Work Programme now yielding better results than doing nothing (just!)

The DWP published its latest statistics for the Work Programme just before Christmas, and the good news is, it’s now better than doing nothing – but only just.

work programme

Click the image to enlarge. The dotted lines show the minimum expected levels. These are based on what would be expected if the long term unemployed were just left to their own devices. The second graph shows the proportion of people who stayed on the Work Programme for 2 years, but who had a spell of employment during that time lasting for 6 months or more (or 3 months for certain groups). Of the almost 1 million people who spent 2 years on the Work Programme, just 28% fall into this category, while almost 70% were sent back to the Job Centre having been failed to be helped into sustainable work. This 28% is a mere smidgeon above the figure DWP thought the long term unemployed would achieve on their own devices. Better than nothing then!

This is a programme that has cost billions, but achieved astonishingly little. When the Work Programme started, the job market was in the toilet, so job outcomes were incredibly low. As the economy started to recover, it became easier to find unemployment people poor quality temporary and/or part time work, so the job outcome figures have picked up (while still remaining poor). In effect all it has done has transferred public resources into the hands of private outsourcing companies like Serco and A4E, who do little more than cherry pick the easy cases, while ignoring the rest. The job outcome figures for those who have come to the Work Programme via sickness/disability type benefits has been particularly poor, achieving barely half the job outcome rate deemed achievable without any intervention at all. A lot of these people are probably not well enough to be actively seeking work, but the Work Programme is failing badly for those who may be ready to return to the workplace.

esa

Instead of wasting resources on pretending people can be got back into employment through improving their ‘soft skills’ or CV writing abilities, why not actually create some jobs?

40% of payments to Work Programme providers have nothing to do with results

The DWP published this ad-hoc release last week. It very briefly details how much money has been paid to Work Programme providers from when it began up to 31st March this year. Providers are the (mainly) private sector organisations contracted by the DWP to help the long-term unemployed find work. In the DWP release it says:

“The Work Programme is predominantly a ‘Payment by Results’ model”

The Government have been keen to trumpet this feature, claiming that providers only get paid if they are successful. In fact though, since the Work Programme began, 39% of the money paid to providers has come from the ‘attachment’ fee. That’s a payment paid when an unemployed person starts the Work Programme with a provider. For the first year of the programme, the attachment fee was £400, the second year it was £300 and for the year just gone, £200. From July, the attachment fee will no longer be paid. To date then, on this “paid by results progamme”, the Government has paid providers £538m (out of a total of £1.372bn) just for taking people on their books and before they have helped a single person into work.

With this payment for doing nothing now ended, will we see Work Programme providers start to walk away?

On this 2nd DWP release, it says that over the same period, there have been 296,000 job outcomes. The DWP defines a job outcome as a job that is sustained for at least 6 months (or three months for certain groups). Doing a quick calculation based on the attachment fees paid, it looks as though around 1.72 million people have been attached to the Work Programme since it began, so that means only about 17% (1 in 7) have found work lasting at least 6 months. Not a great return for a spend of £1.4bn, particularly when you think that a lot of these people would have found work anyway.

 

Government spin can’t hide the fact the the Work Programme is still not working

I remembered today that the latest Work Programme figures were being published and did my usual thing of looking for the story on the BBC News website. Its article on the figures is entitled “More find jobs on the Work Programme, DWP figures suggest“. I then looked for the DWP press release which was titled “Work Programme transforming lives as number finding lasting work soars to 132,000“. So after the complete failure of the first year, things now seem to be going well. Better than expected even?

But having then found the official statistical release, I  look ed for the Minimum Performance Levels, which I think is the main information that should be highlighted to judge success or failure of the programme. The Minimum Performance Levels are based on what proportion of people would get jobs on their own if the Work Programme didn’t exist. The minimum levels are set 10% above this non-intervention estimate. For the first year, they were set at 5.5% for the three target groups (JSA 18-24; JSA 25+ and ESA new customers).

There is some discussion in the statistical release about how media reporting of the performance failure last year was inaccurate, with it being reported variously that performance was either 3.5% or 2.4% (I did so myself here). So that makes you think Minimum Performance Levels were actually better than reported. In actual fact though, they were much, much worse!

MPLs are calculated over the financial year apparently, so the first year only covered June 11 to March 12. This meant the official performance levels (which I didn’t hear the Government state once) for the first year were:

JSA 18-24: 1%

JSA 25+: 1%

ESA new customers: 0.6%

In total, only 9,000 job outcome payments were made in year 1 out of 687,000 referrals.

