Payment-by-results contracts set up by the Department for Work & Pensions (DWP) to get benefits claimants back into employment are “not succeeding”, according to a group of MPs.
The Work Programme is designed to encourage suppliers to help people who have been out of work for long periods to find and keep jobs. The DWP pays prime contractors to provide support to people to get them into long‑term employment using a payment-by-results approach. The amount it pays depends on the level of success in getting people into sustained work and the payment group of the individual (influenced by factors such as age and the benefit they are claiming). It has 40 contracts with 18 prime contractors.
However, in a report published today, Margaret Hodge MP, chairwoman of the Public Accounts Committee (PAC), said: “The department has not succeeded in incentivising Work Programme providers to support harder-to-help claimants into work. Almost 90 per cent of Employment and Support Allowance claimants on the programme have not moved into jobs.
“Evidence shows differential payments have not stopped contractors from focusing on easier-to-help individuals and parking harder-to-help claimants, often those with a range of disabilities including mental health challenges.”
She said data from Work Programme providers shows they are, on average, spending less than half what they originally promised on these harder-to-help groups.
“The department must do more to encourage providers to work with harder-to-help groups by tackling poorly performing prime contractors and sharing information on what works. It should also collect and publish information from each provider on how much they are spending on different payment groups.”
A DWP spokesman disputed the success of the programme saying it had contributed to the largest drop in long-term unemployment in a generation and repeated that suppliers are paid according to their achievements.
“The Work Programme is helping more people than any previous employment programme, with more than 330,000 people moving into lasting work and finally gaining the economic security that comes with a regular pay packet.
“Providers are paid by results, with more money for the hardest to reach – but only if they get those people back into lasting work.”
The PAC also said it was concerned that the DWP had designed the contracts with providers in a way that exposes the taxpayer financially.
“Underperforming providers may still be able to claim bonus payments for 2014/15 because of the flawed performance measure whereby the fewer clients referred to a provider, the better their performance looks,” said Hodge. “This may include Newcastle College Group whose contract has been terminated.”
However the PAC did concede that after a “slow start”, performance of the Work Programme “is improving” and made a number of recommendations - including seeking more information from the DWP on the impact of differential payments - and said it will take evidence from DWP in early 2015 to assess its progress.