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DWP fails to incentivise Work Programme providers to support ‘harder-to-help claimants’ says report

The Department of Work and Pensions has failed to incentivise Work Programme providers to support ‘harder-to-help’ claimants to work, according to a report from the Public Accounts Committee (PAC).

The report also highlighted that 90% of Employment and Support Allowance claimants on the Work Programme have not moved into jobs.

Speaking as the committee published the report, chair Margaret Hodge MP said that “differential payments” have not stopped providers focusing on easier-to-help individuals and “parking” harder-to-help claimants, often those with disabilities, including mental health problems. Data also showed that on average Work Programme providers are spending less than half of what they originally promised on these harder to help groups.

Hodge said: “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.”

Quoting figures from the DWP, the committee’s report highlighted that around 90% of people claiming benefits will move into a job within a year, with the remaining 10% moving into the Work Programme. Therefore all participants on the programme can be considered as ‘harder to help’.

While the DWP pays prime contractors more for getting harder-to-help participants into work, its interim evaluation showed that there was no clear relationship between payment groups and the nature of support the participants receive. In its recommendations, the committee’s report said that the DWP should review the impact of differential payments.

The report also said that the DWP designed the contracts with providers in a way that “exposed it financially”. The way performance is measured means that the fewer clients that are referred to a provider, the better their performance will look. They then become entitled to additional incentive payments. For example, Newcastle College Group, whose contract will be terminated in March 2015 on performance grounds, may still be entitled to incentive payments because the measurements chosen by the DWP distort real performance.
Because of the flawed performance measure, the DWP expects to make incentive payments – intended only to reward exceptional performance – to all 18 of the prime contractors for all 40 of the contracts. The DWP estimates that it could end up paying prime contractors incentive payments totalling £31m for 2014/15 and £61m over the Work Programme’s life (compared to £6m and £17m respectively if it had a more appropriate performance measure).

The DWP has confirmed that any incentive payment due to the Newcastle College Group, which is required to work within the terms of its contract up until March 2015, would be calculated on the basis of its performance during its notice period. The Department has estimated that it paid £11m to providers for sustainment payments that it is unlikely to be able to validate, an amount which it has declared as a loss in its 2013/14 annual accounts. In addition, the report stated that the DWP had told the committee it has recovered more than £500k from one prime contractor, and that it hopes to recover all £11m.

In further recommendations outlined in the report, the PAC said:
  • the DWP should confirm whether Newcastle College Group will or will not receive an incentive payment for 2014/15
  • update the committee on its progress in clawing back from prime contractors the estimated over payment of £11m for invalid sustainment payments
  • provide an update on its progress renegotiating its contracts with prime contractors, including a summary of the changes it has made to the contracts, the intended impact of the changes and the cost of making the changes.

A statement from the DWP sent to Recruiter said: “As this report says, the Work Programme is helping more people than any previous employment programme, with over 330,000 people moving into lasting work and finally gaining the economic security that comes with a regular pay packet.
“The Work Programme has contributed to the largest drop in long-term unemployment in a generation and providers are paid by results, with more money for the hardest to reach - but only if they get those people back into lasting work.”

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