The UK’s Work Programme for the unemployed

The UK’s coalition government made one of its key policy objectives the reduction of money paid out in benefits for the unemployed. It introduced the Work Programme in 2011 as a partnership with public, private and voluntary sector contractors with the primary aim of helping the long-term unemployed back into work for sustained periods of time.

The challenge

In the UK in 2011, “around 5 million people of working age [were estimated as] receiving out-of-work benefits, around half of whom receive incapacity benefits." [1] Unemployment stood at around 2.5 million. Youth unemployment and long-term unemployment were of particular concern, and “the proportion of individuals living in workless households is one of the highest in the EU." [2]

The initiative

The Work Programme was “a major new payment-for-results welfare-to-work programme that launched throughout Great Britain in June 2011." [3] The aim of the programme was to support the long-term unemployed – “or those at most risk of becoming so." [4] It was central to the UK coalition government’s welfare reforms.

The Department for Work & Pensions (DWP) is responsible for the programme. It expected “to refer 2.1 million people to the Work Programme between June 2011 and March 2016, at a total cost of £2.8 billion." [5]

The DWP usually refers people to the Work Programme after they have been unemployed for between 9 and 12 months. [6] It “assigns people to different payment groups depending on factors such as age or benefit type.” It focuses on “harder-to-help groups such as people who claim Employment and Support Allowance (ESA)" [7] rather than “easier-to-help groups such as Jobseeker’s Allowance (JSA) claimants.” [8]

The DWP pays ‘prime contractors’ to provide support, where contractors can be private or public sector organisations or NGOs. [9] “The amount each prime contractor receives depends largely on its success in getting people into sustained work. The Department pays a different amount depending on the participant’s payment group. Contractors can be private, public or third sector organisations.”

The public impact

In July 2014, the National Audit Office reported on the progress of the Work Programme:

  • “By March 2014 it had referred 1.6 million people, 76 per cent of the total ...[10]
  • “Around 296,000 people had achieved job outcomes, and 687,000 had completed two years on the Work Programme."
  • The DWP had saved £21 million “by extrapolating invalid job outcome payments and reducing payments to prime contractors accordingly." [11]

In October 2015, the Parliamentary Work and Pensions Committee reported on the progress of the Work Programme. “Committee chairman Frank Field said the DWP ‘deserves credit for implementing a programme which, in general, produces results at least as good as before, for a greatly reduced cost per participant'. [12] But the Labour MP added: ‘We must not forget that nearly 70% of participants are completing the Work Programme without finding sustained employment. We must do much better’."

What did and didn't work

All cases in our Public Impact Observatory have been evaluated for performance against the elements of our Public Impact Fundamentals.

Legitimacy

Public Confidence Good

An opinion poll from November 2010 indicated that the majority of the public were in favour of the government’s more restrictive benefits policies. “A new YouGov poll for Channel 4 News yesterday found strong public support for many of the government’s planned cuts to benefits. [16] 73% of respondents supported the idea of making the long-term unemployed do compulsory work placements or risk losing benefits, 66% supported withdrawing JSA from people who turn down job offers or interviews, 69% supported more stringent testing of people claiming disability living allowance and 68% supported capping housing benefit at £400 a week.”

However, the scheme has also received some negative press, with claims that “in half the areas where the scheme is being run, people would have been more likely to get a job if they hadn't taken part in the programme.”

Stakeholder Engagement Strong

The main stakeholders were the government, in particular the DWP, the ‘prime contractors’ from the private, public and voluntary sectors (and their subcontractors, if any, and the long-term unemployed.

