Can the Work Programme work for all user groups?

House of Commons Work and Pensions Committee Can the Work Programme work for all user groups? First Report of Session 2013 14 Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/workpencom Ordered by the House of Commons to be printed 15 May 2013 HC 162 [Incorporating HC 835-i to -vi, Session 2012-13] Published on 21 May 2013 by authority of the House of Commons London: The Stationery Office Limited 23.00

1 The Work and Pensions Committee The Work and Pensions Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Work and Pensions and its associated public bodies. Current membership Dame Anne Begg MP (Labour, Aberdeen South) (Chair) Debbie Abrahams MP (Labour, Oldham East and Saddleworth) Mr Aidan Burley MP (Conservative, Cannock Chase) Jane Ellison MP (Conservative, Battersea) Graham Evans MP (Conservative, Weaver Vale) Sheila Gilmore MP (Labour, Edinburgh East) Glenda Jackson MP (Labour, Hampstead and Kilburn) Stephen Lloyd MP (Liberal Democrat, Eastbourne) Nigel Mills MP (Conservative, Amber Valley) Anne Marie Morris MP (Conservative, Newton Abbot) Teresa Pearce MP (Labour, Erith and Thamesmead) The following Members were also members of the Committee during the Parliament: Harriett Baldwin MP (Conservative, West Worcestershire), Andrew Bingham MP (Conservative, High Peak), Karen Bradley MP (Conservative, Staffordshire Moorlands), Ms Karen Buck MP (Labour, Westminster North), Alex Cunningham MP (Labour, Stockton North), Margaret Curran MP (Labour, Glasgow East), Richard Graham MP (Conservative, Gloucester), Kate Green MP (Labour, Stretford and Urmston), Oliver Heald MP (Conservative, North East Hertfordshire), Sajid Javid MP (Conservative, Bromsgrove), Brandon Lewis MP (Conservative, Great Yarmouth) and Shabana Mahmood MP (Labour, Birmingham, Ladywood). Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/workpencom. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Committee staff The current staff of the Committee are Carol Oxborough (Clerk), David Foster (Committee Media Adviser), James Clarke (Committee Specialist), Daniela Silcock (Committee Specialist), Emma Sawyer (Senior Committee Assistant), and Hannah Beattie (Committee Assistant). Contacts All correspondence should be addressed to the Clerk of the Work and Pensions Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 2839; the Committee's email address is workpencom@parliament.uk.

2 Contents Report Page Summary 5 1 Introduction 9 Background 9 Policy intentions 10 This inquiry 11 Structure of this report 12 2 The implications of lower than expected job outcome performance 13 Job outcome performance against Minimum Performance Levels 13 Options open to DWP in the event of continuing poor performance 17 The implications of lower than anticipated job outcome payments 19 Provision for unsuccessful participants 19 3 The role of JCP in the Work Programme 21 The aspiration towards warm handovers 21 Conditionality and sanctioning of Work Programme participants 22 4 Employer engagement 25 How willing are employers to recruit the long-term unemployed? 25 Work Programme providers approaches to employer engagement 26 5 Jobseeker segmentation and the differential pricing model 29 Work Programme payment groups 29 Accuracy of the Work Capability Assessment 30 Effectiveness of the current pricing model 32 Alternative models 35 Funding the Work Programme 36 6 Assuring service standards for all participants 38 The black box approach 38 Minimum Service Standards 39 The type of services currently being provided 41 Assuring service quality 43 7 Availability of specialist support and regulating the market 46 The prime provider model 46 Subcontracting models 46 Volume of referrals to specialist subcontractors 47 Use of alternative and external funding streams 48 Financial risk and the flow of funding to subcontractors 49 Regulating supply chain relationships: the Merlin Standard 51 8 Conclusion 54

3 List of conclusions and recommendations 55 Formal Minutes 62 Witnesses 63 List of printed written evidence 64 List of additional written evidence 64 List of Reports from the Committee during the current Parliament 66

5 Summary The Work Programme, introduced by the coalition Government in June 2011, has simplified the welfare-to-work system by replacing a number of contracted employment schemes and consolidating support into a single mainstream programme. It is based on payment by results and focused on sustained job outcomes, meaning that providers receive most of their fees only once they place long-term jobseekers into work for three or six months and continue to support them in work for up to a further 18 months. We were supportive of the policy objectives for the Work Programme in our first Report on it in 2011 and we remain so. The Work Programme s job outcome performance in the first 14 months of delivery was poor but there were some mitigating circumstances for this. Providers were operating in a worse than predicted economic situation. Furthermore, the Work Programme represents a wholesale reorganisation of the welfare-to-work market, with a number of providers setting up new operations in unfamiliar areas of the country. The fact that delivery began just over a year after the initial announcement of the policy, and only six months after the final Invitation to Tender was published in December 2010, was a significant achievement. However, the rapid commissioning process inevitably led to implementation delays which may also have contributed to lower than expected job outcome performance. The contractual Minimum Performance Levels (MPLs), set by DWP for sustained job outcomes relating to three of the nine claimant groups, have proved to be unrealistic in the circumstances none of the 18 prime providers (primes) met the year one MPL. Primes remain hopeful that they will meet their contractual targets for jobseekers in the mainstream payment groups in subsequent years and there are some unverified data which suggest that the next set of official job outcome data due to be published in June 2013 may show a significant improvement. DWP has contractual options to shift new referrals from poorly performing prime providers to the best performing prime in the same area, and ultimately to remove contracts altogether from primes. If some primes continue to under-perform in comparison to others in the same area, DWP should implement the market share shift mechanism during 2013, but this must be done transparently and carefully to ensure that it does not further impair the services offered to jobseekers attached to poorly performing primes. DWP also needs to be clear about how market share shift will impact on subcontractors. DWP has asserted that it is prepared to use the ultimate sanction against poorly performing primes of terminating prime contracts. However, we are not convinced that this could be achieved without significant disruption to services. DWP needs to do more to explain how this sanction could be applied effectively, and any negative impacts mitigated. The Work Programme s effectiveness could be much improved by better relationships with its external stakeholders. DWP must promote closer working relationships between Jobcentre Plus staff and local Work Programme advisers. At a local level providers should routinely make use of the expertise and knowledge of local authorities and local business groups.

6 There appears to be a general lack of awareness of the Work Programme amongst employers; we had to proactively encourage their input to our inquiry. We found some excellent and innovative approaches, particularly Transport for London s systematic engagement with the six primes operating in the capital. This is a model which DWP should promote. Providers should invest more in preparing jobseekers for specific vacancies and providing an effective recruitment solution, rather than playing the ineffective numbers game of deluging employers with poorly matched CVs and underprepared candidates. The Work Programme s differential pricing structure was intended to reduce the risk of creaming and parking in which welfare-to-work providers prioritise relatively workready jobseekers ahead of those facing greater disadvantages by offering greater financial rewards to providers which succeed in achieving sustained job outcomes for jobseekers whom DWP considers to be harder to help. However, there is growing evidence that differential pricing is not having its intended impact: the Work Programme appears not to be reaching the most disadvantaged jobseekers. The current pricing structure, based largely on the type of benefit jobseekers are claiming, is a very blunt instrument for identifying jobseekers needs. In the short term, DWP must improve its processes for identifying jobseekers barriers to work, including disability, homelessness and serious drug and alcohol issues. These jobseekers should be allocated to the JSA Early Access group, where appropriate. DWP should pilot additional pre-work Programme support to prepare those with the severest barriers for effective engagement with the Work Programme. DWP under-spent its 2012/13 Work Programme budget by some 248 million because of lower than expected job outcomes. In a period of low economic growth and relatively high unemployment it is important to keep disadvantaged jobseekers as close to the labour market as possible. DWP should use part of the unspent Work Programme budget to expand proven, alternative employment provision, such as the Work Choice programme; to extend and continue to promote Access to Work to employers and welfare-to-work providers; and to provide support for individuals who have completed their two-year attachment without finding sustained work. In the longer term, DWP should consider developing a much more thorough, needs-based assessment of jobseekers needs, which could determine the type of services required by each jobseeker and the appropriate level of up-front funding. Alternative funding models, which recognise the greater up-front costs associated with more intensive interventions, should be considered for jobseekers who are furthest from the labour market. DWP should also consider, for some jobseekers, whether it is appropriate to pay for outcomes which include milestones along the path to sustained employment. The Work Programme currently has insufficient safeguards to ensure that all participants receive an appropriate service. We support the non-prescriptive black box approach to service delivery, which should give providers the freedom to determine the most effective interventions for each jobseeker. However, the black box must be balanced by clear, measurable minimum service standards, to better protect participants from being parked. Ideally these should be encapsulated within a single set of standards applicable to all primes, and to which all participants are entitled. DWP should also require all primes to survey participants satisfaction with the programme and use the results as part of its assessment of primes effectiveness.

7 One of the key aspects of successful welfare-to-work provision is one-to-one time with a qualified adviser. We were dismayed to learn that caseloads per adviser in the Work Programme are around 120 180 jobseekers. This ratio is simply far too high for an effective service and must be brought down. The industry must also work towards ensuring that all frontline advisers are professionally accredited and qualified, through the Institute of Employability Professionals and other specialist organisations. The welfare-to-work sector lacks effective regulation; the suspicion remains that many smaller, specialist organisations with experience of supporting jobseekers with the severest barriers, were used by the primes as bid candy to make their bids more appealing to DWP and then subsequently not used in service delivery. A number of subcontractors also complain that primes have imposed unfair financial terms. The Merlin Standard was introduced by the Government to help regulate the quality of Work Programme supply chains. Its remit should be extended to include powers to impose financial sanctions on primes which treat subcontractors unfairly. The Merlin assessment should also be extended to assess the quality of primes services from the perspectives of Work Programme participants, local authorities and employers. Our scrutiny of the Work Programme has been hampered by a lack of transparent official data in the early months of service delivery. Official job outcome data at prime contractor level only were not published until some 17 months after delivery of services began. We were concerned that DWP proposed to publish official Work Programme data on a sixmonthly basis, which we believed was inadequate for a programme of this size and importance. We therefore welcome DWP s recent announcement, made after we had heard evidence from the Minister for Employment, that it will publish official data on a quarterly basis from 27 June 2013. However, we remain concerned that the data will be published at prime contractor level only. We recommend that official data on referrals and job outcomes are published at both prime contractor and subcontractor level. This would allow more effective scrutiny of the programme and help the market to develop.

9 1 Introduction 1. In the text of this report, our conclusions are set out in bold type and our recommendations, to which the Government is required to respond, are set out in bold italic type. Background 2. The Work Programme is the latest government-contracted employment programme, which aims to support long-term jobseekers into work and off unemployment benefits. Launched in June 2011, the Work Programme replaced a number of existing schemes, including the remaining New Deals for young people, adults, disabled people and lone parents, the Flexible New Deal and Pathways to Work, the previous scheme for Incapacity Benefits (IB) claimants. It therefore consolidates employment support for a very wide range of jobseekers, including many with health problems and disabilities, into a single mainstream programme. 1 Participation is mandatory for most of the jobseekers referred to the Work Programme; failure to engage with the programme can result in benefit sanctions being applied. 3. Jobseekers are referred to externally contracted Work Programme providers if they remain unemployed and on benefit after receiving the support offered to them through Jobcentre Plus (JCP) in the early months of their claim. Work Programme providers take responsibility for offering the interventions long-term jobseekers require, which might include help with building CVs, interview techniques, confidence-building, mentoring, work experience and skills training, for example. Participants are attached to Work Programme providers for two years. They remain on unemployment benefits until they find work and typically continue to report to JCP every two weeks to sign on. 4. The table below sets out the nine separate groups of participants in the Work Programme, the point at which jobseekers in each group are referred from JCP to Work Programme providers and whether their referral is on a mandatory or voluntary basis. 1 The Government decided to retain Work Choice, a voluntary welfare-to-work programme, specifically designed to support benefit claimants with severe disability-related barriers to employment.

10 Table 1: Work Programme payment groups Payment Group Point of referral Basis for referral JSA aged 18-24 At 9 months on JSA Mandatory JSA aged 25+ At 12 months on JSA Mandatory JSA Early Access 2 From 3 months on JSA Mandatory or voluntary depending on circumstance JSA Ex-IB At 3 months on JSA Mandatory ESA Volunteers At any time from point of Work Capability Assessment Voluntary New ESA claimants ESA Ex-IB Mandatory when expected to be fit for work within 3-6 months, otherwise voluntary from point of WCA Mandatory when expected to be fit for work within 3-6 months, otherwise voluntary from point of WCA IB/IS (England only) From benefit entitlement Voluntary JSA Prison leavers Day one of release from prison Mandatory Mandatory or voluntary depending on circumstance Mandatory or voluntary depending on circumstance Policy intentions 5. One of the key objectives of establishing a single mainstream contracted employment programme was to create a simpler and more cost-effective welfare-to-work system through a single commissioning process, benefitting from economies of scale and reduced transaction costs, with consequent savings to the Exchequer. 6. The Work Programme has a number of innovative design features, which aim to address some well-established deficiencies of predecessor programmes. It operates a more resultsbased model by linking a greater proportion of providers payments to sustained job outcomes and paying a smaller proportion in up-front fees than has previously been the case. Three types of fees are available to providers: Attachment fees relatively small initial payments made when contact is first made between provider and participant. DWP plans to withdraw attachment fees altogether from April 2014; Job outcome fees larger payments made when the participant finds work, comes off unemployment benefit and remains in work for a total of up to 26 weeks within a 104-week window; and Sustainment fees monthly fees paid to providers for up to 80 subsequent weeks as long as the participant stays off benefit and in work. 7. The Work Programme operates through DWP contracts with large prime contractors (primes), predominantly commercial companies, deemed to have the capacity to bear the financial risk of operating on a results-based model and sufficient cash-flow (at least 20 million annual turnover) to finance interventions with reduced up-front funding. There are 18 primes delivering 40 separate contracts in 18 regional Contract Package Areas 2 The JSA Early Access group includes: ex-offenders and offenders (has or is serving a custodial or community service); disabled people (as defined under the Equality Act); people with mild to moderate mental health issues; careleavers; carers on JSA; ex-carers; homeless people; ex-armed Forces personnel; Armed Forces reservists; partners of current or former Armed Forces personnel; people for whom a drug/alcohol dependency (including a history of) presents a significant barrier to employment. See DWP, Work Programme Provider Guidance, para 13.

11 (CPAs) across Great Britain: 16 CPAs cover the whole of England; Scotland and Wales each count as one CPA. There are two or three primes operating in each CPA, with the intention that competition between primes will drive up performance. Primes were encouraged by DWP to deliver services through supply chains of subcontractors from the private, public and voluntary sectors, including niche providers with experience of supporting jobseekers with more complex barriers to employment. 8. The Work Programme is designed to allow providers greater freedom to choose how best to support unemployed people, without prescription from government an extension of the so-called black box approach. 9. The Work Programme has an innovative differential pricing model, in which providers can claim higher payments for placing jobseekers into sustained work, according to the payment group they are in. The policy intention of differential pricing is to address the previously observed problems of creaming and parking, in which welfare-to-work providers have prioritised relatively work-ready jobseekers in order to maximise their financial rewards. Creaming occurs where easier to place claimants are identified by providers and given greater support while claimants who face greater challenges are parked and given very limited support. This inquiry 10. Our first report on the Work Programme was published in May 2011, just before the programme was implemented, and considered its design and commissioning. 3 We were and remain supportive of the Work Programme s key policy intentions, in particular the obvious benefits of consolidating the large majority of support into a single scheme with resulting economies of scale and reductions in transaction costs. We also welcomed the Work Programme s more outcome-based model, particularly its focus on sustainable job outcomes, and the extended two-year attachment period. Broadly, we recognised that the Work Programme s design represented a significant evolution in welfare-to-work and an improvement on some previous schemes. However, our 2011 Report highlighted some concerns about how the Work Programme might operate in practice, notably about the management and regulation of supply chains and whether the proposed differential pricing model would be sufficient to incentivise providers to support those furthest from the labour market. 11. We therefore made clear our intention to conduct a second inquiry into the Work Programme, to consider its effectiveness for different groups of jobseekers, with a particular focus on those who may be considered harder to help. We announced this second inquiry in October 2012. We received 51 written submissions from a range of organisations and individuals. We heard oral evidence from academics and expert commentators; groups representing particularly disadvantaged jobseekers; subcontractors; emqc Ltd, the company contracted to assess the quality of supply chain relationships; primes and the industry body, the Employment Related Services Association; employers 3 Work and Pensions Committee, Fourth Report of Session 2010 12, Work Programme: providers and contracting arrangements, HC 718 [hereafter, Committee s 2011 Report ]

12 and employers organisations; and the DWP Minister for Employment, Mr Mark Hoban MP, and DWP officials. A full list of witnesses is set out at the end of this report. 12. We also visited St Mungo s, a homelessness charity and provider of employment services to homeless people; and Willesden JCP in the London Borough of Brent, for a meeting with Work Programme participants followed by a roundtable discussion with Brent Council, JCP staff, local primes, subcontractors, training providers and the Hilton Hotel, a local employer. We are very grateful to all those we met and to everyone who has contributed to the inquiry. 13. We would also like to thank Richard Johnson, a former Director of Welfare to Work at Serco, for his assistance as Specialist Adviser to the Committee for this inquiry. 4 His deep knowledge and understanding of the welfare-to-work market was invaluable to us and we very much appreciate the contribution he made to our work. Structure of this report 14. Our Report begins by considering the implications of the well-publicised low joboutcome performance of the Work Programme in the first 12 14 months of delivery. In chapter 3 we examine the role of JCP in referring and handing over claimants to the Work Programme and its role in the application of conditionality and sanctioning. We consider Work Programme providers approaches to engaging employers in the programme, and highlight some examples of best practice, in chapter 4. Chapter 5 examines the current differential pricing model; considers its effectiveness in addressing creaming and parking ; and looks at how the pricing model might evolve in the future. In Chapter 6 we consider whether there are sufficient safeguards to ensure that all types of jobseekers receive an appropriate service within the black box. The availability of specialist support within Work Programme supply chains and regulation of the welfare-to-work market are examined in chapter 7. Our key conclusions are set out in chapter 8. 4 Relevant interests of the Specialist Adviser were made known to the Committee. The Committee formally noted that Richard Johnson declared the following interests: adviser to Brent Council on how to coordinate its services with the Work Programme.