Remember, DWP expected 5.5%, and 5% if there was no Work Programme at all!

The 2nd year’s (the first full year) targets were much higher (reflecting that the providers would be well established and would have had much more time to work with clients), but again providers have failed. Here were the performance levels they achieved (with the minimum performance targets in brackets):

JSA 18-24: 31.9% (33%)

JSA 25+: 27.3% (27.5%)

ESA new customers: 5.3% (16.5%)

So the best that can be said is that for JSA claimants at least, the Work Programme is marginally better than nothing, but for ESA new customers, it’s still worse than nothing. Just under half of providers (18 out of 40) are meeting their targets for JSA clients (only just). None met their targets for ESA clients.

You’ll hear a lot of spin about how the Working Programme is ‘transforming lives’, but against the DWP’s own benchmark, it is still failing to meet even the minimum levels expected. So DWP are lauding the success of the Work Programme, but all providers are in breach of their contracts. Time to rethink the whole thing?

“The parable of 100 dogs and 92 bones” – Why the Work Programme can’t work

Today’s Billy Blog is another must read, on the state of austerity-age Britain. In it he includes his ‘parable of 100 dogs and 92 bones’. I’ve used this before on this blog, but this is a better version of it, so it’s worth recounting, as it’s a perfect allusion to Governments’ obsession with ‘back-to-work’ schemes and why they can never succeed on their own. The Coalition’s failing Work Programme is a perfect example of this.

“Case study: the parable of 100 dogs and 92 bones

Imagine a small community comprising 100 dogs. Each morning they set off into the field to dig for bones. If there enough bones for all buried in the field then all the dogs would succeed in their search no matter how fast or dexterous they were.

Now imagine that one day the 100 dogs set off for the field as usual but this time they find there are only 92 bones buried.

Some dogs who were always very sharp dig up two bones as usual and others dig up the usual one bone. But, as a matter of accounting, at least 8 dogs will return home bone-less.

Now imagine that the government decides that this is unsustainable and decides that it is the skills and motivation of the bone-less dogs that is the problem. They are not skilled enough. They are idlers, bludgers and “bone-shy”.

So a range of dog psychologists and dog-trainers are called into to work on the attitudes and skills of the bone-less dogs. The dogs undergo assessment and are assigned case managers. They are told that unless they train they will miss out on their nightly bowl of food that the government provides to them while bone-less. They feel despondent.

Anyway, after running and digging skills are imparted to the bone-less dogs things start to change. Each day as the 100 dogs go in search of 92 bones, we start to observe different dogs coming back bone-less. The bone-less queue seems to become shuffled by the training programs.

However, on any particular day, there are still 100 dogs running into the field and only 92 bones are buried there!”

Bill concludes with:

“In the UK there are about 92 bones for every 100 dogs and in Spain 72 bones for every 100 dogs!

The point is that fallacies of composition* are rife in mainstream macroeconomics reasoning and have led to very poor policy decisions in the past.

There are simply not enough jobs.”

* Fallacies of composition are very common in discussions of economics. It basically means – what’s true for an individual isn’t always true for a whole group of individuals. An example of this would be the argument that cutting the minimum wage will increase the number of jobs available. While for a single firm, if wages could be cut, that might enable the firm to hire more people, if they are cut across all firms, then workers will be able to buy less stuff, so less will be produced, meaning less workers are needed. David Cameron saying everyone should pay off their credit card bills is another example. Good for the individual, bad if everyone does it at the same time.

DWP offers intensive support for any dog failing to find a bone after 2 years

The title above refers to this press release today from the DWP:

Work Programme leavers targeted by specialist advisers as part of a tough approach to get them into a job.

A more honest title would end with “… a tough approach to get them off Jobseeker’s Allowance”, as getting someone a job seems to come a distant second to those at the DWP.

Anyway, the press release is about what action will be taken once the private sector Work Programme provider has failed to find work for someone (or bullied them into being chucked off JSA) after 2 years (!!!). Apparently, those poor souls are going to be “targeted by a hit squad of specialist advisors”, which doesn’t sound too pleasant, but also begs the question of what the hell the Work Programme provider has being doing for the previous two years.

