular adult unemployed forming the bulk of the cheapest group. The young unemployed are the main group in the middle tier and those with significant disabilities forming the most expensive tier. This step has been planned for some time with the move to Employment Support Allowance replacing Incapacity Benefits and the development of a welfare to work strategy for the disabled. However, this integration is the first time that the UK has operated a clear unified programme which offers real hope of reducing long-term marginalisation of this group from the labour market. The second major advance is that the full payment to providers for getting people into work will not be paid until a person has been in work for a year rather than 6 months, and two years for the sick and disabled. This will encourage providers to think more about job matching and indeed job quality as better paid permanent jobs have a far greater likelihood of paying out. Third, the programme is fully “black box”: there is no prescribed provision or minimum service agreement. This will facilitate use of new group/team based working rather than one-to-one fortnightly meets which dominated the minimum service agreements and are probably poor value for time and resources. Team or group based working has a good history of helping through peer support as well as being low cost.
What is missing, in my view, is discussion of a number of issues which have not been dealt with previously, and a couple which are particular to the new programme. For young people, even though youth unemployment is high, very few NEETs will be on the Work Programme. Only around half of 18-24 year olds not in work or education are signing on for Job Seekers Allowance and only a minority of these have a single spell of claiming that is sufficiently long to join the Programme.
Hence most will miss treatment because they get spells of short term work or training or don’t sign on. In terms of benefits spending this may appear acceptable, but we know that these individuals who fail to connect to sustained work go on to have very poor earnings and frequent spells of unemployment when older. A window based on the person’s recent history of worklessness is necessary for entry to the programme, rather than single spell duration and those not on JSA need to be identified and tracked to facilitate re-engagement.
A further long standing problem is that DWP contracts on a fixed price for all those in a group. The risk is that the provider will focus on the easiest to help and not invest in the hardest. This is sometimes called parking; parking is likely to occur within the three group bands, although there are small extra payments for some groups within bands but is probably most problematic among the disabled where the huge variation in conditions and costs associated with getting them back to work may mean many are written off as too costly to help. The fees on offer are tight for providers and the poor labour market conditions will mean providers will struggle to match cost. In many cases winning the current contracts may well prove to be loss leaders until the next round of contracts. This means DWP may be getting very good value right now but there has to be a risk that some providers may withdraw or need contract top ups to keep going, as happened in Holland when this structure was introduced in the 1990s.