13 2 The implications of lower than expected job outcome performance 15. Official Work Programme job outcome performance data, covering the period from June 2011 to the end of July 2012, were published for the first time in November 2012; some 17 months after delivery began in June 2011. DWP had planned to publish official job outcome data, together with referral data, on a six-monthly basis thereafter. The Minister informed us that lack of data was an issue for him: I do wish that we had more data from the outset. That is something that we are tackling now [...] I am very keen that we use data to talk about the benefits of the scheme, and also to enable us to manage the scheme and drive through continued performance improvements. 5 DWP informed us, after we had finishing taking evidence, that it now plans to publish the next set of data on 27 June 2013 and on a quarterly basis thereafter. 6 16. As was much publicised at the time, the November 2012 data showed that job outcome performance in the first 12 14 months of delivery was significantly lower than had been anticipated by DWP. This chapter examines the reasons for low performance in year one of the programme; the implications for subsequent years of the contracts; and the options open to DWP in the event of continuing poor performance. Job outcome performance against Minimum Performance Levels 17. Job outcome performance is measured as the percentage of participants referred to the Work Programme who achieve a 13 or 26 week job outcome in a 12-month period. Participants can achieve a job outcome in a single job or in a series of short-term jobs which together satisfy the definition. 18. DWP imposed contractual job outcome Minimum Performance Levels (MPLs) on primes for three of the nine payment groups in the Work Programme: Jobseekers Allowance (JSA) claimants aged 18 24 years old; JSA claimants aged 25 and over; and new Employment and Support Allowance (ESA) claimants. MPLs were not set for the remaining payment groups, which include ex-incapacity Benefit (IB) claimants, Income Support claimants, JSA claimants with severe barriers to work and prison leavers. DWP set out indicative performance targets for these groups rather than a contractual MPL, as it was thought that job outcome performance amongst these groups was too unpredictable. 7 19. The contractual MPL for the three mainstream payment groups were set as follows: 8 5 Q 554 6 Ev 123 7 Committee s 2011 Report, para 109 8 See Committee s 2011 Report, chapter 5

14 Table 2: Work Programme Minimum Performance Levels (MPLs) Payment Group Job outcome MPL year 1 MPL year 2 MPL year 3 MPL year 4 MPL year 5 MPL year 6 JSA 25+ 26 weeks 5.5% 33% 33% 33% 33% 28% 6% JSA 18 24 ESA new claimants MPL year 7 26 weeks 5.5% 44% 44% 44% 44% 33% 11% 13 weeks 5.5% 17% 17% 17% 17% 11% 6% The first official release of job outcome data in November 2012 showed that: there were 31,000 job outcome payments paid to providers from 1 June 2011 to 31 July 2012, from 878,000 referrals, representing job outcome performance of 3.5% across all payment groups and job outcome performance of 3.2% in relation to the three mainstream groups during the first 14 months of the Work Programme. The overall performance is lower when calculated for the 12-month period from 1 June 2011 to 31 May 2012: 18,000 job outcome payments from 785,000 referrals, representing overall job outcome performance of 2.3% and job outcome performance of 2.1% in relation to the three mainstream groups. 9 Job outcome performance was therefore significantly below DWP s expectations. None of the 18 primes reached the contractual year one MPL of 5.5% in the first 12 14 months of delivery they were all technically in breach of contract. 20. As we highlighted in 2011, the MPLs were considered by experts to be extremely challenging. For example, Dave Simmonds, Chief Executive of the Centre for Economic and Social Inclusion (Inclusion) and a leading commentator on welfare-to-work programmes, told us in 2011 that the performance challenge for Work Programme providers was very severe indeed. 10 21. Expert witnesses to this inquiry agreed that MPLs had been set at unrealistic levels. Ian Mulheirn of the Social Market Foundation was baffled by how DWP had calculated the performance targets. His view was that the MPLs set for the Work Programme were macho targets, designed to show that DWP was being tough on private sector providers. He believed, drawing on the analysis of the National Audit Office (NAO), that a large margin was added to the MPLs on the basis of pure faith that the Work Programme was brilliantly designed. His view was that this was a huge dose of wishful thinking. He noted that DWP s record on setting welfare-to-work performance targets was poor, arguing that targets set for previous programmes, such as the Flexible New Deal, had been even more absurd. 11 22. A number of witnesses highlighted that the Work Programme MPLs had been set when forecasts for the economy were more positive. 12 Inclusion s analysis was that the 9 DWP, Work Programme Statistical Release, November 2012, p 1; see also Centre for Social and Economic Inclusion, Work Programme performance statistics: Inclusion analysis, November 2012, p 1 10 Committee s 2011 Report, para 100 11 Q 5; See also, National Audit Office, The Introduction of the Work Programme, HC 1701, January 2012 12 See, for example, Q 5 [Ian Mulheirn]; Wheatsheaf Trust, Ev 164

15 MPLs should be revised down by around 15% to reflect the worse than expected economy. While overall employment levels have held up remarkably well in the economic downturn since 2008, recent research by Inclusion found a strong correlation between economic growth, measured in Gross Domestic Product (GDP), and the employment prospects of long-term jobseekers. 13 Tony Wilson of Inclusion argued that future Work Programme performance targets need to be more responsive to changing economic forecasts, and perhaps even recognise actual economic conditions retrospectively. 14 23. Sean Williams of G4S, a prime operating in three CPAs, believed that the Work Programme s failure to meet the contractual MPLs in year one of the contracts highlighted the inadequacy of DWP s targets, rather than a deficiency in the programme itself: If the Work Programme is not measuring up against the minimum performance levels, there is clearly either a problem with the Work Programme or there is a problem with the minimum performance levels. I would suggest that the minimum performance levels are completely inadequate for the task that they have been set to do. They were set in completely different macroeconomic conditions and, even at the time, leading figures in the industry said that those minimum performance levels were just not realistic. 15 24. Beyond the worse than expected economic situation, a number of other reasons have been put forward for low performance in the early months of the Work Programme. The Work Programme was commissioned very quickly; delivery began just over a year after the announcement of the policy and within six months of the publication of the final Invitation to Tender. The NAO has highlighted that, in contrast, the procurement phase of the Flexible New Deal took some 15 months and that some previous welfare-to-work programmes were introduced over a four-year period. 16 25. It should also be noted that the Work Programme represents a wholesale restructuring of the sector; some 230 existing welfare-to-work contracts were either terminated or not renewed. 17 A number of primes had to set up operations in areas of the country in which they had never worked before. This involved moving offices and personnel and inevitably led to some delays in service delivery. 18 26. The Minister for Employment has acknowledged that Work Programme performance was poorer than expected, citing in mitigation the difficulties providers were facing in achieving sustained job outcomes for participants and problems in tracking, and claiming payment for, the outcomes which they did achieve. However, he has stated that the Government s aspiration for the job outcomes to be achieved in future years of the contracts remains the same. 19 13 Centre for Economic and Social Inclusion, Long-term unemployment in 2012, November 2012 14 Q 37 15 Q 273 16 National Audit Office, The Introduction of the Work Programme, HC 1701, January 2012, p 6; para 2.2 17 Ibid., para 2.12 18 Ev 128 19 HC Deb, 3 December 2012, col 652W

16 27. Primes told us that they still expected to achieve, or get very close to, the MPLs for the three mainstream payment groups in subsequent years of the contracts. 20 Kirsty McHugh, Chief Executive of the industry body, the Employment Related Services Association (ERSA), agreed that this was likely, although she noted that the unpredictability of economic circumstances made it uncertain. 21 28. We are concerned about the appropriateness of the Work Programme Minimum Performance Levels (MPLs) and how they were calculated by DWP. They do not appear to be sufficiently responsive to the actual economic conditions in which providers are operating. The lack of realistic MPLs results in realistic assessments of performance being difficult and makes sanctioning primes, and therefore delivering and incentivising improved performance, harder to achieve. For the next round of Work Programme contracts, we recommend that DWP devise, in collaboration with independent experts, a new method of calculating and setting MPLs which are more responsive to the state of the economy; can be more transparently calculated and applied; and can be reviewed periodically during delivery. 29. On the day before the release of the official job outcome statistics, ERSA published its own unofficial and unverified Work Programme performance data, based on internal information collected from each of the 18 primes. ERSA s data related to job starts the number of Work Programme participants who had achieved at least one day in work in the 16-month period from June 2011 to the end of September 2012. ERSA s unofficial data showed that 207,381 Work Programme participants had achieved a job during the period. Although there are no official referral data covering the entire period, ERSA s data suggest that around 20% of participants referred to the programme had achieved at least one day in work by the end of September 2012. The data are broken down to show the percentage of each monthly cohort of referrals which had achieved a job start by the end of the period. Some 29% of participants referred to the Work Programme in June 2011, the first month of delivery, had achieved a job start by the end of September 2012. ERSA estimates that 65 85% of job starts will convert into sustained 13 or 26-week job outcomes. Some witnesses were cautious about the reliability of unverified data produced by the industry, but ERSA believes that its figures indicate a reasonably positive picture of performance building in the pipeline, at least within the mainstream JSA payment groups. 22 30. Our scrutiny of the Work Programme in the early months of service delivery has been hampered by a lack of transparent official data. Official job outcome data were not made available until some 17 months after service delivery began. After many months of being unable to provide figures, because DWP claimed they would be unverified and therefore unreliable, the publication of the first official figures was accompanied by the publication of unofficial figures by the Employment Related Services Association (ERSA). Although unofficial, these were frequently referred to by Ministers as an alternative to the official figures. Such an approach to statistics is unhelpful. 20 Q 277 [Sean Williams]; Q 278 [Richard Clifton] 21 Q 270 22 Q 43 [Ian Mulheirn]; Employment Related Services Association (ERSA), Job start data, November 2012, pp 2 and 9

17 31. We were concerned that DWP had planned to release official Work Programme referral and job outcome data on a six-monthly basis, which we believed would have been inadequate for a programme of this size and importance. We therefore welcome DWP s recent decision to move from six-monthly to quarterly reporting of Work Programme referral and performance data. 32. At the beginning of May 2013, after we had finished taking evidence, the UK Statistics Authority published a report on official statistics relating to DWP employment programmes, including statistical releases on the range of pre-work Programme provision and the official Work Programme job outcome data published in November 2012. The main findings of the report were that: There may be scope to extend the published statistics to allow comparisons by claimant and provider characteristics The presentation of the official statistics on job outcomes in the November 2012 Work Programme statistical release could have been clearer There is scope for greater coherence across statistical releases and research There is scope to improve compliance with the Code of Practice for Official Statistics, including by reviewing how statistical releases meet the needs of users. 23 33. The UK Statistics Authority has recently made a number of recommendations about improvements it would like to see DWP make to the statistics it publishes on the Work Programme and pre-work Programme employment provision. We support the Authority s recommendations. We accept that it may not be possible for DWP to take all of the recommendations into account in publishing the next tranche of official Work Programme statistics in June 2013. However, we expect the clarity, interpretation and usefulness of subsequent releases to improve in response to the Authority s report and our own recommendations. Options open to DWP in the event of continuing poor performance Market share shift 34. The official data released in November 2012 showed that primes job outcome performance in the first 14 months of delivery varied between 2.2% and 5%. 24 Currently primes operating in the same CPA receive an equal number of randomly referred jobseekers. Where there are significant differences in job outcome performance between primes in the same CPA, DWP has the option to shift 5% of new referrals from the worst performing prime to the best performing. The trigger for a potential shift of referrals is a 3 percentage points or greater difference in job outcome performance. The market share shift can be applied from two years into the programme (i.e. June 2013) and subsequently every 12 months. 25 23 UK Statistics Authority, Statistics relating to DWP Work Programme and pre-work Programme, May 2013, Monitoring Review 2/13, pp 2-3 24 Centre for Economic and Social Inclusion, Work Programme performance statistics: Inclusion analysis, November 2012, table 1 25 Committee s 2011 Report, para 56

18 35. Sean Williams of G4S, a relatively highly-performing prime, argued that shifting market share would bring about swift performance improvements, as G4S had demonstrated in relation to its own subcontractors. He believed that the market share shift mechanism should be implemented by DWP as soon and as boldly as possible. 26 36. However, expert witnesses urged caution in the application of market share shift. Tony Wilson of Inclusion believed, based on international evidence, that it was likely to bring about short-term improvements in performance but that there were also a huge host of risks. Principal among these were risks associated with moving towards monopoly provision, which could damage competition and service innovation in the longer term. Ian Mulheirn also highlighted that shifting market share would result in a diminishing proportion of referrals going to the relatively poorly performing provider, which could further impact on that provider s performance. His view was that this would condemn some jobseekers to an underperforming provider faced with an increasingly severe performance challenge and reduced funding. 27 37. Any shift of market share will be applied on the basis of job outcome performance at prime level. Subcontractors expressed concern about how shifting market share might impact on them. Wheatsheaf Trust, a subcontractor operating in Hampshire, told us that DWP had not made clear whether subcontractors which could be performing relatively well despite being attached to a poorly performing prime will be protected by DWP from potential adverse impacts of actions taken against primes for poor performance. 28 Termination of prime contracts 38. The then Minister for Employment told the Committee in 2011 that primes would not be allowed to just sink down and cruise along at a very low level. They will be in breach of contract then and we will remove them. 29 The current Minister reiterated this point, stating that he was absolutely serious about contract termination. He told us that DWP had looked at this scenario and was confident that, if a prime was consistently underperforming in breach of contract, it was feasible for its contract to be terminated and for a replacement prime to take over its caseload of jobseekers. 30 39. We believe that shifting market share from the lowest performing to the highest performing prime in the same Contract Package Area could boost provider performance and should be implemented during 2013. However, the market share shift mechanism will need to be actively, carefully and transparently managed and applied by DWP. We recommend that, in response to this Report, DWP provide further information about the scenario modelling it has undertaken to assess the likely impacts on provider performance and service quality of shifting market share between primes. We also remain unconvinced that the early termination of a prime contract could be achieved without significant disruption to services and request further details about the research DWP has conducted to assess the feasibility of contract termination and its impacts on service delivery. 26 Q 295 27 Q 39 28 Ev 163 29 Committee s 2011 Report, paras 56 57 30 Q 472

19 40. We are concerned that relatively highly-performing subcontractors may suffer as an unintended consequence of market share shift between primes or in the event of prime contract termination. We recommend that, in its response to this Report, DWP make clear how it will protect highly-performing subcontractors attached to poorly-performing primes in the event that the latter lose market share or have their contract terminated. The implications of lower than anticipated job outcome payments 41. Expert witnesses were concerned that, in a largely outcome-based payment model, low job outcome performance in the early months of the programme would impact on investment in future services. Ian Mulheirn believed that, with limited up-front funding, providers would inevitably reduce investment in resources at the frontline. He believed that funding was being reduced at the wrong time and that more funding, not less, was required during a period of low economic growth and relatively high unemployment. 31 42. It should be noted that funding for the Work Programme will be further reduced by the planned withdrawal of attachment fees from April 2014. Professor Roy Sainsbury, of the Social Policy Research Unit at the University of York and co-author of the official DWP evaluation of the Work Programme, argued that attachment fees had thus far been a buffer that had kept the whole thing going. His view was that DWP should carefully consider the implications of the withdrawal of attachment fees. 32 43. Funding within the Work Programme has been considerably diminished by lower than anticipated levels of job outcome payments to providers in the first 14 months of delivery. Attachment fees are due to end in April 2014. We recommend that DWP review the balance between attachment fees and outcome fees, and consider retaining attachment fees, to protect delivery of services, including by subcontractors. Provision for unsuccessful participants 44. Even if primes meet their contractual targets, a large proportion of Work Programme participants will reach the end of their two-year attachment period without finding sustained work. Primes accepted that the proportion was likely to be 60 70% of participants. 33 The first cohorts of participants will begin to come to the end of their attachment to the programme from June 2013. Some witnesses noted with concern that DWP did not appear to have plans in place to further support them. 34 JCP staff in Willesden were aware that DWP was formulating arrangements but were not aware of what form further support might take. 45. We wanted to know what plans the Government had put in place to support unsuccessful participants. The Minister told us that DWP had piloted separate options for those who had made significant progress towards sustained employment who had undertaken work experience or started a job which had not been sustained, for example and for those who were still some way from the labour market. Those who had made 31 Q 38 32 Q 72 33 Q 297 34 Q 53 [Tony Wilson]; Q 302 [Kirsty McHugh]

20 progress would be supported in their job-searching by JCP and possibly undertake a community activity placement. JCP would provide more intensive support for those with greater barriers to employment who were still some distance from the labour market. 35 46. The first cohort of Work Programme participants will reach the end of their attachment period from June 2013. DWP must set out as a matter of urgency the support that will be in place for participants who are unsuccessful in finding sustained work during their two years on the Programme. We recommend that all unsuccessful participants should have an end of Work Programme assessment. Specialist support must be put in place for those who have made little progress. Those who have made significant progress towards sustained employment should be permitted to voluntarily extend their attachment to the Work Programme. The period in which providers are able to claim job outcome fees in relation to these participants should likewise be extended. We also recommend that DWP consider the practicalities of assigning participants who have completed the programme without success, but are close to work, to one of the other primes covering their area. 35 Qq 485 487

21 3 The role of JCP in the Work Programme 47. This chapter considers the relationship between JCP staff and Work Programme advisers and whether effective processes are in place to ensure a smooth handover of jobseekers, including whether sufficient and accurate information about the jobseeker is passed on to Work Programme providers. We also consider the relationship in the context of the processes for the application of conditionality and sanctions, which are intended to promote participants effective engagement with the Work Programme. The aspiration towards warm handovers 48. JCP manages the handover of claimants to the Work Programme. All jobseekers will have been supported by JCP in the early months of their unemployment benefit claim. All will have signed up to a Jobseeker s Agreement, in which the claimant agrees to undertake particular job-searching activities and attend mandatory work-focused interviews. Work Programme participants continue to receive out-of-work benefits as long as they meet the conditions of their Jobseeker s Agreement, and usually continue to report to JCP to sign on, typically every two weeks. All other contact related to employment support is with the Work Programme provider for the duration of the two-year attachment period. 36 49. The initial report of the official DWP evaluation of the Work Programme highlights the aspiration set out in most Work Programme contracts for warm handovers of jobseekers from JCP to Work Programme providers. These would typically involve a threeway meeting between the JCP adviser, Work Programme adviser and the participant. The aim of warm handovers is to ensure that information about the participant s specific needs and barriers to work are effectively communicated to the Work Programme provider and that the participant understands why they are being referred, what they can expect from the programme and what is expected of them in return. 37 50. Professor Sainsbury, co-author of the evaluation report, highlighted evidence from the evaluation that warm handovers did not appear to be commonplace. A key issue which may impact on effective handovers is the quality of working relationships between JCP and Work Programme staff. One JCP manager told the evaluation team that there has always been a level of hostility from Jobcentre Plus staff towards private providers. 38 Professor Sainsbury explained in oral evidence why some JCP staff may have a hostile attitude towards the Work Programme: They see it as a threat to their jobs and their livelihoods. They do not trust it and they do not think that the Work Programme providers are going to do as good a job as they did. That is another reason why they do not sell it Why should I sit here in my Jobcentre office selling an organisation, pumping them up, when they are effectively the people that could do me out of a job in future? 39 36 Committee s 2011 Report, para 171 37 DWP, Work Programme evaluation: Findings from the first phase of qualitative research on programme delivery, November 2012, chapter 5 38 Ibid., para 5.2.3 39 Q 6

22 The evaluation report noted variable quality in relationships between JCP and Work Programme staff; there was evidence of close relationships in some localities but in others Work Programme advisers had not even been able to establish telephone contact with their local JCP as they had not been given a direct telephone number. 40 51. Providers painted a picture of improving relationships with JCP. Sean Williams of G4S told us that warm handovers occurred for the majority of jobseekers referred to its Work Programme provision, although there were variations between CPAs. 41 Rehab Group aimed to ensure that all ESA claimants received a warm handover. One of its supply chain partners had decided to co-locate with a local JCP for one day per week, so that warm handovers for ESA claimants could take place at the Jobcentre. 42 Warm handovers were more problematic for Shaw Trust and CDG, which operates in east London, due to the volume of participants in their area and logistical difficulties within local JCP offices. It was piloting different approaches, such as locating JCP staff in its own Lewisham office and appointing outreach advisers to liaise with JCP about harder-to-help clients. 43 52. The Minister assured us that improving JCP/Work Programme relationships was a priority for DWP. As well as encouraging warm handovers, DWP was also promoting the co-location of offices. He believed that JCP staff now see the merits of a very strong relationship with Work Programme providers. 44 We gained a similar impression from our visit to Brent, in which JCP staff and providers told us of a problematic relationship in the early days of the Work Programme but reported recent improvements. JCP staff had initially seen referring claimants to the Work Programme as a failure, which was a source of competitive tension and some hostility, but there was a growing understanding amongst frontline JCP staff in Willesden that the Work Programme was needed and local relationships were starting to mature. Conditionality and sanctioning of Work Programme participants 53. Work Programme providers can require participants to undertake specific workrelated activities, such as appointments with advisers and training courses. Failure to participate in these activities has sanctionable consequences i.e. payment of benefit can be stopped for a period of time. The sanction is four weeks for a first failure to comply, followed by 13 weeks for any second or subsequent failure within a 52-week period. 54. DWP guidance to providers states that conditionality can be applied on a case by case basis. It states that if it is apparent that a participant has failed to participate [...] in a nonmandated activity, you should consider mandating them to their next activity to help ensure they effectively engage with you. Alternatively, providers can decide to take a blanket approach, applying conditionality to all participants every time they want them to attend an appointment or complete a particular activity. 40 DWP, Work Programme evaluation: Findings from the first phase of qualitative research on programme delivery, November 2012, para 5.2.3 41 Qq 310 311 42 Q 311 [Andrew Conlan-Trant] 43 Q 311 [Richard Clifton] 44 Q 546