It all comes down to the same idiotic idea that the unemployed don’t have work because of personal deficiencies rather than a systemic lack of jobs, and if only the right attitude can be instilled into the individual, then a job will instantly appear. The problem with this is that it’s a fairy story. At the moment, there’s about half a million vacancies, but 2.5 million unemployed, another 2.5 million classed as inactive but want a job, and 1.4 million who are underemployed. If we send out 100 dogs to find 10 bones, most are going to come back without one, and no matter how much ‘intensive support’ we give give those dogs, unless we increase the number of bones, the same amount will come back without one next time (although maybe not the same dogs).

So rather than wasting £30m on this intensive support package (or the £5bn on the Work Programme for that matter), why not just create some jobs? What, more public sector non-jobs I hear you say? When there is spare capacity, a non-job is always better than no job at all, but with a bit of imagination we could think of much more productive things for people to do. This should be a statement of the bleeding obvious, but apparently it’s still quite a minority view. Politicians seem to much prefer to compete to see who can sound the toughest, rather than who can actually solve problems which doesn’t inspire hopes of a quick recovery any time soon.

The Youth Contract – Giving public money to private firms in return for?

The Youth Contract is the Coalition’s response to youth unemployment. A key element of the Youth Contract is the offer of a wage subsidy of up to £2,275 to businesses who take on an eligible unemployed 18-24 year old for 6 months. The plan was to provide 160,000 of these subsidies over a three year period. The programme began in April last year, but details about how it’s doing have been thin on the ground. Finally, and without fanfare, the DWP published an “Early Evaluation of the Youth Contract wage incentive scheme” (a summary of the findings can be read here). Some of its findings are quite interesting and tell a slightly different story to the one the Government spun at the programme’s launch.

The researchers surveyed 279 employers who had recruited somebody eligible for a wage subsidy and had been sent a claim form. They also interviewed Work Programme providers and Jobcentre Plus staff. Here are some of the findings:

  • Only 56% of employers had actually heard of the wage subsidy scheme before they began recruiting;
  • 63% of employers had recruited the person on a permanent basis, while 31% were temporary or fixed term contracts;
  • The main reason for taking on someone eligible for subsidy (given by 30% of employers) was to gain some extra money. 22% said it was to give an unemployed person a chance;
  • Jobcentre Plus staff did not believe the wage incentives were creating new jobs, nor encouraging employers to retain staff;
  • Only 9% of employers had created new jobs as a result of the wage incentive scheme;
  • Only 7% of employers would not have hired a young unemployed person but for the wage incentive;
  • There was some evidence that some employers were taking on a person for 6 months, then letting them go before hiring another person and claiming another wage subsidy, even though this is against the rules.
  • Only 20% of employers said they have difficulties with recruiting young people.

What can we conclude from all this then?

New jobs are not being created as a result of this scheme. Employers with vacancies are just using the scheme as an extra revenue stream. At best we are talking about a young person being taken on where otherwise the employer might have hired someone over 25. At worst, the employer would have hired a young person anyway, so the wage incentive just represents a transfer of money from public to private sectors with no additional benefit whatsoever accruing to the Government (or the young person). 

So on the one hand you have a jobs scheme that creates no jobs, being talked up because it costs less than Labour’s previous scheme, and on the other, you have Labour’s Future Jobs Fund which actually created over 100,000 additional jobs (albeit for only a 6 month duration). Cheaper is not always better. The Youth Contract demonstrates one area of welfare spending that is not being cut – corporate welfare. Lets not forget as well that for every young person from the Work Programme completing 6 months work with an employer, the Work Programme provider gets a nice juicy outcome payment, so there’s a double helping of corporate welfare. As Private Eye is fond of saying “Trebles all round!”

There is an alternative to this kind of nonsense. Its called a Job Guarantee.

 

When is a Job Guarantee not a Job Guarantee?

The Labour Party’s new ‘job guarantee’ idea is getting a lot of coverage this morning, but is it any good? They are proposing to introduce a guaranteed minimum wage job offer to those aged over 24 who have been claiming Jobseeker’s Allowance (JSA) for more than two years. If the claimant turns down the job offer, they risk losing their benefits. Currently, there around 130,000 people who fall into this category. The jobs will be for a 6 month duration, after which the individual will have to find work elsewhere, or go back on benefits.

First then, the positives. By proposing this, Labour are tacitly accepting that even in the good times, there will always be some people left behind, meaning Government does have an active role to play in the Labour market. Once this principle is established, perhaps we could move to something more ambitious. It also get the issue of long term unemployment back on the map, and puts pressure on the Government to respond given the current failure of the Work Programme.

