Submitted by Paul.Bivand on Fri, 13/01/2012 - 5:41pm.
Providers are currently considering the latest advice from DWP as to what they can and can't say before DWP starts releasing quality-assured official statistics this autumn.
Outcomes will definitely not be permitted (as that is part of the DWP schedule) but job entries may be. Referrals and attachments maybe not, for the same reason.
Would be good if Primes would release what they are permitted to do.
Saw a very short piece on this morning's news that the National Audit Office has stated the government has overestimated the number of people the work programme will help into work. It is putting its estimates at 25 or 28 percent (sorry I can't fully remember I hadnt quite woken up and it wasnt clear which group this was). Also expressed concerns that some providers may cut corners to stay profitable and park more vulnerable customers. The minister is apparently disappointed
The Government's biggest department over-estimated how many jobseekers will be helped by a new multibillion-pound work programme, while the risk of fraud and errors going undetected has increased, according to an official report.
The National Audit Office (NAO) warned that the speed at which the Work Programme had been introduced had led to increased risks.
The programme, which replaced virtually all welfare-to-work schemes in England, Scotland and Wales last year, will help 26% of the largest group of jobseekers into work, compared to an estimate of 40% by the Department for Work and Pensions (DWP), said the NAO.
Some of the organisations delivering the programme in areas of high unemployment may struggle to meet targets and could get into "serious financial difficulty", said the report.
The NAO also revealed that the computer programme to support the new scheme was not fully functional when it was launched so that the DWP will not be able to carry out automatic checks to confirm that people who find work have stopped claiming benefits, until March at the earliest.
"The Department needs to ensure that improvements to the IT system are delivered on schedule. In the meantime there is an increased risk of fraud and error going undetected," said the report.
The NAO also noted it had cost £63 million to terminate existing welfare-to-work contracts, and said that no alternatives to the Work Programme were considered, nor was it tested through pilot schemes.
Margaret Hodge, chairwoman of the Public Accounts committee, said: "The rush to get the programme up and running was so great that the supporting IT is still not in place even though the programme was launched eight months ago. This has led to an increased risk of fraud and error."
Employment Minister Chris Grayling said: "Payment by results is a totally new approach for Government and its success simply cannot be assessed in the same old ways. I'm really disappointed that the NAO is producing a report which is partially based on guesswork, when it's private companies and not taxpayers who are carrying the risks.
"Unlike the last government's welfare to work schemes, we only pay when companies succeed in getting the long-term unemployed into sustained employment."
Just 12.2 per cent of Flexible New Deal customers were helped into sustainable employment.
I believe that 26 per cent is too high a figure for Work Programme job outcomes for customers over the age of 25, and will be revised downwards when the number of starts is revealed. Job outcomes for those under 25 will certainly be far lower.
Private companies are carrying the financial risks, but it is the unemployed who are ultimately being failed yet again by the unholy alliance of incompetent politicians and public purse dependent big business.
well, until we see the official stats, I guess its just a guessing game. All I know is that one Tier 1 provider (well resourced and with good presence and strong backing) told me they were just on target but considered it would be an impossible situation if they ever came to be behind target to ever make that up.
The Work Programme has so far spent £63m terminating existing welfare-to-work contracts. Two former contractors have not yet agreed settlements.
Ministers have overestimated the number of people who will get jobs as a result of attendance on the work programme, according to the National Audit Office (NAO). Down from 40 per cent to just 26 per cent.
One of the NAO report's more surprising disclosures is that the Work Programme's software will not be up and running until March. This has left the scheme open to abuse and fraud while making payments of £60m to private contractors, it concludes.
Everything is tickety-boo with the Work Programme.
Submitted by stephw2w on Tue, 24/01/2012 - 1:56pm.
Not only has it spent £63m terminating contracts, it's paid a lot of that to providers who actually hold Work Programme contracts!
It's worth reading the full report as it details how NAO have worked out their predicted performance and why it differs from DWP. It isn't conclusively saying WP will only achieve 26% job outcomes. The report is highlighting risks from the way the WP was introduced and isn't a report on its success, so it's being slightly misrepresented in the media (surprise surprise).
Submitted by Paul.Bivand on Tue, 24/01/2012 - 2:58pm.