23 55. The guidance sets out a number of steps providers must follow before mandating a participant to undertake a particular activity, including: Ensuring that the activity is reasonable in the participant s circumstances; Ensuring that the participant is fully aware of the sanctionable consequences of failure to comply; Making the participant aware of the specific action they are required to undertake and by when; and Notifying the participant in writing. Decisions on whether to sanction participants for failure to undertake a mandated activity rest with JCP Labour Market Decision Makers. 45 56. Organisations representing particular groups of jobseekers reported that a lack of coordination and communication between JCP and Work Programme staff was leading to the inappropriate application, or threat, of benefit sanctions. The Single Parent Action Network (SPAN) conducted a survey of 16 single parent Work Programme participants, which found that in some cases the Work Programme provider had not been aware of, or not followed, the terms of the participant s Jobseeker s Agreement drawn up with JCP: For instance, [two single parent participants] were told by the Work Programme to apply for jobs that went against their Jobseekers Agreement. [...][One] had been told to apply for jobs where she would have to work Saturday and Sunday even though her Agreement specified work between Monday and Friday. 46 Cymorth Cymru, a charitable organisation which works with a range of disadvantaged people, reported that in Wales JCP staff are not providing Work Programme providers with relevant information such as action plans. 47 The UK Council on Deafness stated that it was not clear that JCP staff routinely pass on information, through their Disability Employment Advisers, to ensure that Work Programme advisers understand the specific support needs of deaf and other disabled people. 48 57. Research by homelessness charities found that some 22% of homeless participants in the Work Programme had been sanctioned. Respondents to its survey claimed that sanctions related to appointments they hadn t been informed of, clerical error, or appointments they had had to move due to other commitments, e.g. a meeting with probation. 49 The charities report also argues that it is likely that many of the homeless people who have been sanctioned, particularly those with severe barriers such as learning disabilities, may not have understood the reasons for sanctions being applied. 50 58. Evidence from the official evaluation found that most sanctions resulted from participants failure to attend their initial meeting with an adviser, rather than any 45 See DWP, Work Programme Provider Guidance, Chapter 3a 46 Ev 153 47 Ev w31 48 Ev w86 49 See DrugScope and Homeless Link, Ev 126 50 Crisis/Homeless Link/St. Mungo s, The Programme s Not Working, November 2012

24 subsequent failure to engage in Work Programme activity. Furthermore the evaluation found that: Providers report that some of these failures to attend result from poor quality information passed to them by Jobcentre Plus. There is little evidence of effective communication on this question between providers and Jobcentre Plus local offices. 51 The evaluation report concluded that communication between JCP and the Work Programme, in both directions, was a critical factor affecting the effectiveness of the sanctions process. Overall, the evaluation s initial analysis suggests that while conditionality and sanctioning are an accepted and acceptable part of the Work Programme there is some way to go in ensuring that the processes work effectively. 52 59. Improving local relationships between JCP and Work Programme staff is rightly considered a priority by DWP. We observed an improving relationship in Brent but the evidence from the official evaluation suggests a varied picture across JCP Districts and clearly more progress needs to be made. Local JCP managers must take responsibility for ensuring that the message gets through to frontline staff that good working relationships with their Work Programme counterparts are essential. 60. We are in favour of conditionality where it supports the policy intention of encouraging participants effective engagement with the Work Programme. However, we are deeply concerned by evidence of the inappropriate use, or threat, of benefit sanctions against Work Programme participants and the initial findings of the official evaluation, which suggest that the processes for the application of conditionality and sanctions do not yet work effectively. We recommend that DWP conduct a review of Work Programme conditionality and sanctioning activity as a matter of urgency, with a view to ensuring that the processes are clearly understood by participants and consistently applied by both Work Programme and JCP staff, and that it publishes its findings by the end of 2013. 51 DWP, Work Programme evaluation: Findings from the first phase of qualitative research on programme delivery, November 2012, para 11.4 52 Ibid.

25 4 Employer engagement 61. Encouraging employers to recruit long-term unemployed people will be a key factor in improving the job outcome performance of the Work Programme. We initially received no written submissions from employers but we were very keen to hear their views on the Work Programme as a potential recruitment partner. We approached a number of employers and employers organisations which have a track-record of promoting the employment of long-term and disadvantaged jobseekers. This chapter examines the Work Programme s effectiveness in engaging with employers and sets out some examples of best practice. How willing are employers to recruit the long-term unemployed? 62. Some witnesses believed that few employers are willing to consider recruiting longterm jobseekers who may face challenges in adapting to the workplace. 53 Papworth Trust, a Work Programme subcontractor in the east of England, wrote: A major barrier for our clients is that employers often seek ready-made employees who are proficient in their role with minimum training, support, cost or perceived risk to the employer. Extra support or training is viewed as inconvenient, time consuming and costly. 54 Similarly, the UK Council on Deafness believed that deaf and other disabled people face attitudinal barriers at work and mental health organisations highlighted research by Shaw Trust which found that 40% of employers view employees with mental health problems as a significant risk. 55 Cymorth Cymru also raised concerns about employers perceptions of some groups of unemployed people, particularly ex-offenders. 56 Providers we spoke to in Brent believed that negative media coverage may have dissuaded some employers from engaging with the Work Programme. Repositioning employers 63. We sought evidence from the Business Disability Forum (BDF), an employers membership organisation, one of whose aims is to facilitate the recruitment of disabled people. BDF believes that two key changes are required if the Work Programme is to effectively support large numbers of long-term unemployed disabled people into sustained employment. Firstly, employers must be repositioned from problem people whose attitudes must be changed to valued end user, customer and potential partner. Secondly the disability-to-work supply chain needs to be streamlined, equipping and supporting employers and making it easier for them to recruit disabled people on the basis of their capabilities. 57 53 See, for example, Ms M J Canning, Ev w18, para 2 54 Ev w64 55 Ev w18; Ev 137 56 Ev w30 57 Ev 115

26 64. Susan Scott-Parker, BDF s Chief Executive Officer, felt that Work Programme providers were not sufficiently aware of initiatives such as Access to Work, a DWP-funded scheme which supports disabled people in work by providing practical support to overcome work-related obstacles resulting from their disability. The scheme contributes to costs which go beyond the reasonable adjustments which employers are obliged to provide under the Equality Act. Access to Work supported 30,780 disabled people in 2011/12, of whom 10,000 were new recipients. 58 The Government recently announced its intention to strengthen and improve the scheme. 59 65. BDF argued that it was fundamentally important that providers understood employers recruitment processes in order to facilitate the employment of disadvantaged jobseekers such as disabled people. Susan Scott-Parker highlighted work BDF had done with the National Autistic Society, for example: [...] they brought us 50 CVs, so that we could see the talent and the qualifications and what they were interested in, and then we brought a group of companies together that we knew in the next year or two were likely to have jobs to match. [...] We learned that the job interview disadvantaged many of these individuals, and so the members agreed to do work trials. We have had hundreds of people with Asperger s find work as a result of bringing the demand from the employer together with the supply of candidates in a structured and systematic way [...]. 60 66. We also heard evidence from Timpson, the well-known high street shoe repairing and key-cutting company. For eight years, Timpson has been running a scheme offering work experience and jobs to prison-leavers. It works with around 80 prisons, interviewing prisoners with a view to employing them or offering work experience placements on release. In recent years the scheme has been supplemented by prison-based Timpson academies, in which prisoners can learn the skills required to work in Timpson s branches. Timpson s charitable foundation also funds pre-release support, helping prisoners make plans for housing, family support and a job on release. Timpson currently has 235 prison leavers in its organisation, 142 of whom are in full-time paid jobs. 61 Gouy Hamilton-Fisher, Timpson s Head of People Services (HR), told us that there was a strong business case, as well as a corporate responsibility case, for recruiting ex-offenders. After he had helped set up Timpson s prison-leavers scheme, he could not believe how blind we had been to a wider recruitment pool. 62 Work Programme providers approaches to employer engagement 67. During our visit to St Mungo s, its employment services staff told us that establishing good relationships with employers was sometimes problematic. However, they emphasised that they had managed to establish effective partnerships with a number of sympathetic employers. In St Mungo s experience it was often more productive to approach small and 58 DWP, Access to Work: Official Statistics, April 2013; See also, A review to Government by Liz Sayce, Getting in, staying in and getting on: Disability employment support fit for the future, June 2011, p 14 59 HC Deb, 19 November 2012, cols 23 26WS 60 Q 407 61 Ev 161 62 Q 444

27 medium-sized businesses but they also noted that some large retailers, for example Debenhams and John Lewis, had a good track record of recruiting disadvantaged jobseekers, including homeless people, and providing opportunities for career progression. 68. We received relatively little detailed comment from Work Programme providers on strategies for engaging employers. Some believed that having more than one prime in each CPA had led to confusion. For example, Wheatsheaf Trust told us that: [...] we have put in a considerable amount of work over the last 5 or 6 years, alongside Jobcentre Plus and the local authority, to get all the agencies working in the employment and skills arena to co-operate, particularly in approaches to employers. Because providers are now in direct competition with each other for outcome payments and with Jobcentre Plus for the few available vacancies, this co-ordinated approach is falling apart and employers are already getting frustrated with a number of multiple approaches from different agencies chasing their vacancies. 63 3SC, a consortium of third sector subcontractors, highlighted instances of positive impact on job outcomes through primes working together to create regional employer engagement strategies. 64 69. Our discussion with local stakeholders in Brent suggested that primes are not routinely calling on the knowledge and expertise of local authorities, many of which have close relationships with local employers. The Director of Regeneration and Major Projects for Brent Council told us that none of the three primes operating in his area had contacted him directly for advice on employers upcoming recruitment needs, despite the council s track record of close collaboration with local employers and its own position as one of Brent s largest employers. 70. A4e believed that the length of the current Work Programme contracts seven years in total would allow primes to foster stronger links with local employers over time and to develop an understanding of employers long-term recruitment plans. It told us it intended to help Work Programme participants to gain skills required not just within specific local sectors but also for specific roles with specific employers. 65 71. However, the employers we heard evidence from reported a mixed experience of recruiting from the Work Programme. Timpson and Transport for London had both had some poor experiences. For example, Timpson had been looking to recruit people from the Work Programme but of the 12 people put forward by the provider only one had proved suitable. The remaining 11 either did not arrive for work and had to be chased up or were very poorly prepared. Gouy Hamilton-Fisher s impression was that eight had not had any preparation whatsoever. He believed that this experience demonstrated that Work Programme providers were not focusing sufficiently on matching suitable jobseekers to specific vacancies. Susan Scott-Parker s view was that this experience was common. She felt that too often the providers played a pure numbers game, randomly pushing jobseekers towards vacancies in the hope that a few stick. 66 63 Ev 164 64 Ev w82 65 Ev w2 66 Q 407

28 72. The most positive example of Work Programme employer engagement we heard about was Transport for London s (TfL) systematic engagement with all six primes operating in the capital. TfL works with its supply chain partners to identify upcoming job vacancies and the primes then collaborate to provide suitable candidates from the Work Programme. A single Work Programme Coordinator (WPC) is funded by the six primes and is embedded within TfL to identify suitable vacancies and to ensure that the recruitment processes run smoothly. Working closely together in this way helps the primes to understand fully the business requirements of TfL s suppliers. The WPC coordinates feedback between TfL, suppliers and the primes and also monitors candidates job retention. TfL started the scheme as a pilot in January 2012. In its first year of operation, it achieved 112 job starts across 12 TfL suppliers. 67 Andrea Fozard, TfL s Supplier Skills Project Manager, told us that the WPC role had been crucial in ironing out early problems, including candidates being poorly prepared. She believed that close collaborative working had enabled some of the primes subsequently to provide a fantastic service. 68 73. We believe that providers should do more to prepare jobseekers for real vacancies and should desist from simply deluging employers with a random selection of CVs and poorly prepared candidates. Excellent examples exist of employers engaging effectively with Work Programme providers, in particular Transport for London s systematic engagement with all six primes operating in the capital. We recommend that DWP and the Employment Related Services Association (ERSA) encourage approaches such as these. 74. General awareness of the Work Programme amongst employers appears to be low. We recommend that DWP work with the welfare-to-work industry to promote the Work Programme to employers as a potentially effective recruitment partner and that DWP and ERSA produce a national action plan for engaging employers in the Work Programme before the end of 2013. 75. At a regional level evidence suggests that collaborative approaches, where providers work together to create employer engagement strategies, are most effective. At a local level, providers should make effective use of the experience and contacts of local stakeholders, for example by meeting regularly with local authorities and local business groups such as Chambers of Commerce, to identify employers recruitment needs and prepare Work Programme participants for identified future vacancies. 67 Ev 162 68 Q 447

29 5 Jobseeker segmentation and the differential pricing model 76. As we have indicated, in past welfare-to-work programmes providers have sometimes tended to prioritise long-term jobseekers who are relatively job-ready, while sidelining jobseekers with more significant barriers to employment. A range of providers from all sectors have taken this approach to make the most effective use of their resources and, in the case of private sector providers, to maximise profits. The Work Programme is designed to reduce this risk of creaming and parking by employing an innovative differential pricing model. Providers can claim greater financial rewards for finding sustained employment for jobseekers whom DWP considers to be harder to help. In this chapter we examine the Work Programme s differential pricing model and its impact on creaming and parking; and consider how the pricing model could evolve in the future. Work Programme payment groups 77. For the purposes of the Work Programme jobseekers are allocated to one of nine payment groups, based largely on benefit type being claimed, with some sub-categories according to age, and a separate group for JSA claimants with the most significant barriers to work, such as serious drug problems and homelessness. There is also a separate category for prison leavers. The table below sets out the maximum value of payments available to providers in relation to participants attached in year one of the programme. Table 3: Maximum payments to Work Programme providers by payment group Maximum payments available over 2 year attachment period Payment group Max year 1 Max year 1 job Max year 1 Total attachment fee outcome fee sustainment fee (monthly) 1. JSA aged 18-24 400 1,200 2,210 3,810 2. JSA aged 25+ 400 1,200 2,795 4,395 3. JSA Early Access 400 1,200 5,000 6,600 4. JSA Ex-IB 400 1,200 5,000 6,600 5. ESA Volunteers 400 1,000 2,300 3,700 6. New ESA claimants 600 1,200 4,700 6,500 7. ESA Ex-IB 600 3,500 9,620 13,720 8. IB/IS 400 1,000 2,300 3,700 9. JSA Prison leavers 300 1,200 4,000 5,500 78. The differential payments on offer are intended to reflect the relative difficulty, and costs, of supporting different types of claimant into sustained work and thereby incentivise providers to support all participants. DWP told us that the payment model ensures that providers can only make a reasonable return on their investment if they genuinely help all their participants; in other words creaming and parking will not pay. 69 79. It is important to understand that the differential price per participant in each payment group is not the same as the differential price per job outcome. This is because job outcomes are more likely in some payment groups than others. As we noted in 2011, the 69 Ev 121

30 maximum value of payments on offer to providers for placing an ex-ib ESA claimant into sustained work ( 13,720) is just over three times the amount offered for a job outcome relating to a mainstream JSA claimant aged over 25 years ( 4,395). However, if you consider the relative likelihood of achieving a job outcome for an ex-ib ESA claimant compared to a mainstream JSA claimant, it is likely that the price per participant in the ex- IB ESA group is around the same level, or even slightly lower, than that for a participant in the mainstream JSA group. 70 Accuracy of the Work Capability Assessment 80. The Work Programme will support a far larger number of participants with disabilities and health conditions than any previous scheme. The Government is currently in the process of reassessing IB claimants who until now have not been expected to seek employment for ESA, the replacement benefit for IB. A large proportion of ESA claimants, including those migrating from IB, will be expected to take steps towards returning to work and many will be referred to the Work Programme on either a mandatory or voluntary basis, depending on their prognosis of ill-health or disability. 71 81. A number of witnesses noted the importance of the Work Capability Assessment (WCA), the face-to-face eligibility test for ESA, in allocating claimants to the correct benefit type, with the correct prognoses of ill-health, and therefore the correct Work Programme payment group. The accuracy of the WCA as an assessment of claimants fitness for work has been the subject of a great deal of public debate since its introduction in 2008. Our 2011 Report on the IB reassessment highlighted flaws in the WCA as originally introduced and, while acknowledging attempts to improve the process through implementation of the recommendations of the Independent Reviewer, which are ongoing, concluded that many claimants had received a poor service and an inaccurate assessment of their fitness for work. 72 82. Some providers reported recent improvements in the accuracy of the WCA but a number told us that claimants who were clearly unfit for any type of work-related activity were being referred to the Work Programme. G4S rated the improvements made to the WCA process in recent years as four or five out of 10. 73 Kirsty McHugh of ERSA reported ongoing concern amongst providers about the accuracy of WCAs. Both G4S and Rehab told us that claimants with terminal cancer, whose life expectancies were shorter than the WCA work-ready prognosis, had been referred to the Work Programme. 74 83. The Minister for Employment confirmed that there was currently no process by which providers can refer claimants back to JCP if they believe the claimant to be clearly unfit for work despite being assessed as being fit for work following a WCA. While he could see the 70 Committee s 2011 Report, para 76 71 See Work and Pensions Committee, Sixth Report of Session 2010 12, The role of incapacity benefit reassessment in helping claimants into employment, HC 1015 72 Work and Pensions Committee, The role of incapacity benefit reassessment in helping claimants into employment, Sixth Report of 2010 12, HC 1015, chapter 3 73 Q 323 74 Q 323

31 argument for introducing such a process, he believed that it would need to be subject to checks and balances to ensure that providers could not declare people unfit for work simply because they did not want to work with them. 75 84. Providers reported some improvement in the accuracy of the Work Capability Assessment (WCA) but we also heard some quite shocking examples of participants referred to the Work Programme who had clearly been incorrectly declared fit for work following a WCA. We recommend that DWP work with providers to agree a process by which participants whom providers believe are clearly unfit for work can be referred back to Jobcentre Plus. We agree with the Minister that the process will require checks and balances to ensure that providers cannot simply refer back any participant whom they do not want to work with. The Work Focused Health-Related Assessment 85. The disability charity, Scope, recommended that a distance from work test be added to the WCA. It argued that this could measure disabled people s actual readiness for work, in addition to their functional capability to undertake some form of work or work-related activity and their eligibility for ESA. Scope noted that many providers already carry out such tests and therefore that the addition of a distance from work test to the WCA need not lengthen the time of the overall process. 76 We raised this issue in 2011 in our Report on the IB reassessment process. We pointed out that, when the WCA was first introduced, it included a separate component the Work Focused Health-Related Assessment (WFHRA). The WFHRA focused on what work the claimant might be capable of doing and how their condition might be managed to help them find and stay in work. It sought the claimant s views on returning to work, what difficulties they faced in this, what steps they thought they needed to take to move back into work, and tried to identify healthrelated or workplace interventions which might support them into work. 86. The WFHRA was suspended for two years from July 2010. In the course of our IB reassessment inquiry, DWP told us that the decision was taken in the light of the introduction of the Work Programme and would provide an opportunity for DWP to reconsider the WFHRA s purpose and delivery while also improving the capacity to focus on and cope with the demands of the reassessment of existing benefit customers. 77 On 25 April 2013, DWP announced in a brief Written Ministerial Statement that an external evaluation of the WFHRA had found that it was not delivering the intended outcomes. The WFHRA will therefore remain suspended until at least April 2016, so that DWP can properly evaluate the impacts of both the Work Programme and Universal Credit systems. 78 87. We repeat the conclusion reached in our July 2011 Report on the Incapacity Benefits reassessment; a separate component of the Work Capability Assessment, which could focus on health-related or workplace interventions, and which might support claimants with health conditions and disabilities into work, would be particularly useful for people 75 Q 514 76 Ev 146 77 Work and Pensions Committee, Sixth Report of 2010 12, The role of incapacity benefit reassessment in helping claimants into employment, HC 1015, paras 111 122 78 HC Deb, 25 April 2013, cols 75 76WS