That’s where I run out of positives though I’m afraid. I think if you set out the design the weakest possible job guarantee scheme that had the least impact upon the economy, this would probably be it. Labour’s proposal is very similar to something the IPPR have been proposing for a while, only even less ambitious. I briefly mentioned that here, although I was probably a little too positive about it. The IPPR want the job offer to be made at 12 months rather than 2 years, but other than that it pretty much the same as what Labour is proposing.

I have a number of issues with this idea and the way it’s being presented. Here are the main ones.

  • It only applies to those who have been unemployed for over 2 years. This is less than 10% of those claiming JSA, and an even lower proportion when measured against all those out of work who want a job. So the impact on the economy would be negligible.
  • The guaranteed jobs would only be for a 6 month duration – probably not long enough to give someone the skills and experience to make a smooth transition to better paid work.
  • The way this is being presented is that there is a need to be tough with those who are long-term unemployed. You need to force people to work on threat of losing their benefits. The evidence just doesn’t bear this out. Research undertaken recently by the Joseph Rowntree Foundation found an almost universal “commitment to conventional values about work”. JSA is already conditional upon the individual actively seeking work. No further sticks are necessary.
  • The proposed scheme would apparently cost £1bn and be ‘paid for’ by restricting pension relief for high income pensioners. The tax relief restrictions may be sensible and fair, so may be worth doing on its own merits, but it has nothing to do with paying for anything. This idea that every policy proposal must be ‘fiscally neutral’ is very damaging as it severely limits the effectiveness of any spending programme.

So what would a job guarantee worthy of the name look like? Here’s some features it might have:

  • Job offer at 3 months or less
  • Jobs last for an indefinite period
  • All jobs come with training
  • Paid at a living wage
  • Genuinely full time work available, but with flexible and part time hours for single mothers, those with health issues etc.
  • Optional, i.e. the person can choose to remain on benefits and seek their own job (subject to Jobseeker’s agreements as now)

I’ve expanded on the my preferred type of job guarantee here and here.

To sum up then, while Labour are calling their idea a job guarantee, it is a million miles away from what a true job guarantee would look like. It lacks ambition, scope and retains the nasty undertones of the current climate – not wanting to appear to be soft on ‘scroungers’. To me it represents a step back from Labour’s last foray into job creation schemes – the Future Jobs Fund. That was also quite timid, but remained optional, people had a fair amount of choice about what jobs they applied for and the ethos of ‘community benefit’ was a good one. This new idea junks the first two principles and weakens the third. In short, not great. Another ‘big announcement’ that turns out to be anything but.

The Work Programme Part 3 – Payment by Results and Unpaid Work Experience

“Payment by results”. It sounds good. Firms only get paid if they do well, so there is a powerful incentive for them to act in the best interests of the individual. Something is going very wrong though. About £4 in every £5 paid out to Work Programme providers is not being paid because a ‘result’ has been achieved. It is being paid for an ‘attachment’ to the Work Programme i.e. when an unemployed person starts the programme. Only £1 in £5 constitutes ‘payment by results’, and even then as we have seen, the value of these results is somewhat dubious.

The Government has actually taken these poor results and tried to spin it into a story about value for money for the taxpayer. Responding to the dire figures published in November, Work and Pensions Secretary Iain Duncan Smith said:

“I think we are on track. Payment by results is about saying the taxpayers need not foot the risk.”

In other words, he’s saying that even if the Work Programme providers performance is abysmal, it’s OK because the taxpayer only pays for results. Leaving aside the fact that that is just not true, as we’ve already seen, the idea that all that matters is value for money for the taxpayer is frankly bonkers.

We have an unemployment crisis in this country and every day we are forgoing millions of pounds in lost income because we have millions of people unable to find work. We are not making use of all these people’s skills and experience while they languish on benefits through no fault of their own. The idea that it’s OK that we are not finding work for these people because the taxpayer is not on the hook is crazy.

The Future Jobs Fund was scrapped by the Government because it cost too much. A cost of over £7,000 per job is widely cited, but a recently completed evaluation of the programme came up with somewhat different numbers. The programme was found to have a net cost to the Exchequer of £3,100, but provided a net benefit to society of £7,800 per participant.