All participants were strongly engaged, the DWP because it was a flagship programme of the coalition government, as well as the contractors, many of whom benefited financially from their services. There were “18 prime providers … selected to deliver 40 Work Programme contracts across the 18 contract areas throughout Great Britain." [13]

Political Commitment Strong

The Work Programme was one of the coalition government’s social policy priorities. "The Work Programme along with the Universal Credit, represents the UK government’s strategy to tackle long-term dependency and its budgetary cost through back to work assistance and its long-term commitment." [14] It replaced the previous Labour government’s programmes such as the New Deal, Employment Zones and Pathways to Work, and the government’s reputation in benefits policies was heavily dependent on its success. [15]

Policy

Clear Objectives Strong

The objectives of the Work Programme were clearly stated at the outset and were explicitly measurable:

  • “Aims – move more participants into work. Measuring success – an increase in the rate at which participants move
    into sustained employment." [17]
  • “Aims – move participants into work sooner. Measuring success – a decrease in the average time participants are on benefit".
  • “Aims – move participants into work for longer. Measuring success – an increase in average time in employment for a participant".
  • “Aims – lead to less ‘parking’ of harder-to-help groups. Measuring success – a reduction in the gap between off flow/time in employment rates for disadvantaged groups compared to other participants.”

Evidence Fair

Payments-by-results initiatives are not new and can be traced back as far as Victorian England and are seen in the present day in countries such as the US and Australia. [18] Payment by results schemes have been used in other UK ministry departments for example the Ministry of Health introduced a PbR initiative into the National Health Service in 2004. [19]

However the policy has been described as “the biggest experiment in public service reform." [20] In June 2015 (after the scheme had been implemented) there was still not clear evidence of the successes of PbR initiatives, the head of the National Audit Office stated:

“While its supporters argue that, by its nature, Payment by Results offers value for money, these contracts are hard to get right, which generates risk and cost for commissioners. Payment by Results potentially offers benefits such as innovative solutions to intractable problems. If it can deliver these benefits, then the increased risk and cost may be justified, but this requires credible evidence. Without such evidence, commissioners may be using this mechanism in circumstances to which it is ill-suited, to the detriment of value for money." [21]

Feasibility Fair

The financial feasibility of the Work Programme has been called into question, not least by the Parliamentary Public Accounts Committee:

  • “Evidence shows that 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." [22]
  • “Data from Work Programme providers shows that they are, on average, spending less than half what they originally promised on these harder to help groups …"
  • “The Department has designed the contracts with providers in a way which exposes the taxpayer financially.”

Action

Management Strong

There is a committee commissioned by the DWP to monitor the results, a panel of third party experts to evaluate the programme, and after the implementation the committee was implementing step by step changes to ensure the progress towards the goals.

  • "The DWP has commissioned a consortium of third party experts to undertake a multi-year evaluation of the Work Programme and assess the kinds of issues raised by claimants and contractors." [23]
  • “The Department’s Compliance Monitoring Officers have been in place since the start of the Work Programme. They use the contractors’ minimum services standards and a set of 14 standardised quality measures to monitor each prime contractor’s service quality. Each month, the Compliance Monitoring Officers randomly test 1,000 individual case files." [24]
  • There is a pragmatic resolution of issues or the problems faced. For example in April 2014, “in response to the difficulty of monitoring and enforcing minimum service standards the DWP has changed how it oversees contractor performance” by recruiting an assurance officer. [25]

Measurement Strong

Performance comparison is the main indicator that was used by the DWP and policymakers in adapting the policy to achieve the objectives:

  • "Measured performance is based on job outcomes claimed by contractors and validated by the Department. [26] The Department has estimated how many job outcomes are hidden in this way. It identified people who had long spells off benefit but for whom no job outcome had been claimed. It then used real-time information on earnings from HM Revenue & Customs to estimate how many of these people were actually in work.”
  • The DWP’s compliance monitoring officers have an important role in the Work Programme. “Each month, the Compliance Monitoring Officers randomly test 1,000 individual case files."[27]
  • The department uses a two-step validating approach for job outcome and sustainment payment option.

Alignment Fair

It was not clear that there was adequate alignment between the DWP and the prime providers:

  • “The Department has not set out the levels of support it considers each contractor should give people. Instead the Department asked prime contractors to set their own minimum service standards in their bids to help guarantee service quality regulators of employment barriers." [28]
  • “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. This may include Newcastle College Group whose contract has been terminated." [29]

This had a detrimental effect on the other main stakeholders, the long-term unemployed. “It is a scandal that some of those in greatest need of support are not getting the help they need to get them back to work and are instead being parked by providers because their case is deemed just too hard." [30]