32 moving off Incapacity Benefits. We believe that, if this had been in place when the Work Programme was implemented, it could have provided a better assessment of benefit claimants readiness for work and might have prevented inappropriate referrals. Based on the limited information which DWP has made available, its original decision to suspend the Work Focused Health-Related Assessment, and its recent decision to continue its suspension until at least April 2016, seem regrettable. We recommend that DWP provide a fuller explanation of its reasoning for its latest decision than was provided in its Written Ministerial Statement of 25 April 2013, and that it publishes the external evaluation. Effectiveness of the current pricing model 88. With the caveat that it was still relatively early days for the Work Programme, Professor Roy Sainsbury told us that the differential pricing model did not appear, from qualitative research, to be having its intended impact. Frontline Work Programme staff had told researchers that they prioritise those closer to the labour market. The evaluation report states that: [...] observations suggested that the most job-ready participants were booked into more regular review appointments than the least job-ready, and that the most jobready were encouraged to rapidly take-up any support or training required, because they were seen by advisers to be easy to progress into work once minor constraints had been overcome. Those who were less job-ready appeared to be challenged by advisers less frequently and less intensively about their job-seeking activities during meetings, and were booked into programmes of lesser intensity. 79 Furthermore, Professor Sainsbury told us that frontline Work Programme advisers had reported that they simply haven t got the financial resources to support those with more significant barriers to work. 80 89. As set out in chapter 2, the job outcome performance of the Work Programme in the first 12 14 months of delivery was generally disappointing (2.1% within the mainstream payment groups after 12 months of delivery against the contractual year one target of 5.5%). The official data also show significantly lower job outcome performance in the harder-to-help groups than in the mainstream groups, although this was anticipated to some extent. Within the generally poor picture, Inclusion has noted some positive features, including relatively high job outcome performance for JSA claimants with complex barriers to work and higher than expected performance, relative to the mainstream JSA groups, in the JSA ex-ib group. However, performance in the ESA ex-ib group was very poor with only 30 job outcomes from 9,440 referrals in the first 14 months of delivery (0.3%). 81 The official job outcome data are also concerning when broken down by a range of personal characteristics. The data show that in the first 14 months of delivery people 79 DWP, Work Programme evaluation: Findings from the first phase of qualitative research on programme delivery, November 2012, chapter 5 80 Qq 51 52 81 Centre for Economic and Social Inclusion, Work Programme performance statistics: Inclusion analysis, November 2012, pp 8 9

33 with disabilities and lone parents had the lowest job outcomes of the nine groups identified in the data (2.3% and 2.6% respectively, compared to 3.5% across all payment groups). 82 90. As previously noted, ERSA s unverified job-start data present a relatively positive picture of overall performance building in the pipeline. However, ERSA s data show much lower job-starts for participants in the ESA and ex-ib groups than in the mainstream JSA groups. ERSA has stated that this reflects the real challenges that jobseekers with health conditions and disabilities face in the labour market. 83 Segmenting jobseekers by benefit type 91. DWP was aware in 2011 that a model based on benefit type was an imperfect method of segmenting jobseekers. However, it had decided on the model because it was simple, with no scope for debate and discussion. The then Minister for Employment acknowledged that there would inevitably be variations between participants within the groups but argued that the differential prices, as a broad average, would give providers a sensible basis to work with. 84 92. Our earlier Report acknowledged the innovative attempt to address creaming and parking through differential payments, concluding that it represented an improvement on the design of predecessor schemes. However, we were concerned that a model based largely on benefit type being claimed may not in practice accurately reflect the level of jobseekers needs, their distance from the labour market and the relative difficulty of supporting them into sustained work. Importantly, we concluded that creaming and parking remained possible within payment groups. Our view was that the differential payment model was likely to need to evolve over time. 85 93. Concerns about the payment model were again expressed by a wide range of witnesses to this inquiry. There was consensus amongst providers and representative groups that benefit type is a poor proxy for the level of jobseekers needs. ERSA noted that it was not necessarily the case that someone on ESA would be more difficult to place into sustained employment than someone on JSA, for example. 86 Official data show that some 49% of JSA participants in the Work Programme who report having a disability have been allocated to one of the mainstream payment groups which attract lower job outcome fees for providers. 87 94. The Pluss Organisation, a specialist provider of welfare-to-work for disabled people, felt that the Work Programme groups do not effectively distinguish between those who need only a little support and those who need more intensive interventions. 88 DrugScope and Homeless Link wrote that DWP s choice of benefit type as the basis of the differential 82 Ibid., pp 10 11 83 ERSA, Job Start data, November 2012 84 Committee s 2011 Report, para 82 85 Committee s 2011 Report, chapter 4 and para 201 86 Ev 128 87 Centre for Economic and Social Inclusion, Work Programme performance statistics: Inclusion analysis, November 2012, table 3 88 Ev 140

34 pricing model was a missed opportunity to align the pricing structure with individual jobseekers needs. 89 95. Some providers reported that the differential pricing model had little or no discernible impact on their frontline advisers behaviour. G4S said that its advisers probably would not know which payment group individual jobseekers were in and would therefore be unaware of the amount of money attached to that individual s head. Richard Clifton told us that for Shaw Trust and CDG, the only entirely voluntary sector prime in the Work Programme, the payment group to which jobseekers had been allocated had no impact on the services they would receive. 90 This evidence is supported by the recently published second Work Programme evaluation report, which considered the programme s procurement, supply chains and the implementation of the commissioning model. It states that, so far, there is little evidence that primes use differential pricing to target different types of support to different payment groups. The report notes that all providers use their own assessment tools, none of which consider the participant s payment group. 91 96. Shaw Trust and CDG welcomed differential payments as a necessary evolution in welfare-to-work delivery but argued that the model needs to evolve further. It cites a survey of its frontline Work Programme delivery staff which found that: 60% of staff stated that they did not feel that the payment group a customer is allocated to on the Work Programme accurately reflects how easy or difficult each customer will be to get into work. For example, staff reported that mental and physical health problems affect customers in all payment groups and not just the three ESA payment groups and the IB and IS group. Similarly, barriers to work such as homelessness, or a lack of access to affordable childcare, are not exclusive to just one payment group. 92 97. Some witnesses believed that the effectiveness of the Work Programme for harder-tohelp groups could be improved by alterations to the existing payment model. Ian Mulheirn s view was simply that we have not tried offering nearly enough money to providers for supporting disadvantaged jobseekers into sustained employment. 93 This view was also expressed by some providers in the official evaluation. 94 Others believed that DWP should increase the proportion of funding available to providers via up-front attachment fees for jobseekers in some payment groups. Shaw Trust and CDG argued that this would retain a focus on payment-by-results but at the same time release resources for more expensive, tailored interventions required by harder-to-help jobseekers. 95 89 Ev 125 90 Q 333 91 DWP, Work Programme Evaluation: Procurement, supply chains and implementation of the commissioning model, March 2013, para 5.2.2 92 Ev 149 93 Q 53 94 DWP, Work Programme Evaluation: Procurement, supply chains and implementation of the commissioning model, March 2013, para 5.2.2 95 Ev 149 150

35 Alternative models 98. The Pluss Organisation believed that the needs of long-term jobseekers with significant disabilities and health conditions, and other disadvantaged groups such as substance misusers, homeless people, over-50 year-olds and care leavers, would be better served by specialist programmes separate from the Work Programme. 96 99. A number of witnesses highlighted the relative success of the Work Choice programme, the specialist disability employment programme which the Government chose to retain as a separate scheme when it set up the Work Programme. Like the Work Programme, Work Choice operates within a black box, prime provider model. It operates in 28 CPAs with between two and seven subcontractors in each. It has an element of outcome-based funding but is not heavily weighted towards payment-by-results; providers are paid a 70% service fee, with 15% being paid when the client moves into supported employment and the final 15% paid following a move into unsupported employment. The payment level is the same for all clients regardless of whether they are JSA, ESA, IB or other claimants. DWP statistics show that 17,200 disabled people were referred to Work Choice in 2011/12, of whom 5,640 (33%) achieved either a supported or unsupported job outcome. 97 100. Kirsty McHugh of ERSA stated that we have all known from the outset that benefit type was a very rough proxy for jobseekers needs. She argued that the introduction of Universal Credit, which will replace both income-based JSA and income-based ESA by 2017, offered the opportunity to move towards something that is a fairer assessment of people s needs. 98 101. A wide range of witnesses recommended that, in the longer-term, the Work Programme would benefit from a more thorough needs-based assessment of jobseekers barriers to employment. Several pointed to the Australian system, in which a Jobseeker Classification Instrument (JSCI) allocates jobseekers to one of four work streams depending on their distance from the labour market and level of support required. Services in stream 1 are designed for more work-ready jobseekers; at the other end of the spectrum, stream 4 caters for the most disadvantaged claimants with severe non-vocational barriers to work. Under the Australian JSCI system, unemployment benefit claimants are assessed and allocated to the appropriate service stream at the beginning of their claim. Claimants are assessed against 18 categories of personal circumstances, including: work experience; access to transport; educational attainment; disability; and criminal convictions. The initial JSCI assessment is carried out by the Australian equivalent of JCP. Subsequent JSCIs can be conducted by qualified assessors employed by contracted providers if there is a change in the claimant s circumstances. The JSCI questionnaire contains a maximum of 49 questions to the claimant, who receives a score which determines to which service stream they are allocated. 99 96 Ev 139 97 DWP, Work Choice: Official Statistics, February 2013 98 Q 329 99 See Australian Department of Education, Employment and Workplace Relations, Jobseeker Classification Instrument: Factors and Scores, July 2012

36 102. There is an element of needs-based segmentation within the Work Programme, with JSA claimants with certain characteristics of disadvantage, such as homelessness and serious drug problems, being referred at an earlier stage of their benefit claim and attracting higher payments than the mainstream JSA groups. However, as highlighted in chapter 3, there is evidence that crucial characteristics such as these are often not identified by JCP, meaning that some participants are not being correctly allocated to the Early Access group. 103. During our visit to St Mungo s, employment services staff told us that jobseekers with the severest barriers to work, such as homelessness, mental ill-health and serious drug problems are often not ready to engage in the types of interventions currently available within the Work Programme. Staff at St Mungo s told us that homeless people s journey back to work is often a long one; they believed that a two-year attachment period would be insufficient for many of their clients. St Mungo s believes that the Government should provide pre-work Programme support to prepare jobseekers with the severest barriers to work for effective engagement with the Work Programme. 104. There is growing evidence that the Work Programme is failing to reach jobseekers with the most severe barriers to employment. We recommend that DWP review Jobcentre Plus processes for identifying jobseekers with severe barriers to employment, such as homelessness and serious drug and alcohol problems, as a matter of urgency. It should also review its processes for communicating these barriers to Work Programme providers. Where appropriate, we recommend that these types of jobseekers are more consistently allocated to the JSA Early Access group, where they will attract a higher level of funding than those in the mainstream JSA groups. 105. There was consensus amongst witnesses that benefit type is a poor proxy for the level of jobseekers needs and the relative cost of supporting them into work. In the longer-term, in preparation for the next round of Work Programme contracts, we recommend that DWP consider whether a more thorough assessment of jobseekers individual barriers to work, possibly along the lines of the Australian Jobseeker Classification Instrument, should be the basis of a future needs-based differential pricing structure. 106. We recommend that DWP assess how a needs-based differential pricing structure might determine the level of up-front funding and the types of services required by jobseekers referred to the Work Programme and whether alternative funding models, which reward providers for achieving milestones along the way to employment, should apply to jobseekers who are furthest from the labour market. Funding the Work Programme 107. DWP has paid considerably fewer job outcome payments to date than it anticipated. The 2012/13 DWP Supplementary Estimate, which sets out departmental budget allocations, shows that DWP will repay some 248 million to HM Treasury due to lower than anticipated job outcome payments to Work Programme providers. 100 The Minister told us that funding allocated for the Work Programme was ring-fenced and that DWP was therefore required to repay any under-spend to the Treasury. Mr Hoban said that 100 DWP, Department for Work and Pensions Supplementary Estimate 2012/13: Memorandum to the Work and Pensions Select Committee, 13 February 2013, para 10

37 DWP was in negotiations with the Treasury about whether the unspent budget allocation could in fact be reinvested in the Work Programme in future years. 101 108. Expert witnesses thought that the Government should use the unexpected budget shortfall, consequent on lower than anticipated job outcome payments, to fund alternative provision to tackle long-term unemployment in order to keep jobseekers as close as possible to the labour market during a period of relatively high long-term unemployment. 102 109. Our previous Report on the Work Programme highlighted DWP s original intention to fund the Work Programme partly from the future benefit savings accrued from placing long-term unemployment benefit claimants into sustained work. We therefore expected the Work Programme to bring about a change to the internal government accounting rules, which have required expenditure on employment programmes to be funded from DWP s Departmental Expenditure Limit (DEL), by releasing funding for extended employment support for a wider range of jobseekers from the much larger Annually Managed Expenditure budget (AME). This AME/DEL switch had been proposed following the findings of an independent report to DWP in 2007 by David Freud (now Lord Freud, the Minister for Welfare Reform), which calculated that the saving to the Exchequer of placing a recipient of IB into work for a year was 9,000, including gains from direct and indirect taxes. On average an IB claimant stays on IB for eight years, therefore the Freud Report noted that a genuine transformation into long-term work for such an individual is worth a net present value of around 62,000 [...] to the State. 103 110. The Government s intention was to fund the Work Programme, in part, from future benefit savings accrued from placing long-term jobseekers into sustained employment. We were supportive of this in principle and therefore do not believe it is appropriate, during a period of high unemployment, for the Government to retain the savings accrued as a result of the Work Programme s early under-performance. We recommend that the ring-fence around the Work Programme budget is extended to encompass alternative provision to address long-term unemployment. Part of the unexpected shortfall in Work Programme spending should be utilised to extend the Work Choice programme, to further increase resources for Access to Work, and to extend the attachment period for participants who make real progress but complete two years on the Programme without achieving a sustained job outcome. 111. Jobseekers with the most severe barriers to employment are often not ready to engage effectively with the Work Programme. DWP should use part of the shortfall in Work Programme spending to pilot additional pre-work Programme provision to prepare jobseekers, such as homeless people and those with serious drug and alcohol problems, for effective engagement with the Work Programme. In commissioning this provision, DWP should draw on the expertise of specialist providers, many of which have not been involved in Work Programme delivery to the extent anticipated (see paragraph 162). We recommend that additional support is in place by early 2014. 101 Qq 489 491 102 Q 72 103 Committee s 2011 Report, paras 16 20

38 6 Assuring service standards for all participants 112. This chapter considers whether, beyond the financial incentives offered within the differential pricing model, there are sufficient safeguards within the Work Programme to ensure that all participants receive an appropriate standard of service. The black box approach 113. DWP s Invitation to Tender for the Work Programme stated that: specialist delivery partners [...] are best placed to identify the best ways of getting people back to work, and will be allowed the freedom to do so without detailed prescription from central government. 104 This freedom from central prescription of services is known as a black box approach. Its aim is to allow providers to innovate and personalise interventions to suit the needs of individual jobseekers and focus on achieving sustained job outcomes, rather than being driven by centrally-prescribed processes. 114. In our first Work Programme Report we were supportive of the black box approach, as long as there were protections for Work Programme participants to ensure that all jobseekers knew the level of service to which they were entitled and that there were safeguards to ensure that all participants were treated appropriately. 105 The Government s response was that providers Minimum Service Standards would ensure that this was the case (see below). 106 115. There was qualified support for a black box approach from witnesses to this inquiry. Expert witnesses pointed out that an inevitable consequence of a black box approach is a lack of central control over the processes of service delivery. Professor Sainsbury s view, supported by other expert witnesses, was that a non-prescriptive approach was preferable if the objective is for services to evolve and respond. 107 116. However, Professor Sainsbury believed that it was not yet clear how the black box was expected to operate in practice. He highlighted evidence of some confusion about the appropriate definition. One view was that it should be defined as the services providers promise to deliver at the commissioning stage i.e. providers should be held to what they pledged to deliver in their contracts. An alternative view, widely held by providers, was that providers should have freedom to evolve their services and innovate. The official evaluation team had found quite a bit of tension between JCP contract managers and providers over the appropriate definition. 108 117. Tony Wilson of Inclusion noted that, where a black box had initially been applied in welfare-to-work schemes overseas, governments had tended to take back some control 104 DWP, The Work Programme Invitation to Tender: Specification and Supporting Information, December 2010, para 2.03 105 Committee s 2011 Report, para 24 106 Work and Pensions Committee, Sixth Special Report of Session 2010 12, Government Response to the Committee's Fourth Report of Session 2010 12, HC 1438, p 2 107 Q 19 108 Q 19

39 over services over time, as a reaction to concerns about equity and standards of service. 109 Although he believed the pricing structure was not yet right, Ian Mulheirn of the Social Market Foundation argued that greater prescription from Whitehall would be the wrong way to go in the Work Programme, because it was an outcome-based programme in which providers behaviours were intended to be driven by prices. 110 118. DWP emphasised that no delivery model should be regarded as fixed and that providers are actively encouraged to adapt their delivery models in the light of lessons learned from experience. It stated that, while providers must seek DWP s approval for changes to delivery models, changes would normally be agreed. DWP was clear that the onus is on providers to use initiative and innovation to deliver best performance. 111 119. We support a black box approach to service delivery; however, DWP must be clearer that this means that providers have the freedom to innovate and personalise services, free from government prescription. Despite minimal evidence of substantive personalisation thus far, we believe that a prescription-free approach is preferable to a centrally-prescribed, process-driven system, which might stifle the potential for innovation and be an inefficient use of DWP s resources. Minimum Service Standards 120. DWP did not prescribe the services providers should deliver but it required primes to set out Minimum Service Standards so that each participant knows what to expect. A common concern amongst witnesses was the variable nature of the Minimum Service Standards set out separately by each of the 18 primes. The standards vary considerably in detail and specificity. Two examples are set out below, in full. Some lack detail and are vague, for example: 109 Q 23 110 Q 21 111 Ev 123

40 The Ingeus Customer Pledge A flexible service that is convenient and accessible A personalised package of support that is tailored to your needs A professional Careers Academy and support to help you develop and progress in work Priority access to exclusive job vacancies and job market information Respect at all times and support to set your own goals If you would like to make a complaint about the service you receive, please speak to an advisor or ask for a copy of our complaints procedure. What we will do for you: Keep in regular contact with you Ensure you can easily contact us Give you access to the tools and information you need Encourage and act on your feedback or complaints Protect your personal information Provide you with equality of opportunity Focus on your safety and welfare Others are brief but contain some specific and measurable pledges, for example: Reed Meet with your personal Employment Adviser within ten days Receive a full assessment of your needs and skills Review your progress with your Adviser at least once every four weeks Receive support to develop a tailored CV and job goals Receive financial advice and support to show how you will be better off working Be able to access e-learning, job search support and vacancies through our online portal 121. Paul Anders of DrugScope felt that the vagueness of some Minimum Service Standards, combined with what he believed was an ineffective pricing structure, created a situation in which some participants can receive an ineffective or [...] completely lacking service. 112 This view was supported by Duncan Shrubsole of Crisis, who argued that loosely defined Minimum Service Standards allowed providers to prioritise the relatively job-ready. In doing so they were behaving entirely rationally by hedging the risks 112 Q 97

