The beginning of the end for contracted employment programmes?

One of the lesser discussed announcements made in the Autumn Statement was the introduction of a new Work and Health Programme to replace the programmes which currently help the long-term unemployed and people with health problems into work.  Currently, these schemes are administered by contracted providers who are paid according to the results they receive; in this case getting people into work.

The new Work and Health Programme will provide specialist support for claimants with health conditions or disabilities and those unemployed for over 2 years.  Currently, people might have to join the Work Programme if they’ve been receiving Jobseekers Allowance (JSA) for more than 3 months or if they get Employment Support Allowance (ESA) and are in the Work-Related Activity Group.

It was also announced that Jobcentre Plus (JCP) would be taking on a larger role in the provision of employment support at the start of a person’s JSA claim.  On the face of it, this did not appear to be a big change: with the number of JSA claimants falling it was expected that the Government would make some changes to its contracted employment programmes. Yet last week, in response to a report by the Work and Pensions committee, the Government stated that contracted programmes will have “a reduced” albeit “significant” role to play in the future.

This apparent change in policy is a reversal from the last 10 years, when successive Governments have developed and implemented contracted employment programmes.

The history of contracted employment schemes

The Labour Government made some limited use of contracted schemes in its first 2 terms, including the New Deals for disabled people, young people and those over 25.  However, in 2006, David Freud (now the Rt. Hon Lord Freud, Minister of State for Welfare Reform) was asked by the then Prime Minister Tony Blair, to provide a review of the welfare to work system.  His report, published in 2007 recommended:

  • Greater use of private and voluntary sector resources and expertise so harder–to-help benefit claimants receive more employment support – particularly claimants who have been “trapped” on benefit for long periods of time;
  • Greater rewards for organisations that are successful in helping claimants find and stay in work, with higher payments based on sustaining people in employment for as long as three years;
  • Greater personalisation of employment support, with higher financial incentives for organisations to target resources at the hardest-to-help who need more support before they are ready to return to work;
  • Retaining Jobcentre Plus’s role in helping claimants during the early stages of their period on benefit and creating a new role for the organisation to assess how much support individual claimants are likely to need before they are ready to return to work.

The Flexible New Deal & the Work Programme

The findings of Freud’s review were welcomed by the Labour Government and led to the introduction of the Flexible New Deal (FND) for people who had been claiming JSA for 12 months in 2009.

Freud’s recommendations were taken a step further by the Coalition Government with the introduction of the Work Programme in 2011.  This replaced all welfare-to-work schemes operating in Great Britain.   It took on Freud’s key recommendations (listed above) and also allowed the lead contractors to appoint subcontractors to provide services that cater for the variety of claimants in a region.  Providers are paid for the results they achieve with higher payments for getting the harder to help into employment, another recommendation from the Freud report.

After a “poor start”, the Work Programme is judged to be performing at the same level as previous schemes and its performance has been on an upward trajectory over the last couple of years.

Due to falling claimant levels and a changing economic landscape, it was expected that the programme would be modified when the current contracts ended.  Yet the announcement of the Work and Health Programme suggests a change in strategy.

The role of JCP and devolution to the regions

The employment minister, Priti Patel, has stated that the new Work and Health Programme will receive funding of around £130 million – a cut of around 80% on current spending according to the Learning and Work Institute.   This is to be expected – less people will be referred to the scheme due to the smaller entry point and falling levels of claimants.

The majority of claimants will remain with JCP and the ‘intensive’ element of the Help to Work scheme (which includes Community Work Placements) is also being bought forward.  Coupled with this, the continued roll out of Universal Credit and “in-work conditionality” pilots (which will make benefit payments to people in work, but on low earnings, conditional on them taking steps to increase their pay or hours) is estimated to increase the JCP caseload by around 1.3 million.  With JCP responsibilities increasing we would expect to see JCP receive additional resources so they can provide services adequately.

The retention of powers for JCP means there may be less scope for the devolution of welfare-to-work policies than was initially anticipated.  The Government has collaborated with Manchester, Glasgow and Clyde Valley, and London to develop some schemes and have said they will look “carefully at whether the localised key worker approach being delivered in those areas improves outcomes for ESA claimants”.

The Scotland Bill has also allowed for the devolution of schemes to help those who have been unemployed for over two years, although the SNP and Labour called for the Scottish Parliament to also have power to legislate on all arrangements for employment support programmes.  The Government has also agreed to testing different approaches to jointly designing and commissioning programmes across the 7 devolution deal areas

However, it remains to be seen how much independence over employment support will be given to the Combined Authorities and Scotland.   The Government in Westminster will retain the executive competence to operate employment programmes and JCP.  DWP will also set the funding envelope for Sheffield and Manchester. Yet, with the smaller entry point for contracted schemes, it’s clear that these co-commissioned and devolved contracted schemes may not provide as much autonomy as people hoped they would.

Picture credit: Jobcentre Plus – frontage, by Lydla, Creative Commons Attribution 2.0 Generic (CC by 2.0)