The future of supported employment providers

The BASE conference last week was primarily aimed at helping attendees to find better ways of supporting some of society's most vulnerable people, and succeeded admirably in this regard. However, the key question on everyone's lips, addressed by every key speaker, and cropping up again and again in the Q&A, was this: will the attendees even be here in two years?

What could possibly go wrong?

Many of BASE's members are small, specialist supported employment providers, or small delivery units within local authorities. The primary funding streams for these organisations come from the DWP Workstep and Work Preparation provisions, or from local authority funding. Both DWP contracts are being replaced by Work Choice. Unlike the micro-scale contracts that characterised its predecessors (often helping as few as five people a year), Work Choice will be made up of large scale prime contracts. Contracts will be awarded through a mix of quality and price competition, and each outcome will receive the same amount of payment.

Senior DWP figures predict that the Commissioning Strategy will result in a marketplace of 20 primes and 80 subcontractors across UK welfare to work. Given that BASE alone has over 200 members, the future, at least in its DWP-funded form, wasn't looking rosy for delegates.

Possibly the grimmest potential future was outlined in gory detail by Dan Finn, who presented his findings on the experience of welfare to work market creation in other countries. Elsewhere, the impact on smaller providers was spread over two stages:

1. An initial sweep-out of those organisations that couldn't adapt to the new marketplace, while the more results-focused and innovative small organisations thrived
2. A further consolidation where the large providers copied the practices of small outfits and replaced them with in-house delivery, leaving a market dominated by a small number of large, mainly private sector organisations
3. Successful adaptations by small and medium non-profits either in consortia or through growth who increased efficiencies, added value for purchasers or primes (especially in reaching harder to help groups or locations) but who struggled with ‘mission drift’ as they delivered contractual obligations

Although New York City is the only prior example of a prime contracting model, most of the other characteristics of the UK reforms can be seen elsewhere, lending some weight to the results.

A more reassuring prospect was sketched out by some of the other speakers:

• Jonathan Shaw, the Minister for Disabilities, either announced or re-announced various wodges of cash, £30m additional here and £3m transition funding there. He also committed himself to advocating the sale of supported employment products to the public sector, and increasing the hiring rates of people with disabilities in government departments. He did however draw a distinction between support for people with disabilities, and support for the existing providers, whose future he explicitly didn't guarantee
• Theresa May (Shadow Work and Pensions Secretary) repeated her belief that the new contracting framework was on too large a scale, and that more protection was needed for small and specialist providers. She has committed the Conservatives to more and smaller prime contracts
• Anne Williams (National Director for Learning Disabilities, Department of Health) announced increased NHS funding for supported employment 'job coaches' in 2010, along with a set of quality standards for the job role
• Peter Little (Strategic Consultant/Adviser to the LSC) highlighted the supported employment elements of the Apprenticeships, Skills, Children and Learning Bill, due to go through in November 2009. This will count supported employment as a learning outcome for both young people and adults, and will rejig Apprenticeships so they don't exclude people with learning disabilities. Both of these will open up new funding routes for supported employment, with funding passing through local 14-19 partnerships
• Simon Shimmens outlined the Merlin standard, designed to promote fair dealing between DWP primes and subcontractors and create a healthy multi-level market for welfare to work services

So, will the fears of BASE members come to pass? Despite the reassurances of ministers and civil servants, increased competition and larger contracts are intrinsic to the DWP's contracting reforms. Many of the smaller contracts funded under the current regime are unlikely to be replicated or made worthwhile under the new system, leaving current providers the choice of either stepping up and trying to win subcontracts or looking elsewhere for funding. There's also a particular fear that local authorities, facing their own budget cuts and with no mandate to deliver supported employment, will take the opportunity to remove any internal funding they've been providing to their teams and shut them down completely.

There are also some bright spots though, notably the new funding opportunities from other parts of the government, and the transition funding for existing customers. About half of the BASE membership already survives without DWP funding in any case. These make it difficult to be certain that the industry will consolidate fully in the near future. In this sense, the future is more hopeful than for small providers of mainstream delivery, who have fewer non-DWP funding options.

Customer focus

Industry staff are the main readers of the site, but they're not the only or even the most important group affected by contracting changes. As Jonathan Shaw pointed out, supporting people with disabilities doesn't mean supporting their providers. What will the impact on supported employment recipients be?

The answer to this is not easy to discern. As Dan Finn pointed out, contracting reform has always taken place in the context of wider reforms, with changes to benefits, conditionality and the basic parameters of support all tied together.

Conceptually, the Commissioning Strategy's use of price competition coupled with sustained job entry payments should result in:

• Increased efficiency – delivering more services to more customers with the available funding
• Tailored delivery – the black box model allows providers to do whatever a customer needs
• An overall better quality of service – paying for sustained outcomes makes it impossible to meet targets by placing people into unsuitable, unsustainable jobs

However, there are some potential downsides:

• The contracting regime tends to favour larger, private organisations as they're the ones who can take on the required level of financial risk and up-front investment
• The focus on outcomes doesn't always reflect the needs of customers, for example when it encourages creaming and parking, both of which are highly incentivised by the current system.
• The bidding process tends to be highly competitive and very expensive, which uses up a substantial chunk of the total delivery cost

There's also the claim, endorsed by Theresa May in her speech, that small, local, specialist providers have a deeper level of connection with customers and can provide a better level of service in consequence. This doesn't necessarily conflict with the marketplace model, as primes should be happy to subcontract to providers who genuinely do produce better results. The issue is more relevant if the contract performance measures don't capture the quality of delivery properly.

Overall, the case for improved customer experience is unproven, although the case for improved efficiency is less arguable. As with many initiatives, it may be more how things are done that decides the success of delivery, rather than what structure is chosen.

Resources

The BASE website will be updated with the conference presentations in the near future. The conference itself had lots more sessions of interest to people working to move people with disabilities or long-term health conditions toward employment.

Full disclosure: the new BASE website, currently under development, is being put together by Indus Delta.