41 involved in choosing which participants to support within the black box. 113 The mental health charity, Mind, was concerned that there was a lack of clarity and transparency in the Minimum Service Standards and therefore about the services to which participants were entitled. Mind also believed that this risked harder-to-help participants being parked. 114 122. Laura Dewar of SPAN highlighted that single parents, in particular, needed predictability about what was required of them and the services to which they were entitled, noting evidence from SPAN s research which showed that the single parents who fared best on the programme were those who knew exactly what was on offer. Her view was that a suitable level of predictability could be achieved without precluding innovation or personalisation. 115 123. Kirsty McHugh of ERSA acknowledged that the detail in Minimum Service Standards varied between primes. We wanted to know whether the industry had considered establishing a single set of standards, which could be applied across all providers, to better protect all participants from being sidelined. She confirmed that there had been discussions about this within the industry, but explained that: The problem with this is that the devil is often in the detail. You think, Yes, that is a really good idea. Then you start drafting it, and it stops individual frontline advisers from doing what they need to do. We know for some people it is group work that is going to help motivate them and get them enthused and confident enough to be able to approach the workplace. With others it is one to one. If we put in minimum service standards that say you will see an adviser x amount of times, that may not be what they need. 116 124. We believe that the black box needs to be balanced by clear and measurable minimum standards so that participants know what to expect and the minimum level of service they are entitled to receive. Currently prime providers Minimum Service Standards vary greatly in detail and measurability. Some Minimum Service Standards are so vague as to permit providers to virtually ignore some participants if they so choose. We understand the difficulties of establishing a single set of standards which could be applied by all providers but we believe it is achievable. For example, it would be perfectly possible for all providers to be required to have a face-to-face meeting to assess all participants needs; to produce an employment action plan within a certain timeframe; and to have a face-to-face follow-up meeting, also within a specific timeframe. We recommend that DWP develop a core set of basic minimum standards applicable to all providers, and to which all Work Programme participants are entitled. The type of services currently being provided 125. Much of the evidence we received suggested that the Work Programme currently offered relatively light-touch and generic interventions. Tony Wilson s view was that so far the Work Programme was delivering the same kind of stuff that has always been 113 Q 97 114 Q 97 [Sophie Corlett] 115 Q 97 116 Q 358

42 delivered, including face-to-face adviser support, coaching, mentoring, help with job searches and CV building. These were all potentially effective options but the suite of interventions typically available suggested that there was little genuine personalisation in the Work Programme to date. 117 This analysis is supported by findings from the initial Work Programme evaluation. The evaluation team found consistent evidence of process personalisation, such as each participant being allocated a named adviser and one-to-one, rather than group, sessions. However, researchers found limited evidence so far of substantive personalisation of the interventions used to support individual participants: [...] advisers regretted that they were not able to provide more opportunities for specific training to meet individual needs. Rather, the courses they could offer tended to be generic, focused on employability skills and job application techniques. 118 126. We received relatively little evidence directly from individual Work Programme participants. The few submissions we did receive tended to report a negative experience of the Work Programme s ability to offer innovative and personalised services. For example, Ross Bradford, an ESA claimant who participated in the Work Programme from February to June 2012, told us that There was no attempt to shape the service to suit my needs or even understand what those needs were. In June 2012 he was referred to Work Choice. 119 Douglas Coombs, a Work Programme participant since August 2011, believed that the services offered to him were staid, old fashioned, inappropriate [and] ineffective. 120 127. Participants we met during our visits expressed mixed views about the level of service they had received from the Work Programme. None of the homeless people we spoke to during our visit to St Mungo s felt that the Work Programme had added significant value to their search for work. One ESA participant we spoke to in Brent had recently completed an employability course on the Work Programme and was about to undertake an IT course. Her Work Programme provider had also arranged for a mentor to advise her on the best ways to gain employment in social care, the sector in which she was most interested. She believed that these interventions had made her more job-ready but she had had to push her adviser to arrange them. She had found the more generic Work Programme activities, such as group sessions spent updating CVs and job-searching, less useful. 128. A JSA participant in Brent was positive about the skills and attitudes of Work Programme advisers and, while most participants we spoke to felt that the quality of Work Programme advisers varied, some believed that they compared favourably with JCP advisers. All but one of the participants we met in Brent felt that Work Programme advisers had limited time for individual participants due to very high caseloads. Providers in Brent later confirmed that average caseloads per adviser were between 120 and 180 participants. 129. As noted in chapter 2, Work Programme participants are randomly referred to one of the two or three primes operating in their area. The policy intention is that primes receive 117 Q 20; see also London Voluntary Service Council, Ev w48, para 44 118 DWP, Work Programme evaluation: Findings from the first phase of qualitative research on programme delivery, November 2012, para 14.1 119 Ev w9 120 Ev w27

43 an equal number and random mix of referrals so that their performance can be easily compared. There is not currently the option for participants to choose a prime on the basis of the services offered or to switch between primes once they have been randomly referred. Some witnesses pointed out that an unintended consequence of randomised referrals was that participants are not always referred to the provision which best suits their needs. For example, Single Homeless Project noted that it was the only subcontractor in east London offering services specifically designed for homeless people but that homeless Work Programme participants were randomly referred to one of three primes operating in the east London CPA two of which had no specialist homeless provision within their supply chains. 121 130. The Minister told us that introducing an element of choice for participants might be something DWP considers in the future but that it would be a significant contractual change and would require some system changes. He believed that random allocation was the right approach for the Work Programme during the course of the current contracts. 122 131. Much of the evidence we received suggested that Work Programme advisers are highly-skilled and dedicated to supporting long-term jobseekers into sustained employment. However, with average caseloads of between 120 and 180, Work Programme advisers are being forced to prioritise whom they support. We recommend that DWP and the welfare-to-work industry devise ways of bringing Work Programme caseloads down. 132. We understand the policy intention of randomly allocating Work Programme participants to one of the two or three prime contractors operating in each Contract Package Area (CPA); it ensures that each prime operating in the same area receives an equal number and similar mix of participants and therefore allows their performance to be more easily compared. However, we recommend that DWP explore options for introducing an element of choice of prime contractor for participants, particularly where it can be clearly demonstrated that specialist services which would benefit an individual participant are not offered by the prime to which they have been randomly referred but are available via one of the other primes operating in the same CPA. Assuring service quality 133. Tony Wilson of Inclusion argued that many welfare-to-work advisers are absolutely brilliant at what they do but that the industry could do more formally to accredit their skills and encourage continuing professional development. He highlighted that welfare-towork was essentially a people business which needed really successful, inspirational leadership and highly professional front-line advisers. He noted that the sector had started to move in this direction, through Institute of Employability Professionals (IEP) accreditation. 123 The IEP was established by the industry, with support from the UK 121 Ev w 75; see also Ev w10 (Anna Burke) 122 Qq 478 479 123 Q 35

44 Commission for Employment and Skills, in June 2012 and offers professional accreditation and the opportunity to study for recognised qualifications. 124 134. OFSTED inspection of welfare-to-work provision was discontinued in 2010; responsibility for quality assurance now lies within DWP. However, Professor Sainsbury believed that at the moment there is nothing built into the Work Programme design that has any measure of quality in it. His view was that DWP contract managers were focused predominantly on job outcome performance rather than service quality. 125 A wide range of witnesses felt that much more could be done to assure the quality of Work Programme services. 126 135. Some witnesses felt that it was important systematically to survey participants satisfaction with the programme. Tony Wilson noted that this approach was taken in Australia, where participant satisfaction partly informs how providers performance is assessed. Others favoured the reintroduction of an independent quality inspection regime, although expert witnesses did not believe that this should be delivered by OFSTED and also noted that an independent regime would inevitably come with significant costs. Ian Mulheirn favoured the introduction of systematic participant satisfaction surveys but was very wary of reintroducing independent quality inspection, explaining that: There is a real danger that you get a tick-box attitude, which would be hugely expensive, hugely costly to monitor and would lead to resources being diverted to the wrong area. Mandation and minimum standards and ticking boxes might make us all feel better from the centre, but it will not solve any of the problems. The primary thing is sorting the prices out. The second thing is finding out from service users how the thing is performing from their perspective. 127 136. DWP defended its approach to assuring the quality of Work Programme services. It told us that it conducts a monthly survey of a sample of participants from each contract and ensures that providers rectify any shortcomings identified. 128 Julia Sweeney, DWP s Contracted Customer Services Director, accepted that Minimum Service Standards varied between providers but she insisted that the Department s performance managers and assurance teams rigorously audited each provider according to the standards it had set out so we can be assured that people are seeing their advisers regularly and that they are getting that service level. The Minister insisted that the minimum standards were clearly communicated to participants and that DWP took compliance with the standards set out by providers very seriously. 129 137. There appears to be insufficient focus on, or responsibility for, Work Programme participants satisfaction with the support they receive. We recommend that DWP require all prime providers to introduce standardised participant satisfaction surveys at appropriate intervals during each participant cohort s two-year attachment to the programme, including immediately after their initial attachment and at the end of the 124 See www.iemployability.org 125 Q 26 126 See, for example, Q 26 [Professor Sainsbury]; A4e, Ev w2; Locality, Ev w41 127 Q 29 128 Ev 121 129 Q 525

45 two-year attachment period. These surveys should form part of DWP s assessment of prime providers effectiveness. It is important that the surveys ascertain how well participants understand: the purpose of the Work Programme and differentiate it from Jobcentre Plus services; why they were referred; and the level of service to which they are entitled. DWP should also be alert to the possibility that some participants will register their satisfaction with the programme merely because very little is expected of them and they are required to attend appointments with their adviser infrequently. Surveys must be designed to draw out these kinds of nuanced responses. 138. We welcome steps taken by the welfare-to-work industry to professionalise its frontline workforce through accreditation and continuing professional development. We recommend that DWP and ERSA continue to move towards greater professionalism in the welfare-to-work sector, by encouraging appropriate training and accreditation for all frontline advisers, for example through the Institute of Employability Professionals and other specialist organisations.

46 7 Availability of specialist support and regulating the market 139. As noted in chapter 2, the consolidation of almost all welfare-to-work provision into a single, centrally-contracted, mainstream programme represents a wholesale reorganisation of the sector. DWP chose to contract with large primes capable of bearing the financial risk of operating on an outcome-based payment model. The explicit intention was that primes would subcontract with a range of private, public and voluntary sector organisations, including small niche providers, to ensure that the diverse needs of the wide range of participants on the Work Programme could be met from within primes supply chains. Here we consider whether Work Programme supply chains are operating as intended; whether there are sufficient and effective mechanisms in place to regulate supply chains; and whether there are sufficiently transparent data available on which to assess the effectiveness of the market. The prime provider model 140. Work Programme primes are required to be members of DWP s Framework for the Provision of Employment Related Support Services (ERSS). The ERSS is an umbrella agreement between DWP and potential service providers who are in effect pre-approved to bid for Work Programme and other DWP-commissioned welfare-to-work contracts. DWP stipulated that organisations bidding to be part of the ERSS had to have the financial capacity to deliver large scale contracts which require a significant amount of cash-flow due to the outcome-based model. Bidders for a place on the ERSS were required to have an annual turnover of at least 20 million. 141. In November 2010, DWP selected 35 organisations to be part of the ERSS, following a competition launched in June 2010. In April 2011, 18 of these organisations won 40 separate Work Programme prime contracts in 18 Contract Package Areas (CPAs) across Great Britain. 130 Subcontracting models 142. Almost all of the primes deliver in-house end-to-end services for some in some cases most participants i.e. the prime supports participants throughout their two-year attachment to the programme, all the way through from the initial referral, through preemployment support and ideally to a job outcome and in-work support to ensure a sustained job outcome. 143. Primes also deliver services through subcontractors and have configured their supply chains in diverse ways. Two of the largest primes, Serco and G4S, subcontract all service delivery. All other primes subcontract to some extent, either to Tier 1 subcontractors, who generally deliver the end-to-end process and/or to Tier 2 subcontractors who can deliver specialist interventions for particular types of claimant, often those with more complex barriers to employment. Individual contracts between DWP and the 18 primes set 130 See Committee s 2011 Report, chapter 3

47 out the types of services specialist subcontractors would be expected to provide, for example debt counselling, health and disability advice and work on offending, or for specific routes into the labour market, such as vocational training or self-employment. The number of specialist providers identified in contracts varied greatly. Primes can also buy in specialist support on an ad hoc basis, outside the formal supply chain. This is often referred to as spot purchase provision. 131 Volume of referrals to specialist subcontractors 144. Much of the evidence to this inquiry suggests that specialist Tier 2 and spot purchase subcontractors are not being used in delivery to anywhere near the extent they had expected. 145. St Mungo s told us that it had entered into subcontracts with three primes but had not received any referrals and had therefore subsequently decided to withdraw from the Work Programme. Charles Fraser, St Mungo s Chief Executive, believed that his organisation had been used as bid candy, to make the primes bids look appealing to DWP. We identified this as a potential risk in our previous Report. 132 Charles Fraser felt betrayed that referrals had not materialised. St Mungo s is one of a number of specialist voluntary sector organisations which have withdrawn from the Work Programme due to lack of referrals. 133 146. DWP publishes on its website a list of Tier 1 and Tier 2 subcontractors in primes supply chains. There are several subcontractors of both types, in some cases a very large number, listed against every prime in every CPA. After its most recent stock take of subcontractors in November 2012, DWP listed a total of 785 organisations as part of Work Programme supply chains: 292 private sector organisations; 125 public sector; and 368 from the voluntary and community sector. 134 In November 2012 DWP issued a press release under the headline More voluntary sector organisations join Work Programme, in which the Minister stated: These figures show just how big a role the voluntary sector is playing in the Work Programme. I'm delighted so many organisations are joining forces with us to help people back to work. Voluntary sector organisations have the specialist skills and expertise in helping the hardest to reach in our society. They are crucial partners in helping those at risk of long term unemployment find a sustainable job, and I applaud them for their work so far. 135 147. However, the DWP list shows only the organisations which had been named as subcontractors by primes; there are no official data to show how many Work Programme referrals subcontractors have received. A BBC Panorama programme in January 2013 called into question the extent of voluntary sector specialists involvement in the Work 131 DWP, Work Programme evaluation: Findings from the first phase of qualitative research on programme delivery, November 2012, para 2.1.1 132 Committee s 2011 Report, para 43 133 See Work Programme under fire as charities shut down, BBC News, 4 October 2012 134 http://www.dwp.gov.uk/policy/welfare-reform/the-work-programme/ 135 More voluntary sector organisations join the Work Programme, DWP press release, 8 November 2012

48 Programme. The BBC contacted 341 of the 348 voluntary sector organisations listed by DWP as Work Programme subcontractors in July 2012 (seven could not be located, or had gone out of business ). Of those contacted, 184 responded to the BBC survey, which found that: 74 (40%) did not consider themselves to be part of the Work Programme; Of the 110 organisations who considered themselves to be part of the Work Programme, 80 (73%) had received fewer referrals than expected and 45 (41%) had received no referrals at all; and Of the 56 organisations who considered themselves to have specialist expertise in supporting unemployed disabled people, 43 (77%) did not feel the Work Programme was correctly utilising and maximising their expertise to help disabled people back to work. 136 148. In the absence of transparent official data on referrals below prime level it was not possible for us to assess with any certainty the extent of specialist subcontractors substantive involvement in Work Programme delivery. Jonathan Cheshire of Wheatsheaf Trust felt that DWP had made a big play of the number of specialist voluntary sector organisations involved in the Work Programme. He believed that an assessment of specialists involvement, based on the financial value of referrals, rather than simply the number of organisations listed, would be likely to present a very different picture. 137 149. ERSA agreed that the scope for specialist involvement in the Work Programme had been over-played by DWP from the outset. On the bid candy point, Kirsty McHugh of ERSA believed that some of the complaints had come from organisations which had had initial discussions with primes during the relatively rapid commissioning process but had subsequently not entered into contractual agreements (although this was clearly not the case for St Mungo s, for example). However, she also conceded that some primes had not been clear enough about the volume of referrals specialist subcontractors were likely to receive. 138 150. Sean Williams of G4S told us that in his experience many organisations named as Tier 2 subcontractors were excellent at tackling particular social problems but were often not being used in Work Programme delivery because the services that they provide make no difference whatsoever to an individual s employability prospects. He also claimed that G4S had made clear to its Tier 2 subcontractors that it was possible that they might receive no referrals at all. 139 Use of alternative and external funding streams 151. The initial report of the official Work Programme evaluation noted that primes also tend to make use of local providers whose services can be obtained free of charge because they draw on funding streams outside the Work Programme. This was intended to some 136 BBC, Panorama, 28 January 2013 137 Q 158 138 Q 370 139 Q 369 370

49 extent; DWP guidance to providers lists a number of external funding streams to which Work Programme providers were intended to have access, including Access to Work; European Social Fund provision; Learndirect courses; Prince s Trust programmes; and Skills Funding Agency provision for those over 19 years old. 140 Some providers told us that they would not be able to deliver Work Programme services without calling on other funding streams. 141 In Brent, Shaw Trust and CDG said that up-front funding in the Work Programme was insufficient to support participants with some disability-related needs, such as interpretation for deaf people. DWP told us that: One of the things we wanted Work Programme providers to do was to innovate and to enhance services to unemployed people. Some of the best providers are bringing together a whole host of services, funded by other agencies, and delivering them coherently to Work Programme participants. There is one centre in Birmingham where they have justice, skills, health and education monies, all in the same place. They have the credit union in there as well. Work Programme participants get the blended help that they need, not all funded by the Work Programme. 142 152. However, it was not intended that providers should utilise, free of charge, the employment services provided by a wide range of charitable organisations. A number of witnesses believed that this was happening routinely. St Mungo s told us that, despite the lack of official Work Programme referrals, charities continued to offer employment services through other funding streams, including private donors and the European Social Fund. Charles Fraser reported that homeless Work Programme participants were sometimes referred surreptitiously to charitable organisations such as St Mungo s, which received no funding through the Work Programme. His view was that primes were therefore claiming job outcome payments in cases where St Mungo s or other charitable organisations had done most of the work but not received any funding from the Work Programme. This view was also held by Crisis. 143 Financial risk and the flow of funding to subcontractors 153. In 2011 we highlighted the possibility in a prime provider model that primes might pass on insufficient funding to subcontractors. We acknowledged witnesses concerns about the risk to the financial viability of smaller, financially insecure subcontractors if this were to happen. Our view was that a key aspect of the primes role in the Work Programme was to bear the financial risk of operating in an outcome-based model. 144 154. Ian Mulheirn believed that DWP s reasoning for limiting bids for Work Programme prime contracts to organisations with annual turnovers of at least 20 million was sound. His view was that the Work Programme was an inherently risky project and that if you do not have a big enough balance sheet, you cannot carry the risk. However, he believed that in practice primes were passing on financial risk to financially insecure subcontractors, in some cases a greater risk than was being passed by DWP to primes themselves. He 140 DWP, Work Programme Provider Guidance, chapter 13. It should be noted that The Prince s Trust is a charitable organisation and its programme are not available to Work Programme providers free of charge. 141 See, for example, Wheatsheaf Trust, Q 190; Ev 162 142 Q 503 [Julia Sweeney] 143 Q 135 [Duncan Shrubsole] 144 Committee s 2011 Report, para 129