The idea that the only thing government’s should be concerned about is value for money, that cheaper means better is just illogical. It’s what society gains from spending by the government that really matters. The Work Programme may be cheaper than previous schemes (debatable I think), but the return on the government’s investment in the Work Programme looks like being very low (and maybe even negative) at this point. That makes no sense at all. Far better to spend more on a programme that will generate a greater return for society.

Payment by results is supposed to incentivise excellence, but achieving excellence is hard, even more so in an economy where there is a shortage of jobs. So instead of promoting excellence among Work Programme providers, payment by results seems to be promoting cheating or corner cutting (read part 2 for more on this). The result of this is that, far from creating an effective, unemployment reducing programme, it has created one which is barely (if at all) better than nothing.

Knock-on effects

Going hand-in-hand with the Work Programme appears to be the beginnings of a worrying trend in the labour market –  a growing casualisation of the workforce and – even more worrying – the rise of the unpaid work placement.

Casualisation

Casualisation, manifesting itself in the form of temporary, zero-hour or self-employment has exploded to such an extent that 3 million people now say they are underemployed, up by 1 million since the economic downturn began in 2008. So while Coalition ministers crow about falling unemployment, and 1 million new private sector jobs, it’s right to question just what sort of jobs they are, and what sort of precedent does this set for the future?

That’s not to say there is no place for zero hour contracts and temporary work. The key though is that there is a strong backstop in place to catch those who fall out of the system. Temporary work or zero-hour contracts are not so bad if there is a strong welfare state to fall back on (or a guaranteed state-funded job as I would like to see), but at the same time as the labour market remains weak, the Government are also weakening the welfare state at the same time by cutting working age benefits in real terms. Done in the name of deficit reduction, it’s the ultimate false economy. Cutting the incomes of those who spend most of their incomes mean less sales for businesses and less income overall. As Paul Krugman says:

“Your spending is my income, and my spending is your income. So what happens if everyone simultaneously slashes spending in an attempt to pay down debt? The answer is that everyone’s income falls — my income falls because you’re spending less, and your income falls because I’m spending less. And, as our incomes plunge, our debt problem gets worse, not better.”

Unpaid Work Experience (Or Workfare)

Wrapped up with the Work Programme has been the rise of mandatory unpaid work experience. Work experience has gained a lot of negative coverage in the media in recent years. A lot of this has focused on schemes outside of the Work Programme, but it is less known that it is very common for Work Programme participants to be mandated to do unpaid work experience.

The Work Programme uses the ethos of the ‘black box’ approach. This means providers have the freedom to do whatever they feel necessary to help a Work Programme participant get back to work. Often, it seems, this takes the form of unpaid work experience. This is mandatory. If participants refuse to take part, they can have their benefits sanctioned.

This practise of sending benefit claimants is growing in scope. It was recently announced that ESA claimants (those deemed unfit for work, but placed in the work-related activity group) can be mandated to do unpaid work experience for a time period without limit.

This phenomenon of unpaid work experience has now become so prevalent that private firms, with the collaboration of Jobcentre Plus and the DWP are now advertising ‘job vacancies’ that are actually unpaid placements. Here’s 2 examples:

There is a real danger I feel that this can become so normalised, that it becomes standard practise for certain employers to only hire on a ‘try before you buy basis’. This is just wrong in my view, but it just seems to have almost passed unnoticed in the press. It just shows how bad things have got when things most people would usually balk at just become the new normal. All decent people should oppose this in the strongest terms.

This post has strayed somewhat from its original theme, but just to try to draw the 3 parts of this series together. Here are the key points:

  • The Work Programme is an expensive failure. If we didn’t have a Work Programme, we would have expected more long term unemployed to have found work.
  • Work Programme providers are providing very little of value for the millions they are being paid. Instead, they are using a number of techniques to extract additional cash from the public purse.
  • Payment by results just doesn’t work
  • The Work Programme is giving rise to all sorts worrying trends, notably unpaid work experience.
  • It seems to be becoming normal for employers to expect jobseekers to work for them for free for a period before offering them a paid role. This can only displace paid employees. It needs to stop.
  • Real terms benefit cut and benefit sanctions are pure false economies. They will ensure unemployment rises, not falls and will bequeath a smaller economy than would otherwise be the case. It will end up costing us all more.

