If the Work Programme works, why pay employers up to £2275 at week 26?

Why is the government providing additional funding for work Programme providers to pay employers to keep a young person employed at week 26?

Providers can offer employers the incentive of up to £2275 if they pay the young person at least minimum wage for up to 26 weeks.

This means the providers get paid for the job start and also extra funding because the young person has stayed in work for a longer retention period.

However young people will have to wait on average at least 9 months prior to been referred to the Work Programme and then the additional time it takes them to find employment.

Would tax payer’s money not be better spent by offering employers the incentive from day one of the young persons claim? Avoiding paying extra money to the government’s flagship welfare to work provision providers.

Given the current climate employers might be more inclined to take staff on with this incentive but why not offer the support sooner rather than later? Young people might find employment sooner and they may not be claiming benefits as long.

Please will someone explain the logic behind this?

It's the same reason the old employer's subsidy under New Deal wasn't available on Day 1. Basically a large percent of people move off benefits in the first few months of their JSA claim. If a claimant can find work on their own and/or an employer would recruit a young person anyway, it wouldn't make sense to automatically offer a subsidy. As a concerned tax payer, you'd have to agree that it wouldn't make sense to pay for something you'd have got for free!

DWP have always done what they can to avoid paying for services in the first few months of someone's JSA claim - hence the introduction of lots of voluntary activities that can be accessed before the Work Programme. As the length of unemployment grows the more DWP are prepared to invest to move people into work. You may want to argue that the point of investment needs to come sooner, but it's unlikely to come for the majority of unemployed people below 3 months. The Work Programme kicks in when DWP has decided that a particular group needs more intensive help, and likewise the employer subsidy.

You'd need to analyse all of the data and get an audience with DWP if you really want to argue the logic any further.

Hi Steph, virtual.

You could make the case for making the job subsidy available at day 1 of a claim if you could find an assessment tool that could reliably identify those who would not have got a job without it in the first year of a claim.

However, when you test assessment tools, they may be better than random at predicting who would become long-term unemployed but they also identify large numbers as needing help who get jobs without help, and also identify as not needing help people who go on to become long-term unemployed.

DWP took the view that such assessment was a mug's game and not cost-effective. Most providers take the opposite view. Your mileage may vary...

What is the case is that direct wage subsidies (such as this, Future Jobs Fund, New Deal Employer Option, etc etc) have been repeatedly shown to be much more effective than equivalent sums directed at employers through cuts in National Insurance and other taxation - it's a nudge thing where keeping the cash directly linked rather than at one or several removes internally inside firms makes a difference, even if the cash is the same.

Ah ... the holy grail .... an effective assessment tool! :)

DWP assess in a crude way by assigning people to cohorts eg ESA claimants, early access groups etc. While they won't invest in an assessment tool that could lead to truly personalised service delivery, they do prioritise these groups, and that's as good as we're ever going to get.

I see the subsidy more as a tool a young person can use themselves in spec letters, interviews, cold calling etc rather than something designed for Work Programme providers. Under New Deal this approach most definitely opened doors. The number of jobs it created was minimal, but it definitely influenced who got the job.

The subsidy will only be useful for people who have the skills an employer is looking for - if they're unsuitable for the job, £2k isn't going to make an employer recruit them, so it isn't a magic cure all. Work Programme providers will need to make sure the young person has the right skills and are targeting the right jobs before the subsidy comes into its own. That means up front investment by Work Programme providers to help them become competitive. The subsidy is the icing on the cake for the employer.

Ok I take the point most people sign off within the first three months.

I agree day one would therefore not be appropriate in many cases as you could be paying for something that you might get for free. Yet perhaps with an effective means of assessment could be appropriate for some people to access the employment subsidy from day one.

I also take the point the subsidy could be a useful tool that young people could use to help get their foot in the doors of potential employers.

However as a concerned tax payer I think given the current challenging environment faced by young people, don’t you think making the majority wait over 9 months before the fund can be used is a long time?

Does anyone think that it is also an effective way for the government to help increase performance on Work Programme? It must be important to show that the Programme works.

Not to mention providers will get increased payments if the person stays in work for longer will they not? and whilst providers may still need to match people to suitable vacancies to would be surprising if they did not use it as a carrot. I mean otherwise JCP would control the release of the subsidy to employers wouldn't they?

Hi virtual

Plausibly, young people you would have identified as needing such help at 3 months would be identified for the JSA Early Access group (or indeed the day 1 access ex-offender group).

Yes, the Job subsdy element of the Youth Contract should affect measured and paid job outcomes. Whether it generates additional outcomes or shifts job outcomes towards young people we will have to see.

However, providers will still need to ensure that the young people remain in work after the subsidised period to get their sustainment payments.

JSA eligibility for early access onto Work Programme provision is very much the minority of young people isn't it? In fact what is the percentage of early access entrants onto the Work Programme, Paul, do you know?

What is the first average length of time from job outcome payment to the first sustainment payment for providers?

And still why wait so long in the majority of cases?