50 believed primes were taking a significant top-slice of the up-front attachment fee and not providing sufficient financial support to subcontractors to deliver specialist interventions. 145 155. It was clear in 2011 that negotiating practicable terms with primes would be crucial to subcontractors financial viability. Some witnesses expected primes to take around 50% of the gross payments from DWP as a management fee. Others expected that management fees of 20 30% would not be unusual. G4S told us that the proportion of the fees passed on would depend on the size of the subcontractor and the type of services they deliver. Sean Williams told us at that time that G4S would pass on 100% of the attachment fee to smaller charities, for example. 146 During this inquiry he clarified that he did not think it was realistic to expect primes to shoulder all of the financial risk of operating on an outcomebased model: Prime contractors are not banks; they are very good management organisations. The funding at the top level will inevitably reflect, to a greater or lesser degree, the funding for subcontractors. [...] If you want to have upfront funding for subcontractors, you have to have upfront funding for primes. It is simply not realistic to expect primes to sit in the middle of that and carry 100% of the risk. 147 156. The Pluss Organisation, a prime contractor in the specialist disability programme, Work Choice, which is much less outcome-based, told us that it had declined a number of Work Programme subcontracts as it considered them extremely high risk. The primes had proposed top-slicing the up-front attachment fee, which Pluss felt would have left insufficient funding to provide an effective service. It had calculated that achieving financial break-even was dependent on meeting very challenging targets with a customer group who faced multiple and complex barriers to entering and sustaining employment. It also noted that it would have had no control over referrals, with the risk that we would only receive customers who the prime regarded as being too far from the labour market to warrant resource allocation in their mainstream provision. 148 157. Wheatsheaf Trust, a Tier 1 specialist subcontractor, described its financial terms as harsh but clear. It reported that it was only able to enter into its Work Programme contract after very carefully assessing the financial risks, which it described as considerable, and because it was in a strong cash-flow position. It was also able to support Work Programme provision through other funding streams. Wheatsheaf supported the view that the Work Programme is not suitable for small, financially insecure organisations unless primes were prepared to bear most of the financial risk. 149 158. Social Firms UK told us that some of its members reported receiving insufficient financial support from primes and that this, combined with a lack of referrals, was threatening their financial viability. Michele Rigby of Social Firms UK told us that two of its members, which had been subcontractors in the Work Programme, had gone out of 145 Q 69 146 Committee s 2011 Report, paras 127 128 147 Q 381 148 Ev 140 149 Ev 162

51 business. 150 We also received evidence from Anna Burke, previously Managing Director of Eco-Activ Services, a Tier 2 subcontractor, which stated that her organisation s demise was partly due to the weakness of its Tier 2 position in the supply chain, in which it had no guarantee of referrals and received only 210 of the 400 attachment fees. 151 159. ERSA, the industry body which represents primes and subcontractors from all sectors, acknowledged that the financial viability of smaller subcontractors was a concern, particularly those for whom the Work Programme was their only source of funding. 152 The Minister acknowledged that the transition to outcome-based funding had proved challenging for a number of contractors and emphasised that it was important that contractors had the capability to manage the commercial negotiations necessary to enter into Work Programme contracts. 153 160. We believe that reporting of official Work Programme data at prime level only is inadequate and does not allow us to make an assessment of the effectiveness of the whole market. In the absence of transparent official data on Work Programme referrals below prime contractor level, we cannot assess with any certainty the level of specialist subcontractors involvement in Work Programme delivery. 161. We recommend that official Work Programme data show both job outcomes and referrals at subcontractor as well as prime contractor level. It is fundamentally important to know which organisations are most effective at supporting the long-term unemployed back into work; it would facilitate effective scrutiny, and help the welfare-to-work industry to establish optimal supply chains, if this information were transparently available. 162. Much of the evidence to this inquiry suggests that specialist providers are not involved in the Work Programme to anywhere near the extent anticipated. There is also evidence that some voluntary sector providers are funding specialist Work Programme provision from their own resources, including from charitable donations. This needs to be taken into account when calculating the overall cost of the Work Programme, including in comparison to previous welfare-to-work schemes. It may also indicate that the specialist support some jobseekers need is not available within all supply chains to the degree envisaged. DWP must ensure that it draws more extensively on the expertise of specialist providers so that the Work Programme meets the needs of participants with complex barriers to work effectively. It should also use part of the unspent Work Programme budget to commission the specialist pre-work Programme provision for particularly disadvantaged jobseekers that we recommend earlier in this Report. Regulating supply chain relationships: the Merlin Standard 163. The relationships between primes and their supply chain partners are governed by the Merlin Standard. This is a standard of behaviour to which prime providers are expected to adhere in their relationships with their subcontractors. The standard is intended to 150 Ev156 151 Ev w10 152 Q 290 153 Q 536

52 encourage excellence in supply chain management by prime providers, to ensure fair treatment of sub-contractors and the development of healthy high performing supply chains. 164. The Merlin Standard contains four broad principles, briefly summarised below: Principle 1: Supply chain design. Primes should ensure variety in supply chains and promote innovation. Supply chains should be enriched by public and private sector organisations to address the holistic needs of customer groups and local demographics. A prime should also ensure it has strategies to deliver comprehensive support services to customers through the use of wider networks outside of supply chains. Principle 2: Commitment. Primes should look to establish relationships with their supply chain partners to mutual advantage. Commitments made when supply chain relationships are formed must be honoured and any changes made by mutual agreement. Principle 3: Conduct. Primes have a responsibility to manage supply chains with integrity and openness. Subcontractors should be clearly informed of the [prime s] expectations, managed in a transparent way and supported via clear communication and guidance. Principle 4: Review. Primes should be able to demonstrate that they actively seek and use feedback from all stakeholder groups. They should also produce an annual Self Assessment Report. Merlin is an independently managed accreditation standard. 154 DWP has contracted emqc Ltd to assess and monitor primes against the standard. 155 165. Despite the issues around referral volumes and financial terms highlighted by subcontractors and other witnesses, all 18 primes have achieved Merlin accreditation. Dave Allan, Managing Director of emqc Ltd, was very clear that it was not within the remit of the Merlin assessors to intervene in these kinds of contractual issues between contractors. His organisation had referred only one dispute between a prime and a subcontractor to DWP. 156 166. Kirsty McHugh of ERSA told us that it was early days for the Merlin standard. She believed that there was room for improvement but that it was fundamentally a good assessment tool. Her view was that Merlin could not address, within its current remit, the issue of lack of referrals to specialist subcontractors. She also noted that it could not stop subcontractors signing contracts that are not in their best interests. 157 167. The Merlin standard s current remit does not allow it to address subcontractors grievances in relation to lack of referrals and the alleged imposition of unfair financial terms. We repeat our 2011 recommendation that Merlin s remit should be extended to address such issues and that it should be given more teeth, with the power to impose 154 http://www.dwp.gov.uk/supplying-dwp/what-we-buy/welfare-to-work-services/merlin-standard/ 155 Ev 122 156 Qq 228 229 157 Q 386

financial penalties on primes which treat subcontractors unfairly. The Merlin standard s scope should also be extended to include the assessment of other stakeholders satisfaction with the behaviour of prime contractors. We recommend that the Merlin process include an assessment of the levels of satisfaction of Work Programme participants, local authorities and local employers with the service provided by Work Programme primes. 53

54 8 Conclusion 168. We believe that the Work Programme, as currently contracted, has the potential to work well for relatively mainstream jobseekers who face less severe barriers to employment. The early under-performance of the programme can, at least in part, be explained by the worse than predicted economic situation and the rapid commissioning process, which inevitably led to some implementation delays. We hope and expect that the next set of official job outcome performance data, now due for release on 27 June 2013, will show significantly improved performance in the mainstream JSA payment groups. We will be deeply concerned if they do not. 169. However, we are less confident that the Work Programme can address the problems faced by jobseekers with more severe barriers to employment. The Work Programme s differential pricing model is a welcome evolution in welfare-to-work but it is not a panacea; there is growing evidence which suggests it is not having its intended impact on creaming and parking. 170. Poor performance in the first 14 months of delivery meant that DWP spent much less on outcome payments than it anticipated; in a period of low economic growth and relatively high unemployment it should use this unexpected budget shortfall to extend alternative provision for highly disadvantaged jobseekers. 171. In future contracts, DWP should consider moving away from differential pricing based on benefit type being claimed; it should assess the merits of implementing a needsbased pricing model instead. It should also give consideration to funding models which reward providers for achieving steps along the way to employment by jobseekers with severe barriers to work and which recognise the need for greater up-front funding for some user groups. 172. Work Programme providers relationships with external stakeholders must improve. Poor working relationships between JCP staff and Work Programme advisers are hampering participants effective engagement with the Work Programme in some areas. Local JCP managers must take responsibility for ensuring that frontline JCP staff establish close working relationships with their Work Programme counterparts. Work Programme providers must improve the recruitment service they provide for employers and work more closely with local authorities and local business groups to match suitably prepared candidates to real vacancies. 173. Evidence suggests that specialist subcontractors with the expertise to support jobseekers with complex barriers to employment are not involved in delivering the Work Programme to anywhere near the extent anticipated. This in turn suggests that the help some jobseekers need is not currently available. The Work Programme requires increased transparency of referral and outcome data both to enable effective scrutiny and to help the market develop. The Merlin standard, as currently designed, cannot regulate the market effectively; it should be given more teeth, including the power to impose financial sanctions.

55 List of conclusions and recommendations In this List, conclusions are set out in plain type and recommendations, to which the Government is required to respond, are set out in italic type. Minimum Performance Levels 1. We are concerned about the appropriateness of the Work Programme Minimum Performance Levels (MPLs) and how they were calculated by DWP. They do not appear to be sufficiently responsive to the actual economic conditions in which providers are operating. The lack of realistic MPLs results in realistic assessments of performance being difficult and makes sanctioning primes, and therefore delivering and incentivising improved performance, harder to achieve. For the next round of Work Programme contracts, we recommend that DWP devise, in collaboration with independent experts, a new method of calculating and setting MPLs which are more responsive to the state of the economy; can be more transparently calculated and applied; and can be reviewed periodically during delivery. (Paragraph 28) Work Programme statistics 2. Our scrutiny of the Work Programme in the early months of service delivery has been hampered by a lack of transparent official data. Official job outcome data were not made available until some 17 months after service delivery began. After many months of being unable to provide figures, because DWP claimed they would be unverified and therefore unreliable, the publication of the first official figures was accompanied by the publication of unofficial figures by the Employment Related Services Association (ERSA). Although unofficial, these were frequently referred to by Ministers as an alternative to the official figures. Such an approach to statistics is unhelpful. (Paragraph 30) 3. We were concerned that DWP had planned to release official Work Programme referral and job outcome data on a six-monthly basis, which we believed would have been inadequate for a programme of this size and importance. We therefore welcome DWP s recent decision to move from six-monthly to quarterly reporting of Work Programme referral and performance data. (Paragraph 31) 4. The UK Statistics Authority has recently made a number of recommendations about improvements it would like to see DWP make to the statistics it publishes on the Work Programme and pre-work Programme employment provision. We support the Authority s recommendations. We accept that it may not be possible for DWP to take all of the recommendations into account in publishing the next tranche of official Work Programme statistics in June 2013. However, we expect the clarity, interpretation and usefulness of subsequent releases to improve in response to the Authority s report and our own recommendations. (Paragraph 33)

56 Options open to DWP in the event of continuing poor performance 5. We believe that shifting market share from the lowest performing to the highest performing prime in the same Contract Package Area could boost provider performance and should be implemented during 2013. However, the market share shift mechanism will need to be actively, carefully and transparently managed and applied by DWP. We recommend that, in response to this Report, DWP provide further information about the scenario modelling it has undertaken to assess the likely impacts on provider performance and service quality of shifting market share between primes. We also remain unconvinced that the early termination of a prime contract could be achieved without significant disruption to services and request further details about the research DWP has conducted to assess the feasibility of contract termination and its impacts on service delivery. (Paragraph 39) 6. We are concerned that relatively highly-performing subcontractors may suffer as an unintended consequence of market share shift between primes or in the event of prime contract termination. We recommend that, in its response to this Report, DWP make clear how it will protect highly-performing subcontractors attached to poorlyperforming primes in the event that the latter lose market share or have their contract terminated. (Paragraph 40) Attachment fees 7. Funding within the Work Programme has been considerably diminished by lower than anticipated levels of job outcome payments to providers in the first 14 months of delivery. Attachment fees are due to end in April 2014. We recommend that DWP review the balance between attachment fees and outcome fees, and consider retaining attachment fees, to protect delivery of services, including by subcontractors. (Paragraph 43) Provision for unsuccessful participants 8. The first cohort of Work Programme participants will reach the end of their attachment period from June 2013. DWP must set out as a matter of urgency the support that will be in place for participants who are unsuccessful in finding sustained work during their two years on the Programme. We recommend that all unsuccessful participants should have an end of Work Programme assessment. Specialist support must be put in place for those who have made little progress. Those who have made significant progress towards sustained employment should be permitted to voluntarily extend their attachment to the Work Programme. The period in which providers are able to claim job outcome fees in relation to these participants should likewise be extended. We also recommend that DWP consider the practicalities of assigning participants who have completed the programme without success, but are close to work, to one of the other primes covering their area. (Paragraph 46) The role of JCP in the Work Programme 9. Improving local relationships between JCP and Work Programme staff is rightly considered a priority by DWP. We observed an improving relationship in Brent but

57 the evidence from the official evaluation suggests a varied picture across JCP Districts and clearly more progress needs to be made. Local JCP managers must take responsibility for ensuring that the message gets through to frontline staff that good working relationships with their Work Programme counterparts are essential. (Paragraph 59) Conditionality and sanctioning of Work Programme participants 10. We are in favour of conditionality where it supports the policy intention of encouraging participants effective engagement with the Work Programme. However, we are deeply concerned by evidence of the inappropriate use, or threat, of benefit sanctions against Work Programme participants and the initial findings of the official evaluation, which suggest that the processes for the application of conditionality and sanctions do not yet work effectively. We recommend that DWP conduct a review of Work Programme conditionality and sanctioning activity as a matter of urgency, with a view to ensuring that the processes are clearly understood by participants and consistently applied by both Work Programme and JCP staff, and that it publishes its findings by the end of 2013. (Paragraph 60) Employer engagement 11. We believe that providers should do more to prepare jobseekers for real vacancies and should desist from simply deluging employers with a random selection of CVs and poorly prepared candidates. Excellent examples exist of employers engaging effectively with Work Programme providers, in particular Transport for London s systematic engagement with all six primes operating in the capital. We recommend that DWP and the Employment Related Services Association (ERSA) encourage approaches such as these. (Paragraph 73) 12. General awareness of the Work Programme amongst employers appears to be low. We recommend that DWP work with the welfare-to-work industry to promote the Work Programme to employers as a potentially effective recruitment partner and that DWP and ERSA produce a national action plan for engaging employers in the Work Programme before the end of 2013. (Paragraph 74) 13. At a regional level evidence suggests that collaborative approaches, where providers work together to create employer engagement strategies, are most effective. At a local level, providers should make effective use of the experience and contacts of local stakeholders, for example by meeting regularly with local authorities and local business groups such as Chambers of Commerce, to identify employers recruitment needs and prepare Work Programme participants for identified future vacancies. (Paragraph 75) Accuracy of the Work Capability Assessment 14. Providers reported some improvement in the accuracy of the Work Capability Assessment (WCA) but we also heard some quite shocking examples of participants referred to the Work Programme who had clearly been incorrectly declared fit for work following a WCA. We recommend that DWP work with providers to agree a process by

58 which participants whom providers believe are clearly unfit for work can be referred back to Jobcentre Plus. We agree with the Minister that the process will require checks and balances to ensure that providers cannot simply refer back any participant whom they do not want to work with. (Paragraph 84) The Work Focused Health-Related Assessment 15. We repeat the conclusion reached in our July 2011 Report on the Incapacity Benefits reassessment; a separate component of the Work Capability Assessment, which could focus on health-related or workplace interventions, and which might support claimants with health conditions and disabilities into work, would be particularly useful for people moving off Incapacity Benefits. We believe that, if this had been in place when the Work Programme was implemented, it could have provided a better assessment of benefit claimants readiness for work and might have prevented inappropriate referrals. Based on the limited information which DWP has made available, its original decision to suspend the Work Focused Health-Related Assessment, and its recent decision to continue its suspension until at least April 2016, seem regrettable. We recommend that DWP provide a fuller explanation of its reasoning for its latest decision than was provided in its Written Ministerial Statement of 25 April 2013, and that it publishes the external evaluation. (Paragraph 87) Alternative models for jobseeker segmentation and differential pricing 16. There is growing evidence that the Work Programme is failing to reach jobseekers with the most severe barriers to employment. We recommend that DWP review Jobcentre Plus processes for identifying jobseekers with severe barriers to employment, such as homelessness and serious drug and alcohol problems, as a matter of urgency. It should also review its processes for communicating these barriers to Work Programme providers. Where appropriate, we recommend that these types of jobseekers are more consistently allocated to the JSA Early Access group, where they will attract a higher level of funding than those in the mainstream JSA groups. (Paragraph 104) 17. There was consensus amongst witnesses that benefit type is a poor proxy for the level of jobseekers needs and the relative cost of supporting them into work. In the longer-term, in preparation for the next round of Work Programme contracts, we recommend that DWP consider whether a more thorough assessment of jobseekers individual barriers to work, possibly along the lines of the Australian Jobseeker Classification Instrument, should be the basis of a future needs-based differential pricing structure. (Paragraph 105) 18. We recommend that DWP assess how a needs-based differential pricing structure might determine the level of up-front funding and the types of services required by jobseekers referred to the Work Programme and whether alternative funding models, which reward providers for achieving milestones along the way to employment, should apply to jobseekers who are furthest from the labour market. (Paragraph 106)

59 Funding the Work Programme 19. The Government s intention was to fund the Work Programme, in part, from future benefit savings accrued from placing long-term jobseekers into sustained employment. We were supportive of this in principle and therefore do not believe it is appropriate, during a period of high unemployment, for the Government to retain the savings accrued as a result of the Work Programme s early under-performance. We recommend that the ring-fence around the Work Programme budget is extended to encompass alternative provision to address long-term unemployment. Part of the unexpected shortfall in Work Programme spending should be utilised to extend the Work Choice programme, to further increase resources for Access to Work, and to extend the attachment period for participants who make real progress but complete two years on the Programme without achieving a sustained job outcome. (Paragraph 110) 20. Jobseekers with the most severe barriers to employment are often not ready to engage effectively with the Work Programme. DWP should use part of the shortfall in Work Programme spending to pilot additional pre-work Programme provision to prepare jobseekers, such as homeless people and those with serious drug and alcohol problems, for effective engagement with the Work Programme. In commissioning this provision, DWP should draw on the expertise of specialist providers, many of which have not been involved in Work Programme delivery to the extent anticipated (see paragraph 162). We recommend that additional support is in place by early 2014. (Paragraph 111) The black box approach 21. We support a black box approach to service delivery; however, DWP must be clearer that this means that providers have the freedom to innovate and personalise services, free from government prescription. Despite minimal evidence of substantive personalisation thus far, we believe that a prescription-free approach is preferable to a centrally-prescribed, process-driven system, which might stifle the potential for innovation and be an inefficient use of DWP s resources. (Paragraph 119) Minimum Service Standards 22. We believe that the black box needs to be balanced by clear and measurable minimum standards so that participants know what to expect and the minimum level of service they are entitled to receive. Currently prime providers Minimum Service Standards vary greatly in detail and measurability. Some Minimum Service Standards are so vague as to permit providers to virtually ignore some participants if they so choose. We understand the difficulties of establishing a single set of standards which could be applied by all providers but we believe it is achievable. For example, it would be perfectly possible for all providers to be required to have a face-to-face meeting to assess all participants needs; to produce an employment action plan within a certain timeframe; and to have a face-to-face follow-up meeting, also within a specific timeframe. We recommend that DWP develop a core set of basic minimum standards