The Work Programme Part 2 – Having a laugh at the public’s expense

In part 1, I discussed the DWP’s recent release of performance data for the Work Programme. Despite quite modest targets for year 1, across the board, Work Programme providers are failing. In this second part, I want to  give a few examples of why I feel the already dire performance figures to date create a misleading picture of how much added-value is actually being generated by the firms contracted to help individuals on the Work Programme. I think the reality is actually much worse than is generally thought.

Before I start, I just want to make clear that I am not picking on a particular provider here. Although firms like A4E have been singled out in the media for a large amount of criticism, the performance of providers across the board is poor, and what follows seems to be taking place within a number of providers.

The following examples appear to be evidence (although anecdotal), that Work Programme providers are adopting a number of techniques to maximise their revenue without actually investing time and effort into individual jobseekers themselves. To me this constitutes a misappropriation of funds, but I don’t expect DWP to investigate any time soon. In one case as you will see, the transfer of funds from public to private without any value being added by the company is officially sanctioned.

Tricks of the Trade

One of the benefits of living in the age of the internet is that people who before found it almost impossible to get their voices heard can now do so. Through blogs and social media, stories are being told about the Work Programme from the people actually referred onto it. The same stories seem to come up again and again. Here are three of the most common ones.

1. Already found a job? Just sign these forms

This technique is actually officially sanctioned in certain instances by the DWP, and is written into the Work Programme guidance (chapter 4) which can be downloaded here. When someone is referred to the Work Programme, there may be a gap of a couple of weeks before that person is officially ‘attached’ to the Work Programme.

If you look at paragraphs 71 to 76 of the guidance it explains how if a claimant finds work between referral and attachment, the provider can try to attach the individual before they start the job. In practice, this means meeting with the individual and completing some paperwork. If they are able to do so (and perhaps provide them with some token help like a bus pass or vouchers for work clothing), then they are eligible to receive the outcome payments should that person remain in work. This could earn the provider several thousand pounds on top of their £400 or £600 attachment fee.* Kerching!

This ruse also applies to people who actually are on the Work Programme. The claimant may have found work themselves after finding the Work Programme support poor. Here’s and example of what I’m talking about from this blog:

“They rang me up today to check how I was doing,” he wrote, “and when I told him I had a job he seemed to perk up a bit. He said he’d give me £100 “petrol money” if I signed some paperwork to let him contact the DWP.”

To me, this sounds like a bribe, but DWP seems absolutely fine with it. I suppose they term it “in-work support”.

Now in cases like this, the provider may argue that it was the help and support they provider that helped the person find work, but how sure are we that this is the case? A lot of people’s experience of the Work Programme seems to be a monthly 20 minute face-to-face meeting with the provider, and maybe the odd phone call. Not the individually tailored, bespoke support we were promised. Which brings us onto the related trick 2.

2. Creaming and Parking

Creaming and parking is the phenomenon whereby providers identify job ready claimants (they may be graduates or other high skilled people), and focus all their attention on them, while ignoring, or providing very little support to those who are harder to help. They still receive their attachment payment for those they ‘park’, and if any of these people get jobs anyway (and the law of averages suggests some will), then all the better, they can apply trick number 1 and claim the outcome payment. Research commissioned by the DWP highlights that creaming and parking may be an issue (see here), saying:

“Some of the reported  experiences of participants and providers suggest, at face value, a degree of creaming and parking; for example, many providers openly reported seeing their most job-ready participants more frequently than those with more severe barriers to work.”

So it seems to be a case of help the ones who would probably find work easily anyway and ignore the rest until they (hopefully) find work on their own.

3. Working Tax Credits are a provider’s best friend

Hat tip to the Johnny Void blog for alerting me to this, but it seems that Work Programme providers seem to be encouraging claimants to declare themselves self-employed in order to trigger a job outcome payment. Apparently, if a person works self-employed for over 30 hours a week (although in reality much less), but earn under a certain threshold, they can claim working tax credits of up to £50 per week. This is only about £20 less than Jobseeker’s Allowance. A person doesn’t need to earn anything to receive WTC, but would only need to work a few hours a week to earn as much as JSA. I don’t know how prevalent this is, but it seems that one provider in particular may be making the most of this apparent loophole.

So these are a few of the wheezes Work Programme providers seem to be using to inflate their job outcome figures (which in part 1 we saw are still woeful). These practices and others like them seem to be widespread and not just used by one provider. Added together, they sum to a large amount of (admittedly anecdotal) evidence that Work Programme providers are delivering even worse value for money than people think. The whole programme seems to amount to nothing more than a giant rip-off, a transfer of huge sums of public money into a relatively small number of private companies and individuals, in return for very little of value. Some people it seems, are having a laugh at the public’s expense.