Sabrina
You're too negative about FND outcomes.
Chris Grayling responded to a Stephen Timms question with a useful set of figures on performance for those who could have achieved their twelve month service period.
That indicates (to me) that there were variations around the average of 21% 3-month job outcomes, with a Max (!) of 27%. It's likely that NAO were working off this sort of figure and adding an extra 5% for the second year of service to get 26%.
The relevant question is whether the FND results quoted were depressed by the state of the economy in 2009-10, or by start-up factors, or whether the recovery in the labour market between June 2009 and 2010 should have produced better outcomes.
Why is the governments target of 40 per cent of Work Programme (WP) 25 plus job outcomes so low in the first place?
This 40 per cent figure suggests that the government doesn't really have much faith in its flagship 'revolutionary' employment programme to succeed if it's best case scenario has less than half of the largest group of WP customers gaining employment.
The government thinks that 60 per cent of those who are on the WP will not find a job. Shocking.
The government thinks that 60 per cent of WP customers will not find a job.
The NAO believes that 74 per cent of WP customers will not find a job.
I don't know which figure will prove to be more accurate, but both indicate that the WP is a failure (in tackling long-term unemployment) even before the data is in.
sabrina - surely that depends on how many WP customers would have found a job without the WP? (Ie if it was only, say, 10% then getting 40% into work is a success...)
All the vacancies would be filled whether there was a Work Programme or not, the WP does not create jobs and so does not lower the unemployment figures by even 1 person, however it does cost around £13,000 for everyone that gets employment of 26 weeks or more while on the WP.
Of course I've got employment through the WP, I administer for a Prime ... But I guess that's not really the point of it.
But the question is who fills the vacancies. If it is you or me, there is no saving to the government as we were already in work and paying income tax and national insurance. If it is somebody who has been long term unemployed, then there is a saving as the person will stop claiming benefits and start paying income tax and NI and probably higher levels of VAT (which could relatively quickly save more than £13,000 if that person is ex IB etc). So the WP is about moving the most 'expensive' citizens into the vacancies that do exist.
Obviously a healthy economy and higher numbers of vacancies make this easier, but it is not the job of the WP to create them.
I am not usually a one for sticking up for primes but where the heck does the idea come from that they will earn £13000 from for 26 weeks of employment. My understanding is that the job outcome payments begin to generate after a period of continuous employment but even then it is paid out in stages. In order for a prime to claim that serious amount of money, they would have had to move ESA / IB customers from long term benefits into long term sustained employment. That wont happen for these customers WITHOUT significant intervention and without significant costs to the prime or their deliverer. Kaz you seem to think this is pure profit.
All that primes get is a relatively small attachment fee (due to be phased out) and serious money only when they have moved people into sustainable employment. Now those that are successful at this will make serious money. Those who only move lets say 26% of the easiest groups into jobs will most likely go bust.
Submitted by sarandreath on Wed, 25/01/2012 - 8:55pm.
Every Prime (and subbie actually) that I have spoken to is saying that the ESA / IB customers are NOT actually being referred in any great numbers. If this situation continues they are not going to make anywhere near the £13,000 quoted!
The NAO report also implies that WP performance is likely to be four percentage points lower than what the DWP thought would happen without any WP whatsoever! No wonder Chris Grayling has criticised the report as 'guesswork'.
The DWP's estimation of 'non-intervention performance' is 30% – the number of jobs the department expects would have been found by the unemployed without any WP service. That performance level is four percentage points above the 26% success the NAO thinks is achievable by WP providers and their sub-contractors.
Over-optimism and the Work Programme: why we should be worried
High expectations for the success of the government scheme to get people back into work will mean trouble at the frontline
Ian Mulheirn
Guardian Professional, Wednesday 25 January 2012 11.46 GMT
A National Audit Office report has criticised the introduction of the government's flagship Work Programme scheme to get people back to work.
The NAO report, released on Wednesday, explains how it has based its assessments of likely provider performance on the most comparable recent programme – the Flexible New Deal.
However Chris Grayling, the work and pensions secretary, said the findings were based on "guesswork", which raises questions about what exotic flavour of guesswork underpinned the over-optimistic projections the Department for Work and Pensions (DWP) made for the new scheme.