60 applicable to all providers, and to which all Work Programme participants are entitled. (Paragraph 124) Assuring service quality 23. Much of the evidence we received suggested that Work Programme advisers are highlyskilled and dedicated to supporting long-term jobseekers into sustained employment. However, with average caseloads of between 120 and 180, Work Programme advisers are being forced to prioritise whom they support. We recommend that DWP and the welfare-to-work industry devise ways of bringing Work Programme caseloads down. (Paragraph 131) 24. We understand the policy intention of randomly allocating Work Programme participants to one of the two or three prime contractors operating in each Contract Package Area (CPA); it ensures that each prime operating in the same area receives an equal number and similar mix of participants and therefore allows their performance to be more easily compared. However, we recommend that DWP explore options for introducing an element of choice of prime contractor for participants, particularly where it can be clearly demonstrated that specialist services which would benefit an individual participant are not offered by the prime to which they have been randomly referred but are available via one of the other primes operating in the same CPA. (Paragraph 132) 25. There appears to be insufficient focus on, or responsibility for, Work Programme participants satisfaction with the support they receive. We recommend that DWP require all prime providers to introduce standardised participant satisfaction surveys at appropriate intervals during each participant cohort s two-year attachment to the programme, including immediately after their initial attachment and at the end of the two-year attachment period. These surveys should form part of DWP s assessment of prime providers effectiveness. It is important that the surveys ascertain how well participants understand: the purpose of the Work Programme and differentiate it from Jobcentre Plus services; why they were referred; and the level of service to which they are entitled. DWP should also be alert to the possibility that some participants will register their satisfaction with the programme merely because very little is expected of them and they are required to attend appointments with their adviser infrequently. Surveys must be designed to draw out these kinds of nuanced responses. (Paragraph 137) 26. We welcome steps taken by the welfare-to-work industry to professionalise its frontline workforce through accreditation and continuing professional development. We recommend that DWP and ERSA continue to move towards greater professionalism in the welfare-to-work sector, by encouraging appropriate training and accreditation for all frontline advisers, for example through the Institute of Employability Professionals and other specialist organisations. (Paragraph 138) Availability of speciality support 27. We believe that reporting of official Work Programme data at prime level only is inadequate and does not allow us to make an assessment of the effectiveness of the

61 whole market. In the absence of transparent official data on Work Programme referrals below prime contractor level, we cannot assess with any certainty the level of specialist subcontractors involvement in Work Programme delivery. (Paragraph 160) 28. We recommend that official Work Programme data show both job outcomes and referrals at subcontractor as well as prime contractor level. It is fundamentally important to know which organisations are most effective at supporting the long-term unemployed back into work; it would facilitate effective scrutiny, and help the welfareto-work industry to establish optimal supply chains, if this information were transparently available. (Paragraph 161) 29. Much of the evidence to this inquiry suggests that specialist providers are not involved in the Work Programme to anywhere near the extent anticipated. There is also evidence that some voluntary sector providers are funding specialist Work Programme provision from their own resources, including from charitable donations. This needs to be taken into account when calculating the overall cost of the Work Programme, including in comparison to previous welfare-to-work schemes. It may also indicate that the specialist support some jobseekers need is not available within all supply chains to the degree envisaged. DWP must ensure that it draws more extensively on the expertise of specialist providers so that the Work Programme meets the needs of participants with complex barriers to work effectively. It should also use part of the unspent Work Programme budget to commission the specialist pre-work Programme provision for particularly disadvantaged jobseekers that we recommend earlier in this Report. (Paragraph 162) Regulating supply chain relationships: the Merlin Standard 30. The Merlin standard s current remit does not allow it to address subcontractors grievances in relation to lack of referrals and the alleged imposition of unfair financial terms. We repeat our 2011 recommendation that Merlin s remit should be extended to address such issues and that it should be given more teeth, with the power to impose financial penalties on primes which treat subcontractors unfairly. The Merlin standard s scope should also be extended to include the assessment of other stakeholders satisfaction with the behaviour of prime contractors. We recommend that the Merlin process include an assessment of the levels of satisfaction of Work Programme participants, local authorities and local employers with the service provided by Work Programme primes. (Paragraph 167)

62 Formal Minutes Wednesday 15 May 2013 Members present: Debbie Abrahams Jane Ellison Graham Evans Sheila Gilmore Dame Anne Begg, in the Chair Glenda Jackson Stephen Lloyd Nigel Mills Draft Report (Can the Work Programme work for all user groups?), proposed by the Chair, brought up and read. Ordered, That the draft Report be read a second time, paragraph by paragraph. Paragraphs 1 to 173 read and agreed to. Summary agreed to. Resolved, That the Report be the First Report of the Committee to the House. Ordered, That the Chair make the Report to the House. Ordered, That embargoed copies of the Report be made available, in accordance with the provisions of Standing Order No. 134. Written evidence was ordered to be reported to the House for printing with the Report (in addition to that ordered to be reported for publishing on 12 December 2012, in the previous Session). [Adjourned till Wednesday 5 June at 9.15 am.

63 Witnesses Wednesday 19 December 2012 Page Ian Mulheirn, Director, Social Market Foundation, Professor Roy Sainsbury, Research Director and Professor of Social Policy, University of York, and Tony Wilson, Policy Director, Centre for Economic and Social Inclusion (Inclusion). Ev 1 Wednesday 30 January 2013 Paul Anders, Senior Policy Officer, DrugScope, Sophie Corlett, Director of External Relations, Mind, Laura Dewar, Senior Policy and Parliamentary Officer, Single Parent Action Network, Duncan Shrubsole, Director of Policy and External Affairs, Crisis, and Robert Trotter, Senior Research Officer and Public Policy Advisor (Employment and Skills), Scope. Ev 20 Wednesday 13 February 2013 Dave Allan, Managing Director, emqc Ltd, Martin Davies, Chief Executive Officer, The Pluss Organisation, Michele Rigby, Chief Executive Officer, Social Firms UK, and Jonathan Cheshire, Chief Executive, Wheatsheaf Trust. Ev 40 Wednesday 6 March 2013 Kirsty McHugh, Chief Executive, Employment Related Services Association (ERSA), Sean Williams, Managing Director, G4S Employment Support Services, Andrew Conlan-Trant, Director of Labour Market Services, Rehab Group, and Richard Clifton, Business Development Director, Shaw Trust and CDG. Ev 58 Wednesday 13 March 2013 Susan Scott-Parker OBE, Chief Executive Officer, Business Disability Forum, Charles Gray, Group Sales and Marketing Director, de Poel, Gouy Hamilton- Fisher, Head of People Support, Timpson, and Andrea Fozard, Supplier Skills Project Manager, and Mike Lycett, Head of Commercial Centre for Excellence, Transport for London. Ev 80 Wednesday 20 March 2013 Mr Mark Hoban MP, Minster for Employment, and Ms Julia Sweeney, Contracted Customer Services Director, Department for Work and Pensions. Ev 95

64 List of printed written evidence 1 Business Disability Forum Ev 115 2 Crisis Ev 117 3 Department for Work and Pensions Ev 121; Ev 123 4 DrugScope and Homeless Link Ev 123 5 Employment Related Services Association Ev 127 6 G4S Ev 131; Ev 134 7 Mental health organisations: the Centre for Mental Health, Mind, and the Scottish Association for Mental Health Ev 135 8 The Pluss Organisation Ev 139 9 Rehab Group Ev 143 10 Scope Ev 145 11 Shaw Trust and CDG Ev 148 12 Single Parent Action Network Ev 151 13 Social Firms UK Ev 155 14 Social Market Foundation Ev 157 15 Timpson Ev 160 16 Transport for London Ev 161 17 Wheatsheaf Trust Ev 162 List of additional written evidence (Published in Volume II on the Committee s website www.parliament.uk/workpencom) 1 A4e Ev w1 2 Association of Chief Executives of Voluntary Organisations Ev w5 3 Association of Colleges Ev w7 4 Ross Bradford Ev w9 5 Anna Burke Ev w10 6 Camden Society Ev w11 7 Ms M J Canning Ev w17 8 Citizens Advice Ev w18 9 Clinks Ev w20 10 Community Links Ev w22 11 Douglas Coombs Ev w27 12 Cymorth Cymru Ev w29 13 Gingerbread Ev w32 14 Indigo Foundation (Norfolk) Ev w34 15 LifeLine Ev w34 16 Locality Ev w40 17 London Voluntary Service Council Ev w42 18 David Marshall Ev w50

65 19 Gill Marshall Ev w51 20 Mencap Ev w51 21 Milton Keynes Women and Work Ev w55 22 National AIDS Trust Ev w55 23 National Association for Voluntary and Community Action Ev w58 24 National Institute of Adult Continuing Education Ev w62 25 Papworth Trust Ev w63 26 Prospects Services Ev w65 27 RNIB Group Ev w67 28 St Mungo s Ev w70 29 Single Homeless Project Ev w74 30 Somali Golden Centre of Opportunities Ev w78 31 3SC Ev w80 32 Turning Point Ev w83 33 UK Council on Deafness Ev w86 34 Wallace School of Transport Ev w87

66 List of Reports from the Committee during the current Parliament The reference number of the Government s response to each Report is printed in brackets after the HC printing number. Session 2010 12 First Report Youth Unemployment and the Future Jobs Fund HC 472 (HC 844) Second Report Third Report Fourth Report Fifth Report Sixth Report Seventh Report Changes to Housing Benefit announced in the June 2010 Budget Appointment of the Chair of the Social Security Advisory Committee Work Programme: providers and contracting arrangements The Government s proposed child maintenance reforms The role of incapacity benefit reassessment in helping claimants into employment Government support towards the additional living cost of working-age disabled people HC 469 (HC 845) HC 904 HC 718 (HC 1438) HC 1047 (HC 1727) HC 1015 (HC 1641) HC 1493 (HC (12 13)105) Eighth Report Automatic enrolment in workplace pensions and the National Employment Savings Trust HC 1494 (HC (12 13)154) Session 2012 13 First Report Appointment of the Chair of the Social Security Advisory Committee HC 297 Second Report Youth Unemployment and the Youth Contract HC 151 (HC 844) Third Report Universal Credit implementation: meeting the needs of vulnerable claimants HC 576 (Cm 8537) Fourth Report Lifting the restrictions on NEST HC 950 Fifth Report The Single-tier State Pension: Part 1 of the draft HC 1000 (Cm 8620) Pensions Bill Sixth Report Improving governance and best practice in workplace pensions HC 768

cobber Pack: U PL: COE1 [SO] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Work and Pensions Committee: Evidence Ev 1 Oral evidence Taken before the Work and Pensions Committee on Wednesday 19 December 2012 Members present: Dame Anne Begg (Chair) Debbie Abrahams Graham Evans Sheila Gilmore Glenda Jackson Stephen Lloyd Nigel Mills Anne Marie Morris Examination of Witnesses Witnesses: Ian Mulheirn, Director, Social Market Foundation, Professor Roy Sainsbury, Research Director and Professor of Social Policy, University of York, and Tony Wilson, Policy Director, Centre for Economic and Social Inclusion (Inclusion), gave evidence. Q1 Chair: Welcome to the first oral evidence session of our inquiry into claimants experience of the Work Programme. I welcome the three of you here this morning. I am particularly glad to see Ian Mulheirn, because I understand that we might not have seen you, as a baby was expected this week, but she has already arrived. On behalf of the Committee, I congratulate you on the birth of your daughter. Ian Mulheirn: Thank you. I may be a bit bleary-eyed this morning. Q2 Chair: We are delighted that you could come along. I will start with a general question. The Department for Work and Pensions says that it is too early to judge the overall performance of the Work Programme, or to answer detailed questions about its operation. Do you agree with that? Who will start? Tony Wilson: I am happy to start. My name is Tony Wilson, and I am the policy director at the Centre for Economic and Social Inclusion. It is certainly too early to make clear final judgments about whether the Work Programme has been successful or not, and it is arguably too early to make robust comparisons between the performance of the Work Programme and what would have happened anyway. One criticism that was levelled when the first data were published was that the programme was worse than doing nothing on the basis that it had underperformed against minimum performance levels set by the Department two years ago. In our view, it is too early to make such judgments because the economy has been different, and calculation of performance levels was not transparently set by the Department, so it is hard to form a judgment on whether they were right, but it is certainly early enough to form judgments about what is happening inside the programme, the sort of support people are receiving, what seems to be working or not from the perspective of what participants are finding most effective, and what Jobcentre Plus (JCP) advisers and Work Programme providers are saying. That formed the basis of the first evaluation report of which Roy Sainsbury was an author. There is enormously useful information there, so we can certainly form judgments on what is happening within the programme. We can also make early judgments about performance in terms of making comparisons with the equivalent stages in previous programmes, and we can make some adjustments for the economy. In our analysis, which we published on the day of the stats, it looks as though the Work Programme is performing more or less in line with predecessor programmes the Flexible New Deal (FND) and New Deal programmes at the same point in time. It does not look as though it is doing massively worse, or any better; it is more or less in line with where you would expect such a programme to be. Q3 Chair: Could you introduce yourself for the record? I forgot to ask you to do that at the beginning. Ian Mulheirn: I am Ian Mulheirn, director of the Social Market Foundation (SMF). I agree with Tony that it is too early to judge many things, but one thing it is not too early to judge is the DWP s benchmarks, against which it said the programme should be assessed. It set out clear numbers for the first year, and the performance figures fell well short. So I do not think we can say that much about whether providers are doing well or badly in absolute terms. What we can say is that the benchmarks were way off, and that raises questions about how it was commissioned, and whether other numbers involved are right. It is not necessarily appropriate to judge the absolute performance of providers against those figures at the moment. The SMF analysis did not take account of the differing economic conditions, but we compared performance with what we had seen under FND and we think the programme is doing slightly worse in fact quite a bit worse than FND was at this point. But how much of that is down to the state of the economy is unknown. Professor Roy Sainsbury: I am Roy Sainsbury. I am research director in the social policy research unit at the university of York. I lead the welfare and employment research group there. We in York are partners in the research consortium that Tony mentioned, which is led by the Institute for Employment Studies in Brighton. We are carrying out the official evaluation of the Work Programme for DWP, which is a three-year project. Tony mentioned

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Ev 2 Work and Pensions Committee: Evidence 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson the first report, which came out on 27 November. That will be the first of many as the Work Programme rolls out. The evaluation will carry on until 2015. I think that some of the findings of that first report are probably in your briefing notes. Is it too early? Yes, it probably is too early. Tony and Ian have already mentioned some reasons, but there are all sorts of other reasons why it is too early. Things never settle down in new programmes for some time. We have been involved over the years in evaluating New Deals and Pathways to Work, and it is an almost universal truth that you have to give programmes some time to settle down. There will not be anything like a steady state for at least a year or 18 months, possibly even two years. I think that it is too early in spades with the Work Programme because things in the design of the Work Programme are going to change. That will change the way providers work and the environment they have to work in. I will mention a couple here. There are the attachment fees, which Work Programme providers get in the first two years only of the programme. Every new referral got an attachment fee of 400 in the first year. That has gone down to 300 in the second year, which is where we are now, and it will go down to zero in year three and beyond. That is a major contextual change and will affect how Work Programme providers operate. They will have to make money from sustained job entries to make any money at all. There is no easy money. The other thing that is different about the design of the Work Programme is the market share shift that will be introduced in two years. If you recall, the providers get an equal share of new referrals in a geographical area. At the moment, if there are two providers, they get a 50:50 share. That will be reviewed after two years by DWP, and that market share could shift on the basis of performance, so one provider could get 60%, and the other could get 40%. Those are major changes. Those design features are there to enhance performance. Until we see those things operating, it is too early to form final judgments about whether the Work Programme is working. Q4 Chair: I take your point about the time it takes before something gets up and running. There has been quite a lot of lost time. There is the fact that there has been a year of the scaling down of the Flexible New Deal, and it not being rolled out in the rest of the country, and a year of the scaling up of the Work Programme. We have two years, effectively, of lost opportunity to get people in work. Professor Roy Sainsbury: Everyone has still been working to try to get people in work. I am not quite sure that it has been an entirely lost opportunity. As the figures that came out on 27 November show, there are people who are in sustained work. It is not very many compared with our aspirations and aims, but I am not quite sure that it is a totally lost opportunity. But it always happens when you are changing programmes like this. There are people coming in, but there is always a slow build-up of cases. I think the Work Programme was put in place quite quickly there was a National Audit Office (NAO) report about implementation. People are still setting up offices, getting staff in and getting their computer systems working. There are always teething problems, which means that they are not operating at their maximum efficiency, or in a steady state. You will always get this. In the meantime, clients keep coming through and they have to be dealt with in some way. We have seen the results: some have done well, but many more have not got much out of it yet. Tony Wilson: It has been made more difficult with the Work Programme for a number of reasons. First, there was the very fast implementation of the programme compared with other programmes. The bid documents came out on Christmas Eve, or a couple of days before Christmas, two years ago. Decisions on assessment were being made in the spring. Many providers will tell you they did not actually have finalised contracts to sign until very late on a few months before delivery was meant to start. There were then a lot of difficulties around TUPE the Transfer of Undertakings (Protection of Employment) rules which proved very difficult to deal with. They always do, but they were being dealt with in a much more compressed period with the Work Programme. We then saw a massive number of referrals happening in the autumn as a result of the closure of the flexible new deal and the transfer of large numbers of claimants into the Work Programme, creating a big bulge for providers. They were not getting the ESA 1 volumes through that they had expected and planned on the basis of. All these things were a consequence of, as Ian said, the rushed commissioning process, the rushed implementation process, but there were also some issues around how that was set up, which come out in the evaluation as well for example, around Jobcentre Plus s readiness for the programme. So these things were made more difficult. When you look at the Flexible New Deal, that was commissioned over a 22 month period. The Work Programme was commissioned over, effectively, less than 12 months. You create these problems by having rushed implementation of major programmes. Q5 Debbie Abrahams: I particularly want to pick up on the point that Ian made about the benchmarks set by the DWP. I also have some questions about this. I think we have another section that specifically deals with performance. Why do you think the benchmarks set by the DWP were so out? Obviously, there have been difficulties in the labour market and so on, but surely within a model that was meant to be projecting, they would have had scenarios to deal with that. Ian Mulheirn: It is baffling how they come up with these figures. Just for a bit of historical comparison, the benchmark figures for the Flexible New Deal that the DWP announced were even more absurd. They were looking at 50% to 55% outcomes, I think, although it was all measured slightly differently in those days. There are always these kinds of macho targets, which are really there to say, Look, we ve really got to be tough on these nasty private providers. We re going to make sure that they hit really high standards. Of course, that comes back to bite the commissioners, because it is not possible to achieve 1 Employment and Support Allowance