This was originally intended to be the 2nd of a two part post on the Work Programme, but I’ve now realised I need a 3rd part to explore why we persist with the payment by results model despite its seemingly obvious failings.

*H/T again to this blog post for drawing my attention to this practice

For more information on problems with the Work Programme, and the Government’s welfare policies in general, I recommend following @boycottworkfare and @johnnyvoid on Twitter.

The Work Programme Part 1 – Worse Than Doing Nothing

This is the first of a two part blog on the Work Programme. This part looks at this week’s data release, and part 2 will look at some of the tricks Work Programme providers seems to be using to ‘enhance’ their figures.

This week, the DWP finally released the first performance figures from the Work Programme, the Government’s flagship welfare to work programme, and boy were they poor. In the first 12 months of the programme, just 2.3%* of people referred to the Work Programme have found work which lasted for at least 6 months.

At the outset, the DWP estimated that if the only support long term unemployed people received was the standard Job Centre Plus offer (basically access to job points and fortnightly signing meetings), then 5% would find sustainable work anyway. The Work Programme providers had a minimum performance target of 5.5%. DWP expected this to be exceeded, but in fact every single provider has failed to meet this contractual obligation. What this suggests is that the Work Programme is worse than doing nothing. Read that again. Worse than doing nothing.

As you might expect, the Government and the providers themselves tried to put a positive spin on the numbers, arguing that since the programme started, 207,000 had moved into work at a cost of £2,000 per job, and over half of participants had had a break in their benefits since starting the programme. Ian Duncan Smith in particular likes to think if someone has come off benefits, they must have moved into work, but lets just look at those figures again.

878,000 people have been referred to the Work Programme, and 207,000 (according to the providers) have had at least one job start since starting the programme (24% of those referred). And yet around half (which equates to almost 450,000) have had a break in their benefits. So less than half of those coming off benefits actually found work. Is the Work Programme about finding people work or getting people off benefits? Providers seems to be more successful at the latter than the former.

If we take the 207,000 figure at face value, does this signify success as is being suggested? We know that in the first 14 months of the programme, 31,000 people moved into work and stayed there for at least 6 months (or 3 months in the case for former ESA claimants. To do this, they must have moved into work by the end of Jan 2012. ERSA (the industry’s trade body) helpfully break down job starts by month, so we know that up to the end of Jan 2012, just over 64,000 individuals started a job, but of these ‘jobs’ only 48% of them lasted long enough for the providers to claim a job outcome payment. It’s probably slightly worse than that because providers can still claim a payment if an individual gets a job, leaves it and starts another. So if someone does 3 temporary jobs lasting 2 months each, the provider can claim that as a job outcome. What sort of jobs are they that so many last less than 6 months? It seems that the definition of ‘job’ seems to be changing. I’ll explore this a bit more in part 2.

Looking at the Government’s chief argument then – value for money, while the headline number is £2,000 per job, if you break that down, it’s about £14,000 per job sustained for 6 months or more. Let’s not forget too that of the over £400m paid out to providers in the first 14 months, at least £350m took the form of ‘attachment’ payments – the £400 or £600 providers receive per participant just for accepting them on the programme. Ultimately though, the value for money argument is spurious, because as we’ve already seen, if we had spent nothing on welfare to work programmes, we would have expected more people to move into work. Once more then, the Work Programme is worse than doing nothing. The Work Programme seems to be very good at shifting public money into private hands, but less so at the job it’s apparently designed to do – finding work for people with complex needs.

That’s Part 1 then. Part 2 will go into more detail about the problems with the programme, why it’s such awful value for money, and what an alternative might look like.

*UPDATE: Via Twitter, @boycottworkfare points out that the performance figure for the first 12 months is not 2.3%, it’s actually worse, only 2.1% See this Fullfact post for an explanation.

Sources

ERSA – The trade body for Work Programme providers

DWP ad hoc analysis of numbers of individuals starting Work Programme and then having a break in their claim. (As an aside, I have a real problem with the DWP’s use of ‘ad hoc analyses’. They seem to be being used to muddy the waters about what is really happening, the opposite of what statistics should be used for. My very first blog post was on this topic. Read it here.)

DWP official Work Programme statistics