So how big are the discrepancies? The DWP said it expected providers to get some 40% of the main client group into work, while the NAO says past experience in a better economic environment suggests that they'll only achieve 26%.
This supports estimates from a similar analysis the Social Market Foundation (SMF) undertook back in August 2011 that performance would be 27.8%. Grayling tried to brush off the figures on Radio 4's Today programme at the time and he's doing the same with the latest report.
The NAO figures also imply that performance is likely to be four percentage points lower than what the DWP thought would happen without any employment service whatsoever. All rather embarrassing.
But so what if the DWP has been over-optimistic. Why does that matter? The answer is the effect it will have on frontline services. In a payment-by-results programme that has been calibrated to be profitable only for good providers, the significant overestimate of what's doable poses a substantial risk to the viability of this important, multibillion pound public service.
With long-term unemployment rising, now is not the time to have a dysfunctional employment service, and the social and economic consequences could last a generation. What's more, with other departments such as the Ministry of Justice seeking to emulate the DWP, problems here risk discrediting an important reform agenda.
A chart from the NAO's report, helps to illustrate the impact. It shows how the average provider's profit margin varies with the cost of providing the service and the number of six-month jobs they achieve for their job seekers. If providers hit 40% performance they can still make a profit of around 5% on current plans. If that's doable then fair enough, especially for such outstanding results.
But what happens if performance is much worse than that 40% figure? Even at DWP's "non-intervention performance" of 30% – the number of jobs the department expects would have been found without any service – at the service-cost levels proposed, providers will make a loss of between 30% and 40%. Even that performance level is four percentage points above the 26% success the NAO thinks is achievable.
But it gets worse. As the NAO point out, the providers were asked when bidding to offer DWP discounts on the headline outcome payments. While DWP said it would pay, say £1,200 for a six-month job, bidders were encouraged to offer to take a lower amount. Once the contracting was complete, the average discount was around 6%, which the NAO estimates will lower profitability by a further 5%.
And if we add on the difference between the NAO's estimated performance (26%) and the "non-performance level" (30%), the NAO's chart implies that we may see something like a further 10% reduction in profitability at any given level of costs. Add it all together and it's fair to say that the NAO figures imply that providers delivering the service they bid for are staring at a loss of somewhere in the region of 40% to 50%. Something has to give.
This massive overestimate of achievable performance has put Work Programme providers and their charity subcontractors in a very perilous position. Assuming that the NAO is right, the only solution is for them to cut services at the frontline to save money.
Eyeballing the NAO's chart, we can get an idea of how much services need to be cut for providers to remain viable. The average provider may have to slash their spending by something like a third before they become profitable. The alternative is failure for them and their supply chain. What impact an effective one-third cut in funding will do to service quality is anyone's guess, but the impact on subcontractors won't be pretty.
Ian Mulheirn is director of the Social Market Foundation
Also, remember that whilst the reward for getting ESA/IB customers in to work is significant, the % of those customers you are working with will be quite small and the % of that % who go into work will be even smaller. The amount earned must be divided into the cost of supporting those customers who don't go into work but are still supported.
Submitted by sabrina on Mon, 06/02/2012 - 10:50am.
BBC NEWS
3 February 2012
Work programme on track, Chris Grayling says
About 20% of unemployed people who have been on the government's main welfare-to-work scheme, the Work Programme, for at least six months have been found a job, the BBC has learnt. The figures come from the trade body representing the main contractors delivering the programme. The government says the figures show the programme is on target.
But several contractors have said they are struggling to employ the long-term jobless in the current climate.
"The early indications for those customers who started in June 2011 are broadly in line with expectations," said Kirstie McHugh, chief executive of the Employment Related Services Association (ERSA), which provided the figures.
"However, the economy is a concern so we are going to have to keep a close eye on things."
When the programme was launched in June 2011, the government said it hoped that 40% of people on it would get a job but speaking to the PM programme on BBC Radio 4, Employment Minister Chris Grayling said he was still pleased with the progress.
"The Work Programme is doing a good job and is on track. It is helping long-term unemployed people into work."
Providers are currently considering the latest advice from DWP as to what they can and can't say before DWP starts releasing quality-assured official statistics this autumn.
