By James Rees
The Work Programme is the Coalition government’s flagship welfare to work policy – designed to get unemployed people off benefits and into work. It represents a major stepping up of the previous Government’s policy model for welfare to work. This model is based on a relatively small number of large 'Prime' contracts, greater flexibility for providers – who come from the private, public and voluntary sectors – to decide what services look like, and payments being dependent on results based on getting people into work over a longer period of time. Many have welcomed the fact that this national programme will stand or fall on its ability to get people into sustained employment.
To an extent the Government created high expectations at the outset that the third sector would be closely involved, declaring it a ‘triumph’ for the Big Society that over 300 organisations were named in the winning bids.
But the programme has generated a considerable amount of criticism from commentators and third sector bodies: focusing on fears that in reality third sector organisations will be muscled out, particularly by the private sector operators with deeper pockets and more ability to absorb risks. This seemed to be confirmed by early reports that ‘flows’ of clients were much smaller than expected in some areas and seemingly to the smaller ‘niche’ organisations in particular, prompting the grumble that TSOs had been conjured up as ‘bid candy’.
A recent evidence review – covering the period 1997-2010 – carried out by the Third Sector Research Centre echoed a number of these concerns. It highlighted a range of risks that the programme poses to the third sector’s role in the delivery of employment services.
The design of the Work Programme suggests that there might be insufficient funds to help the most disadvantaged clients. Although higher payments will be made for the hardest to help groups, the number of outcomes in those groups will be comparatively lower, meaning that those payments have to cover provision to a larger number of people. Per person, funds may actually be lower than in the past.
Evidence from previous schemes suggests that when the financial viability of providers is strained they adapt by neglecting the individuals who require the most support. Payment discounting by prime contractors means that there is a strong incentive for them to focus on the individuals most likely to trigger payments. It also makes them less likely to pass down sufficient funds to subcontractors to focus on the hardest to help.
Crucially, we suggest, there remains little available evidence surrounding the third sector organisations involved in delivery – who they are, what characteristics they have, and so on. This is something we aim to address.
Nevertheless, the problem facing those who make – well founded – criticisms is that Government has been quite clear where it stands. The DWP is deliberately not dictating how services should be delivered, including the detail of exactly how the third sector should be involved. A programme of this sort involves the transfer of risk to the Prime contractors and by extension their supply chain, so from Government’s point of view once contracts have been signed they shouldn’t be concerned apart from monitoring and rewarding performance.
And finally, but importantly, everyone needs to accept that the Programme is still in its infancy and some of the issues reported to date are teething problems. The programme as a whole does need to be judged on performance in normal operation.
But we want to pose a number of challenges based on our initial research:
Size matters
Firstly, it is understandable that many people have focussed on the perceived plight of the third sector. But one early message is that the size of subcontractor might be a more relevant determinant of how they experience the Programme. There are many medium to large TSOs that have long experience of delivering such services under contract and are able to weigh up the risk of engaging (as well as having a cushion of reserves). Equally, small private sector organisations might find themselves just as ‘mistreated’ as small TSOs.
In any case, do we know how distinctive are the services being delivered by third sector organisations in the Work Programme? – in other words how relevant is ‘sector’ as an explanatory factor in the first place?
It’s all about Results
Secondly, Performance will be measured strictly on outcomes – the rate of getting people into sustained employment – not by other more diffuse measures such as community benefits. This will be a harsh task master and one unexpected outcome (for some observers) will be a questioning of previous orthodoxies. How confident are we that third sector organisations will necessarily do things better?
The problem for those criticising Government’s implementation of the Work Programme is that they might well be ‘intensely relaxed’ about the prospect of failure of TSOs and other subcontractors. Ministerial statements suggest just this. So there might be limited purchase from this line of argument.
Payment by Results
Thirdly, It seems to be the case that the Work Programme is a forerunner for a much wider and ambitious programme of introduction of PbR in the reform of public services. Hence it is crucial to monitor and learn from the performance of the WP and for the third sector in particular to understand its implications. This is what TSRC’s research aims to do.
A key question for those concerned with the Sector’s involvement in the work programme and similar public service delivery models is the longer term health of the ‘on the ground’ ecosystem of third sector organisations. As noted, the Government might think that this doesn’t matter – the market will sort it out – but the creation of a ‘scorched earth’ landscape might mean that TSOs won’t be around to pick up any pieces in supporting the most needy. That wasn’t what was meant by the Big Society.
More on the third sector delivering employment services