Work Programme at risk of "financial collapse" says Social Market Foundation

Analysis released today by the the Social Market Foundation suggests at least 90% of organisations involved in delivering the Government's flagship back to work scheme risk having their contracts terminated because of unreachable performance targets set by the Department for Work and Pensions (DWP).

Looking at the Government's stated minimum performance levels for getting adult jobseekers - the main target group - into work, the analysis finds that:

  • The Work Programme will get around one in four adult Jobseeker's Allowance (JSA) clients into work, significantly below the rate needed to meet the DWP's expectations for minimum performance;
  • Providers will fail to meet the minimum performance expected of them by the DWP by around 30,000 jobs over three years;
  • Providers will also undershoot what the Government anticipates would have happened if no welfare to work scheme existed at all, suggesting that the Government's analysis of this 'policy-off' scenario is over-optimistic;
  • Based on FND performance levels, over 90% of Work Programme providers will be at risk of having their contracts terminated by DWP even by year three of the scheme;
  • This under-performance means that funding per jobseeker will be significantly less than anticipated, threatening the financial viability of providers.

The press release and full report can be found here: 

http://www.smf.co.uk/governments-flagship-back-to-work-programme-at-risk-of-financial-collapse-says-think-tank.html

Comments

"Researchers in "Stating the Obvious" Shocker!!!!!"

Yeah, most certainly stating the obvious, but the one in four workers into work is better than none! Especially with such a high unemployment rate right now.

Neil Adams - anti-malware engineer

@ crabtastic
You miss the obvious when you state "but the one in four workers into work is better than none!"
The whole point is that this was the deadweight percentage (approx 28%) so as is pointed out the WP with all its associated anxiety, expense, scandals and waste is probably acheiving less than if nothing had been done at all! "One in four" is indeed better than none BUT one in four without the useless WP would be better.
Even better would be the use of all the resources wasted on the WP to create some real opportunities.

@consigned - but the state only pays Work Programme providers for results above deadweight.

@pippa
Not quite true since there are substantial payments for so called attachment fees.

@pippa
and the providers get paid for everyone that gets work (whether or not they do anything to help) so it is just not true to say "Work Programme providers for results above deadweight."

OK I simplified slightly - yes providers get paid for sustained job outcomes, but the minimum performance levels they need to achieve to break even are above deadweight. See: http://www.publications.parliament.uk/pa...

Attachment payments are quite small when you think about the upfront costs of the programme (premises, salaries etc) and that most payments will be a year + down the line. At any rate, this reduces every year of the contract and will be gone from year 4.

Well pippa - there is a big difference between "not getting paid" and not making a profit!
I am aware of the document you have linked to and I have studied the payment structure of the WP.
It is quite right that providers should not be rewarded for what would have happened anyway. And let's not forget that nobody has forced the providers to participate (unlike the situation that their customers find themselves in). The providers are commercial organisations who entered freely into these contracts with the expectation that they would make a nice little killing at public expense. Well the expense bit has come to pass but it may not be that the spoils are as great as the providers hoped.
I do hope they're not expecting any sympathy.

Yes but failure to achieve minimum performance standards will eventually lead to termination of contracts - then not getting paid anymore!

I think if you've read the above document you'll see that lots of people in and around the industry have long acknowledged that the contracts are extremely challenging and it was always highly unlikely that providers would 'make a nice little killing'.

@pippa
you say "Yes but failure to achieve minimum performance standards will eventually lead to termination of contracts - then not getting paid anymore!"
That is exactly the point of private enterprise.
The contracts may indeed be challenging but I reiterate the providers bid for the contracts with their eyes open hoping to make a profit. It is the nature of business that in order to get the rewards you have to take a risk.
So there is no reason why they should be bailed out.

I wasn't arguing for bail-outs, just pointing out that it's not a massively well resourced programme in response to your claims that it was full of expense and waste....