Outcomes will definitely not be permitted (as that is part of the DWP schedule) but job entries may be. Referrals and attachments maybe not, for the same reason.
Would be good if Primes would release what they are permitted to do.
Saw a very short piece on this morning's news that the National Audit Office has stated the government has overestimated the number of people the work programme will help into work. It is putting its estimates at 25 or 28 percent (sorry I can't fully remember I hadnt quite woken up and it wasnt clear which group this was). Also expressed concerns that some providers may cut corners to stay profitable and park more vulnerable customers. The minister is apparently disappointed
http://uk.news.yahoo.com/warning-over-scheme-risks-000633779.html
The Government's biggest department over-estimated how many jobseekers will be helped by a new multibillion-pound work programme, while the risk of fraud and errors going undetected has increased, according to an official report.
The National Audit Office (NAO) warned that the speed at which the Work Programme had been introduced had led to increased risks.
The programme, which replaced virtually all welfare-to-work schemes in England, Scotland and Wales last year, will help 26% of the largest group of jobseekers into work, compared to an estimate of 40% by the Department for Work and Pensions (DWP), said the NAO.
Some of the organisations delivering the programme in areas of high unemployment may struggle to meet targets and could get into "serious financial difficulty", said the report.
The NAO also revealed that the computer programme to support the new scheme was not fully functional when it was launched so that the DWP will not be able to carry out automatic checks to confirm that people who find work have stopped claiming benefits, until March at the earliest.
"The Department needs to ensure that improvements to the IT system are delivered on schedule. In the meantime there is an increased risk of fraud and error going undetected," said the report.
The NAO also noted it had cost £63 million to terminate existing welfare-to-work contracts, and said that no alternatives to the Work Programme were considered, nor was it tested through pilot schemes.
Margaret Hodge, chairwoman of the Public Accounts committee, said: "The rush to get the programme up and running was so great that the supporting IT is still not in place even though the programme was launched eight months ago. This has led to an increased risk of fraud and error."
Employment Minister Chris Grayling said: "Payment by results is a totally new approach for Government and its success simply cannot be assessed in the same old ways. I'm really disappointed that the NAO is producing a report which is partially based on guesswork, when it's private companies and not taxpayers who are carrying the risks.
"Unlike the last government's welfare to work schemes, we only pay when companies succeed in getting the long-term unemployed into sustained employment."
Just 12.2 per cent of Flexible New Deal customers were helped into sustainable employment.
I believe that 26 per cent is too high a figure for Work Programme job outcomes for customers over the age of 25, and will be revised downwards when the number of starts is revealed. Job outcomes for those under 25 will certainly be far lower.
Private companies are carrying the financial risks, but it is the unemployed who are ultimately being failed yet again by the unholy alliance of incompetent politicians and public purse dependent big business.
well, until we see the official stats, I guess its just a guessing game. All I know is that one Tier 1 provider (well resourced and with good presence and strong backing) told me they were just on target but considered it would be an impossible situation if they ever came to be behind target to ever make that up.
The Work Programme has so far spent £63m terminating existing welfare-to-work contracts. Two former contractors have not yet agreed settlements.
Ministers have overestimated the number of people who will get jobs as a result of attendance on the work programme, according to the National Audit Office (NAO). Down from 40 per cent to just 26 per cent.
One of the NAO report's more surprising disclosures is that the Work Programme's software will not be up and running until March. This has left the scheme open to abuse and fraud while making payments of £60m to private contractors, it concludes.
Everything is tickety-boo with the Work Programme.
Not only has it spent £63m terminating contracts, it's paid a lot of that to providers who actually hold Work Programme contracts!
It's worth reading the full report as it details how NAO have worked out their predicted performance and why it differs from DWP. It isn't conclusively saying WP will only achieve 26% job outcomes. The report is highlighting risks from the way the WP was introduced and isn't a report on its success, so it's being slightly misrepresented in the media (surprise surprise).
http://www.w2wsolutions.co.uk/news-article/nao-report-into-the-work-prog...
And did anyone ever believe a DWP IT system would be up and working effectively when it was needed? I give you LMS and PRaP! :)
Sabrina
You're too negative about FND outcomes.
Chris Grayling responded to a Stephen Timms question with a useful set of figures on performance for those who could have achieved their twelve month service period.
http://www.theyworkforyou.com/wrans/?id=...
