The Government Work Programme
We cut through the hype and cynicism
The Work Programme (GWP), launched today by the Department for Work and Pensions (DWP), is the latest government attempt to lance Britain’s unemployment boil. Billed by employment minister Chris Grayling as a “giant dating agency,”, the initiative brings all existing welfare-to-work schemes together under a single banner, with a clear remit to train, place and mentor Britain’s 2.4 million unemployed.
A network of preferred bidders, including charities, commercial bodies and third-sector agencies, have been selected to train and place unemployed adults in each UK region, with an agreed supply chain operating beneath them. Grayling says the providers will invest around £580m between them in its early years, and it seems the initiative has real teeth; if a claimant is found to have turned down a reasonable job offer, they could lose their benefit entitlement for up to three years.
Reaction has, to put it mildly, been mixed. While the government claims this is the most significant welfare project for generations, opponents claim it is fundamentally flawed, a pointless concoction of spin and bluster. But what is the truth?
It seems that the government, having established the terms of engagement and selected its preferred partners, is happy to sit back and let them do the work; indeed, it is hard to find any direction from the DWP as to how each individual plan will be structured.
Some might be concerned that this will create scope for huge regional disparities in operating practices. Some regions could end up with far better training programmes than others, depending on the techniques put into place by their local contractors – hardly the clear, consistent approach the Work Programme purports to represent.
Yet, on the other hand, supporters will claim the government is simply allowing the specialists to do what they do best – far better than over-regulating and getting in the way. Furthermore, the bidding process has, by all accounts, been rigorous. Nigel Lemmon, welfare director for preferred bidder A4E, told us:
“During the bidding round we had to provide a detailed delivery model, with a full supply chain, and fill out a commercial spreadsheet in terms of their performance offer. The process covered a number of contract package areas, and was very intensive from a resource/time point of view.”
Perhaps, then, we can take comfort in the fact that the government has made its expectations crystal clear during the bidding phase. But what of another key criticism – that the DWP has favoured bigger commercial firms, and established providers, at the expense of the little guys?
Only one of the department’s preferred bidders, G4S, is a new entrant to the welfare-to-work market – suggesting that the programme’s administrators have favoured existing players. Furthermore, the tendering process stipulated that all prime contractors must have annual turnover of more than £20m – ruling out the majority of charities. Indeed, only three out of the 40 major contracts issued to date have been awarded to voluntary organisations.
Given that many charities played a successful role in Labour’s New Deal initiative, this seems extremely foolish; furthermore, many believe the commercialisation of a welfare strategy is inherently wrong – when contractors talk of the unemployed as “customers,”, you can certainly understand why.
To explore these criticisms further, we sought the views of CDG, one of the successful framework bidders and a charity to boot – albeit one which turns over millions of pounds a year. Business development director Richard Clifton told us:
“If you wanted to be a prime contractor you needed to have the financial ability to cover the costs of the first few years of running. We’ve had to set aside £10m – most charities can’t take that commercial risk, we’re a larger charity so we can afford to do it.
“But, there are hundreds of other non-profits on the sub-contractor level. Being on the sub-contractors’ list protects the smaller bodies from the commercial risk. And there is a good blend of companies in the supply chain between commercial, third sector and charities. We have 15 organisations on one of our supply chains, and over half of them are charities.”
Finally, there’s the payment system. For each individual a contractor takes on, the DWP will pay around 10% of the total fee upfront – i.e. for the initial registration and assessment process. The rest of the money will be paid in stages, based on how long that individual stays in a particular job – the full amount will only be paid once they’ve stayed for two years.
The amount paid for each individual depends on their circumstances, up to a maximum of £14,000 for those in greatest need. This isn’t a lot of money when you consider the time, and labour, required to place a candidate in the right job, and keep them there for up to two years.
In fact, it seems there’s a real risk providers will ultimately lose money; PriceWaterhouseCoopers has already severed all ties with the programme due to concerns that it is not commercially viable. Some would also argue the payment structure encourages contractors to force their ‘customers’ into unsuitable jobs, and push them to stay there rather than finding something more satisfying.
Yet Carmen Watson, managing director of recruitment agency Pertemps, believes that “under previous programmes, people got spewed out back into the system because of short-term thinking. This won’t be the case with the new programme; it’s very much in the interest of the training providers to actually understand the candidates, and place them in the right jobs.”
Meanwhile, the contractors we spoke to assured us there would be no prioritising in treatment or selection. Nigel Lemmon said:
“We look at our customers and we assess the barriers they have to becoming employed – they could be drug-related, illiteracy, mental health. We will work with all customers who are prepared to work with us. There is a whole mix out there, and the customers are not prioritised.”
Cut them some slack
After years of flawed policies and broken promises, perhaps we are too quick to condemn any new initiative launched by the government. As Nigel Lemmon says:
“The DWP have had a huge challenge to create a framework in which we can all deliver services much more appropriately. Previously we had lots of different contracts under things like New Deal and Pathways to Work etc, but they’ve tried to create an overarching programme where we can utilise our expertise.
“It’s easy to criticise the DWP in the way they’ve been able to help everybody, but the programme will bring a huge change across the whole country.”
The unemployment problem clearly isn’t going to be solved overnight – so maybe, for once, we should cut Cameron some slack.