That indicates (to me) that there were variations around the average of 21% 3-month job outcomes, with a Max (!) of 27%. It's likely that NAO were working off this sort of figure and adding an extra 5% for the second year of service to get 26%.
The relevant question is whether the FND results quoted were depressed by the state of the economy in 2009-10, or by start-up factors, or whether the recovery in the labour market between June 2009 and 2010 should have produced better outcomes.
Inclusion blog post now up
http://www.cesi.org.uk/blog/2012/jan/nao...
Summarises Inclusion's analysis of impact of economy on job outcomes.
Why is the governments target of 40 per cent of Work Programme (WP) 25 plus job outcomes so low in the first place?
This 40 per cent figure suggests that the government doesn't really have much faith in its flagship 'revolutionary' employment programme to succeed if it's best case scenario has less than half of the largest group of WP customers gaining employment.
The government thinks that 60 per cent of those who are on the WP will not find a job. Shocking.
The government thinks that 60 per cent of WP customers will not find a job.
The NAO believes that 74 per cent of WP customers will not find a job.
I don't know which figure will prove to be more accurate, but both indicate that the WP is a failure (in tackling long-term unemployment) even before the data is in.
sabrina - surely that depends on how many WP customers would have found a job without the WP? (Ie if it was only, say, 10% then getting 40% into work is a success...)
All the vacancies would be filled whether there was a Work Programme or not, the WP does not create jobs and so does not lower the unemployment figures by even 1 person, however it does cost around £13,000 for everyone that gets employment of 26 weeks or more while on the WP.
Of course I've got employment through the WP, I administer for a Prime ... But I guess that's not really the point of it.
But the question is who fills the vacancies. If it is you or me, there is no saving to the government as we were already in work and paying income tax and national insurance. If it is somebody who has been long term unemployed, then there is a saving as the person will stop claiming benefits and start paying income tax and NI and probably higher levels of VAT (which could relatively quickly save more than £13,000 if that person is ex IB etc). So the WP is about moving the most 'expensive' citizens into the vacancies that do exist.
Obviously a healthy economy and higher numbers of vacancies make this easier, but it is not the job of the WP to create them.
I am not usually a one for sticking up for primes but where the heck does the idea come from that they will earn £13000 from for 26 weeks of employment. My understanding is that the job outcome payments begin to generate after a period of continuous employment but even then it is paid out in stages. In order for a prime to claim that serious amount of money, they would have had to move ESA / IB customers from long term benefits into long term sustained employment. That wont happen for these customers WITHOUT significant intervention and without significant costs to the prime or their deliverer. Kaz you seem to think this is pure profit.
All that primes get is a relatively small attachment fee (due to be phased out) and serious money only when they have moved people into sustainable employment. Now those that are successful at this will make serious money. Those who only move lets say 26% of the easiest groups into jobs will most likely go bust.
Every Prime (and subbie actually) that I have spoken to is saying that the ESA / IB customers are NOT actually being referred in any great numbers. If this situation continues they are not going to make anywhere near the £13,000 quoted!
The NAO report also implies that WP performance is likely to be four percentage points lower than what the DWP thought would happen without any WP whatsoever! No wonder Chris Grayling has criticised the report as 'guesswork'.
The DWP's estimation of 'non-intervention performance' is 30% – the number of jobs the department expects would have been found by the unemployed without any WP service. That performance level is four percentage points above the 26% success the NAO thinks is achievable by WP providers and their sub-contractors.
http://www.guardian.co.uk/local-government-network/2012/jan/25/over-opti...
Over-optimism and the Work Programme: why we should be worried
High expectations for the success of the government scheme to get people back into work will mean trouble at the frontline
Ian Mulheirn
Guardian Professional, Wednesday 25 January 2012 11.46 GMT
A National Audit Office report has criticised the introduction of the government's flagship Work Programme scheme to get people back to work.
The NAO report, released on Wednesday, explains how it has based its assessments of likely provider performance on the most comparable recent programme – the Flexible New Deal.
However Chris Grayling, the work and pensions secretary, said the findings were based on "guesswork", which raises questions about what exotic flavour of guesswork underpinned the over-optimistic projections the Department for Work and Pensions (DWP) made for the new scheme.
So how big are the discrepancies? The DWP said it expected providers to get some 40% of the main client group into work, while the NAO says past experience in a better economic environment suggests that they'll only achieve 26%.
This supports estimates from a similar analysis the Social Market Foundation (SMF) undertook back in August 2011 that performance would be 27.8%. Grayling tried to brush off the figures on Radio 4's Today programme at the time and he's doing the same with the latest report.
The NAO figures also imply that performance is likely to be four percentage points lower than what the DWP thought would happen without any employment service whatsoever. All rather embarrassing.
But so what if the DWP has been over-optimistic. Why does that matter? The answer is the effect it will have on frontline services. In a payment-by-results programme that has been calibrated to be profitable only for good providers, the significant overestimate of what's doable poses a substantial risk to the viability of this important, multibillion pound public service.
With long-term unemployment rising, now is not the time to have a dysfunctional employment service, and the social and economic consequences could last a generation. What's more, with other departments such as the Ministry of Justice seeking to emulate the DWP, problems here risk discrediting an important reform agenda.
A chart from the NAO's report, helps to illustrate the impact. It shows how the average provider's profit margin varies with the cost of providing the service and the number of six-month jobs they achieve for their job seekers. If providers hit 40% performance they can still make a profit of around 5% on current plans. If that's doable then fair enough, especially for such outstanding results.
But what happens if performance is much worse than that 40% figure? Even at DWP's "non-intervention performance" of 30% – the number of jobs the department expects would have been found without any service – at the service-cost levels proposed, providers will make a loss of between 30% and 40%. Even that performance level is four percentage points above the 26% success the NAO thinks is achievable.
But it gets worse. As the NAO point out, the providers were asked when bidding to offer DWP discounts on the headline outcome payments. While DWP said it would pay, say £1,200 for a six-month job, bidders were encouraged to offer to take a lower amount. Once the contracting was complete, the average discount was around 6%, which the NAO estimates will lower profitability by a further 5%.
And if we add on the difference between the NAO's estimated performance (26%) and the "non-performance level" (30%), the NAO's chart implies that we may see something like a further 10% reduction in profitability at any given level of costs. Add it all together and it's fair to say that the NAO figures imply that providers delivering the service they bid for are staring at a loss of somewhere in the region of 40% to 50%. Something has to give.
This massive overestimate of achievable performance has put Work Programme providers and their charity subcontractors in a very perilous position. Assuming that the NAO is right, the only solution is for them to cut services at the frontline to save money.
Eyeballing the NAO's chart, we can get an idea of how much services need to be cut for providers to remain viable. The average provider may have to slash their spending by something like a third before they become profitable. The alternative is failure for them and their supply chain. What impact an effective one-third cut in funding will do to service quality is anyone's guess, but the impact on subcontractors won't be pretty.
Ian Mulheirn is director of the Social Market Foundation
Also, remember that whilst the reward for getting ESA/IB customers in to work is significant, the % of those customers you are working with will be quite small and the % of that % who go into work will be even smaller. The amount earned must be divided into the cost of supporting those customers who don't go into work but are still supported.
DWP have released their revised view of volumes following the November OBR forecast.
Article in the News updates section. http://indusdelta.co.uk/story/dwp_raises...
BBC NEWS
3 February 2012
Work programme on track, Chris Grayling says
About 20% of unemployed people who have been on the government's main welfare-to-work scheme, the Work Programme, for at least six months have been found a job, the BBC has learnt. The figures come from the trade body representing the main contractors delivering the programme. The government says the figures show the programme is on target.
But several contractors have said they are struggling to employ the long-term jobless in the current climate.
"The early indications for those customers who started in June 2011 are broadly in line with expectations," said Kirstie McHugh, chief executive of the Employment Related Services Association (ERSA), which provided the figures.
"However, the economy is a concern so we are going to have to keep a close eye on things."
When the programme was launched in June 2011, the government said it hoped that 40% of people on it would get a job but speaking to the PM programme on BBC Radio 4, Employment Minister Chris Grayling said he was still pleased with the progress.
"The Work Programme is doing a good job and is on track. It is helping long-term unemployed people into work."
http://www.bbc.co.uk/news/business-16883641