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Work and Pensions Committee: Evidence Ev 3 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson those targets certainly not in these early days, as Roy said. So this is partly about targets just being far too optimistic. I think the NAO report highlights the very large margin that was put on just through pure faith that the Work Programme was brilliantly designed and was going to yield great outcomes. So there is a huge dose of wishful thinking in these things, but the other part is the economy, and when it comes to looking at these minimum levels, we need to be aware of this. Lots of evaluations going back over the past two or three decades show that these kinds of programmes do work in getting people into work, but they do not have a huge effect. The deadweight the number of people who would get a job anyway is a very high proportion of the number of people who get a job when on these programmes. A good programme might be adding 10% more jobs, so when you see performance levels of 2.3%, the majority of that 2.3% would have got into work anyway. What does that tell you about the benchmark? It tells you that the economy is having a far greater effect on these outcome figures than poor performance by any one provider or other, so we cannot credit providers when they hit the ball out of the park in one year and get high outcome rates, but nor can we really castigate them for appalling performance in year one when it is likely to be mainly the economy that is driving that. I think the benchmarks that were set were largely derived from the labour market performance between 2001 and 2008, when of course the economy was doing much better. That would have driven those figures up. Chair: We have detailed questions on all of that later, so we will move on now to some questions on referral and handover of claimants. Q6 Nigel Mills: Professor Sainsbury, the analysis you did I think it was called the first evaluation report looked at problems of referral between Jobcentre Plus (JCP) and the Work Programme providers. Can you talk us through what those problems were and what impact they may have had on the experience of the participants? Professor Roy Sainsbury: In the tender documents of the DWP, there was quite an emphasis on the referral and handover process that the providers were expected to respond to. They were expected to explain how they were going to do it so that they got new clients hitting the ground running, as it were. There is a logic behind that, because if you get someone coming to a new programme who understands it, has expectations of it, knows why they are there, who the provider is etc., you have got over many barriers and you come with a positive start. What the research shows so far is that that was happening occasionally the jargon in the documents is a warm handover but it was not happening very much. A lot of clients were just being sent along to the Work Programme provider with little information about what to expect, without knowing who they were and what was compulsory and what was not. That creates a problem for the provider staff on day one, because they get someone in front of them who, at best, is ignorant, because they do not know what is going to happen, and, at worst, is worried. Even worse, they are hostile, because they have been given no information, perhaps not full information or sometimes wrong information. Part of the problem from the Jobcentre s viewpoint we interviewed staff as part of the research is that they do not know what the providers are going to do. They said, We haven t had much contact with Work Programme providers. We have a bit of information on paper. Some have had meetings, but still they were saying, We can t sell the Work Programme, because we are not actually sure what it is and what our claimants are going to get, and we are not confident that they are going to get what they are promised. We don t want to tell our claimants, You are going to go along to Work Programme provider X and get fabulous support and they are going to find you a job. They cannot say that and they do not want to say that. So that is one point. That is one area where it is not working as it is meant to. The other bit that came up this is data information from the Jobcentre staff themselves is that some of them do not like the Work Programme. It is a threat to them. They see it as a threat to their jobs and their livelihoods. They do not trust it and they do not think that the Work Programme providers are going to do as good a job as they did. That is another reason why they do not sell it Why should I sit here in my Jobcentre office selling an organisation, pumping them up, when they are effectively the people that could do me out of a job in future? So there are a lot of things working against this smooth, warm handover. It is not all negative. There are examples of people who went along to the Work Programme provider on day one, ready and expecting making demands almost a positive response. There is a lot of emphasis on this working well. When it does not work well, it is not always a disaster, because the Work Programme provider can pick up. If there is a lack of information, or wrong information, they can correct that. If they do not know much about the claimant, they can ask questions. In fact, all Work Programme providers start with an assessment phase with their new clients and they gather all the information that they need. You can get off to a bad start, but you can pull it back. So far, we have little evidence that a good or bad handover is going to have much long-term effect. Q7 Nigel Mills: Was this the same on previous programmes? Professor Roy Sainsbury: I am not sure I know the answer to that, to be honest. Tony Wilson: There were similar issues on the Flexible New Deal. I think this may have been covered in the previous inquiry as well. One of the issues was whether the Department had learnt from the experience of the Flexible New Deal, and we have been assured that it had. It does not appear that all that learning has really been captured. Part of it is around the speed at which the programme was commissioned and set up. There are often these problems. One thing that is different is the very high conversion rate from referral to attachment. Some 95% or 96%

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Ev 4 Work and Pensions Committee: Evidence 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson of people who are referred subsequently attach to the programme. That is verified by comparison with previous programmes and what DWP was expecting. I think they were expecting as much as 10% to drop out. That may reflect that providers have got better at engaging people, getting them on to the programme and harvesting the attachment fees. Partly it may also reflect that it is not having the same effect on clients. Often, when claimants are referred, they sign off JSA 2, and that does not appear to have been happening to the same extent. Q8 Nigel Mills: The last question I have is on the low level of referrals from some of the potential participant groups. I know that providers have expressed concerns about that. Do you have a view on why that is happening or how that can be changed? Tony Wilson: Yes. This a major issue with the programme. It is a significant issue. Two years ago, one of the great opportunities for the Work Programme was to combine the previous programmes for different groups into a single programme. That would allow for more personalisation and greater economies of scale and so on. The expectation was that roughly two thirds of participants would be on JSA and one third on Employment and Support Allowance or incapacity benefits (IB). In fact, it has turned out that 90% are on JSA and 10% are on ESA. When you have a programme that is that heavily geared towards jobseekers and not towards ESA claimants, you create a lot of the issues that Roy and the evaluation team found. Increasing the number of ESA referrals is an important base in terms of increasing the support for people furthest from work, but also ensuring that it is a viable programme within the Work Programme, if you like. Why have referrals been lower? There are three principal reasons. The first is the delays in Work Capability Assessments (WCA) and so on, which are now largely being resolved. The second has been the high volume of appeals, with people who are found to be in the Work-Related Activity Group (WRAG) appealing and subsequently being placed in the Support Group and given longer prognoses. The third is that, in general, people who have been assessed as being in the Work-Related Activity Group have been sicker than expected. They have not had the short prognoses. The DWP s response, as you will know, has been to extend the prognosis. That appears to be having an effect, in that the referrals for new ESA claimants are now more or less in line with what was in the invitation to tender. The really significant gaps are now in all the other groups of ESA claimants, particularly volunteers, people who voluntarily refer themselves to the Work Programme. Those are the ones, for the incapacity benefit claimants, where the largest outcome payments sit. The reasons for that are going to be totally different. It comes down to things such as awareness of the programme, how far the disability employment advisers in Jobcentre Plus are prepared to refer people to that rather than to, for example, Work Choice, which is a specialist 2 Jobseeker s Allowance programme for disabled people, and how effectively providers are marketing their services. My concern is that DWP s response is to continue to try to get more and more of the new ESA claimants by extending prognoses, widening access and so on. Actually, it is that group of 2 million-plus people who are on incapacity benefit and ESA, the potential volunteers for the programme, who are the ones we should really be targeting. I think we need to be more innovative in how we do that. Q9 Nigel Mills: You do not think there is some systemic weakness in Jobcentre Plus s programme that means that people are not being flagged up to be referred as quickly as they ought to be? Tony Wilson: All the points that Professor Sainsbury made around Jobcentre Plus s lack of knowledge or detailed understanding of the Work Programme offer hold here. That is a large part of the issue: how effectively are Jobcentre Plus advisers who work with those groups on ESA and IB selling the potential benefits of the Work Programme? Q10 Nigel Mills: But how much do they need to be selling benefits? That is probably important but, if they are flagged up as, You should be referred now, I take it you are not saying that people in Jobcentre Plus who see that flag are ignoring it or somehow wiping it. Is there a case about flagging up here? Tony Wilson: I think there is some suggestion of that you do pick up anecdotally that that is happening. There are various reasons. This is concerning the new ESA claimant group. There are various reasons why somebody who meets the eligibility criteria may not be referred to the programme. There are various exemptions that can be applied. There is some evidence that that is happening, but I don t think the problem is now. There is still an issue around the new ESA claimants but DWP is addressing that by changing the prognosis. The issue is the large volume of potential volunteers, which I don t think at the moment the programme is going to address. There is a good example of that from November of last year when Jobcentre Plus ran a series of information sessions for ESA and IB claimants to try to increase volumes. The evaluation found that that did not seem to make any difference to referrals. Part of that was because advisers were going through the process of doing the sessions but they were not at the end of it saying, This is right for you. They were still thinking, We can offer a better service, or Work Choice would be better, or The Work Programme might not be right for you, because I am not sure about this particular provider. It is random allocation as well; you don t even know which provider you ll get. You could have a great relationship with one and find your clients referred to somebody else. I don t think those issues have been addressed. Q11 Graham Evans: Picking up on something my colleague said, Professor Sainsbury talked about Jobcentre staff being unhappy because they may be losing their jobs. Isn t that a complete lack of

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Work and Pensions Committee: Evidence Ev 5 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson leadership from management at Jobcentre, that they can have staff feeling like that? By its nature, that impedes the whole objective of getting people into work. How do we end up in that sort of situation? Professor Roy Sainsbury: Well, I do not think that I am in the right position to judge whether DWP leadership has failed, but the evidence on the ground is certainly that that is the feeling. It is hard to argue that their fears are not grounded given the evidence of how things have gone over many years, with the increasing use of private and voluntary sector providers in the work that used to be all Jobcentre Plus. They see a trend. Have they had messages that their jobs are safe? I don t know. That would be a leadership issue, I suppose. When you talk to these staff and hear these fears, you think, Yeah, I can see that I can see where you re coming from. Q12 Graham Evans: It is not those that I am asking about; it is about the leadership and management, or the lack of leadership and management. I understand if the employees and workers the front-line staff are unhappy, but it is the leadership and management of these organisations that are key. In any organisation, if they fail to do that, they perhaps have to consider their positions. Professor Roy Sainsbury: You may be right, but as part of this research project we did not interview those types of staff, higher up the organisations, about what they were doing. As Dame Anne Begg introduced, we were interested in the claimant experience, which takes in the front-line staff. I think you have a point and are right to raise the question, but I do not think I can answer it. Chair: We will have the Minister in at some stage. Q13 Glenda Jackson: On this line of questioning, it is hardly surprising that they think they may be in danger of losing their jobs, because so many of their colleagues already have there has been reduction in Jobcentre Plus. I want to go back to the decision-making process as to where people end up. The whole thrust of this programme, essentially, was to get people off incapacity benefit, and mainly to assist people who have not worked for a very long time. The first step in this is Atos, isn t it? Their numbers go to Jobcentre Plus, who are the decision makers. It seems that the one thing none of you actually touched on in any detail was the individual claimant. It is very easy to say that Jobcentre Plus are being difficult, but so is the individual claimant. The idea that they were all going to go on to ESA was set up by the DWP. My evidence is only anecdotal, but the number of people who have been put on to ESA and fiercely objected to it is very large I am just looking at my own constituency. What, in effect, can Jobcentre Plus do about that? They are having to abide by the rules set out by DWP, and the providers are sitting out there, and according to the evidence that they have submitted they are very quick to hand the claim down to Jobcentre Plus and say, It s not us, guv, nobody tells us anything. But there is also the attitude of the individual claimant. Professor Sainsbury mentioned the changes that are coming down the pike; should this be part and parcel of the changes that DWP should be looking at? Essentially, I am saying I think that the targets they set were wildly, wildly extravagant for the people they were wanting to get into work. Tony Wilson: I absolutely agree. With hindsight, I think that the targets were wrong for ESA groups. You are absolutely right that the mess that the assessment system has become, particularly for people previously on incapacity benefit being reassessed for ESA, has contributed massively to this problem. I also think that the fact that it has had such a detrimental impact on Work Programme providers has actually been a real driving force behind DWP trying to sort it out. Part of the reason the previous Minister for Employment took such a personal interest in resolving these issues was because of the impact it was having, in terms of trying to speed up the appeals process and make the assessment process run more smoothly. We have seen some improvements in recent months, but those issues clearly have not been resolved. There is really a choice for DWP for the future. Should there be a single programme that effectively incorporates all new ESA claimants in the Work-Related Activity Group, for example, and potentially alongside that has less of an employment above all else focus and perhaps more of a focus around steps towards employment and managing conditions it ends up looking something a bit like Pathways to Work within the Work Programme or do you go with something where you are trying to selectively identify the much smaller group of people who have a realistic and fairly immediate prospect of moving back to work? That is an approach that was attempted with the Work Programme and it has been demonstrated that that is incredibly difficult to do, certainly from a standing start. It would be easier with the evidence and the hindsight we have got from this programme. Q14 Glenda Jackson: So should there, in effect, be another category? Tony Wilson: I am not sure whether it would need another category. I would be thinking of looking further forward at whether you actually have a single programme for all groups and, if you do, whether you have to open it out to people who are likely to be much further from work and therefore structure it very differently in terms of the expectations. Q15 Glenda Jackson: But the DWP consistently told us that the hardest to reach were being catered for in this new programme, and then we were told that the primes were going to subcontract these people. As we know, that subcontracting has not happened, so I am just wondering whether there should be Tony Wilson: The most difficult were never going to be catered for in this programme systematically. It was only going to be those people with a prognosis of being ready for work within three to six months. The intention was that if people with longer prognoses wanted to volunteer for the programme, great. If not, they would be seen by an adviser from time to time, supported through Jobcentre Plus and reassessed periodically for their benefits. That group have always been outside the scope, yes. They are now being

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Ev 6 Work and Pensions Committee: Evidence 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson brought in, but they are being brought in order to address a volume problem without actually changing the mechanics of the programme, and that is the worry. Professor Roy Sainsbury: One day in the distant future, these sorts of issues might go away because we will not have ESA any more, and we will not be talking about ESA and JSA groups because we will have Universal Credit. Q16 Chair: Yes, but they will still have to be tagged. Professor Roy Sainsbury: There will still have to be some assessment of how they are treated and what conditionality there is, but it is all translated. It will not be about claimant groups; it will all be in conditionality groups under Universal Credit. That will be the future, and where the existing WCA fits into all that, I do not know yet. I do not know whether anyone does. It is going to change, which is another reason why we should not be judging the Work Programme too early. That is another massive contextual change, which is meant to incentivise people to work, and to work more. These two things are parallel branches of welfare reform that are meant to be co-ordinated and work together. If we come back in five years time, we might be able to have a conversation about whether it has worked under the conditions of Universal Credit. Q17 Chair: Everyone will be mandated by that time. Is that what you are saying? Professor Roy Sainsbury: And we will all, probably, be claiming Universal Credit by then. Q18 Sheila Gilmore: I have to say I think that is a slightly naive view of Universal Credit, because when you look at the diagrams that DWP self-produces about Universal Credit, it has nice little sections that are quite differently grouped. I suspect that a few months after it goes out, people will start talking about ESA-type Universal Credit people and JSA-type Universal Credit people. The conditions attached are very different, unless you are going radically to change those conditions. It seems to me that one of the problems we are facing is that we are dealing with a programme that was generated originally out of an understanding that there are some groups who are hard to reach and need work done with them, which has been transposed into a situation of very high levels of unemployment where a lot of people are simply unemployed because they have lost their job and there is not another one. They do not need a lot of nurturing, necessarily; they need a job. The WRAG, in particular, has become a new catchall in some ways. A lot of people appear to have a longer prognosis to fitness and yet they are now going to be mandated into the Work Programme more quickly. You have got people who are always going to recover, and it is just recovery time that they need; there are people who need to be retrained because they cannot do the work that they did before; and there are people who are ending up in the WRAG who have long-term conditions we have all probably had representations from organisations like Parkinson s UK, who are dealing with people in that group whose conditions are likely not only to remain but to deteriorate. Is that not an argument for more understanding that there are different groups, whether you subdivide them or not, as was suggested? Tony Wilson: Yes, and those are exactly the sorts of exemptions where Jobcentre Plus adviser discretion starts to come in. My point is that we have essentially created a situation where we have broadened access to a much larger group, and now Jobcentre Plus advisers are applying exemptions and discretion for a much wider range of conditions and therefore selecting people out of the programme, which is their right, because the programme may not be suitable for people with progressive conditions of who have no prospect of work. It is a question of what support should look like for those groups: is it right to simply say that no support is the answer, or should we have a programme that looks quite different? Can we simply shoehorn the current Work Programme to deliver that without making fundamental changes to what providers are expected to deliver, what they are paid, what we consider to be a successful outcome and everything that goes with that? That is very, very difficult to do 18 months into a five-year programme. To some extent we either have to start that discussion now for the next programme or look at how you commission specialist support for those groups. Ian Mulheirn: There is a danger of confusing the idea of having separate programmes with whether or not there is sufficient funding for the different groups within this current programme. I think that DWP and the Government were absolutely right to go for one large programme and to try to strip out some of the huge costs of having the patchwork that we had before. The problem is that if you then do not fund people to reflect their different needs underneath that, you will end up with the problems that we have at the moment. I do not think the answer is to set up a whole new programme. There are huge economies of scale here for the organisations that are delivering these things; although people s needs are very specific, there is a huge amount of overlap in the supply chains that are involved, so it would be silly to throw that particular baby out with the bathwater. Chair: I think we will be coming back to that and other things. We will move on to minimum service standards, the black box and personalisation. Q19 Stephen Lloyd: We have discussed the black box a lot over the last couple of years, but I have a couple of key questions. One is, how important is it in your judgment that providers have a free hand on how to deliver services using the black box principle? We have had it now for 18 months; how important do you think it is? Professor Roy Sainsbury: In our work, we have come across two views of what the black box actually means, and it is quite useful to go over those. I am sure you have come across this before. One view is that the black box applies to when people have designed their bids and services that go into a contract, then the black box stops and that is what you are going to deliver. The other view is that the black

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Work and Pensions Committee: Evidence Ev 7 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson box starts then: it allows providers to tailor and evolve their services and innovate, and they are not held to what was in their original bidding contract. So we are finding quite a bit of tension, particularly between JCP contract and performance managers and the providers who are actually out on the ground. Providers want the black box to mean, We can do what we need to do and we do not want to be constrained by anything, whereas the other view is, The black box has stopped. You have said you are going to do this and we are going to keep you to it. How important it is, is a slightly different question. If you want services to evolve and respond, and organisations to learn, then a black box makes a lot of sense. But you lose control of that if you are DWP, because you do not know what you are actually going to get. But there is a fundamental contradiction almost between the payment by results system and trying to keep providers to minimum service standards, for example. If you really wanted to have the black box operating in its purest sense, you would let all the providers go, they would be paid by results and they would fall or succeed on the basis of their outcomes. But then you lose control of what goes on in the black box and you have no guarantee that your constituents, or your claimants, are going to get anything at all from this system, unless you provide some sort of minimum service. So you get this tension, and how you play it has not been worked out yet, I think. You have some people thinking, Yes, you must see your claimants every two weeks. That is what is in the minimum service, and other people thinking, But we don t need to see our claimants every two weeks, because they are doing something else. Q20 Stephen Lloyd: Is there any evidence that it is fostering innovation, compared with the effects with New Deal and Pathways? These are well tried and tested variables over the past few years, but is there any evidence that it is producing any innovation at the minute? Professor Roy Sainsbury: I would say that it is very thin so far. Tony Wilson: That is the key question: is this leading to substantive improvements or changes in the support and the effectiveness of what people are receiving? There appears to be some process innovation, with more efficient ways of contacting people, better use of social media and new technology and work on how to better use systems and processes to match people to vacancies, for example through automatic matching, which Jobcentre Plus is rolling out with its Universal Job Match and so forth. The reality is, however, that at the end of the day it comes out that a large part of what Work Programme providers are delivering is face-to-face adviser support, coaching, mentoring, help with job searches and CV building. That is the same kind of stuff that has always been delivered, but it does work. It is effective support, but we are not seeing substantial innovation in the personal services that individuals are receiving. Ian Mulheirn: That is partly because of the level of funding that is on offer here. The original idea of these schemes was to have a reasonably well funded and tailored system and to move away from the very efficient, but one-size-fits-all Jobcentre Plus approach, which is a sausage machine, but is effective for the vast majority of claimants. If you then start to cut the funding, or the fact that there are no jobs effectively cuts the funding for you, you end up with a situation where you have to do very standardised things, right down to what is in your minimum performance offer. In those things there is not much, except for process innovation, that you can do. The fact that we are seeing some process innovation even in these early days seems like a good thing. On your broader point about the black boxes, you have two ways you can structure your employment programmes. You can stipulate your processes from the centre from Whitehall and say that you want people to do x, y and z and that that will get people into jobs. Everybody would get the same treatment. In that case, you get lots of people being contacted five times a week, as Roy was suggesting, who might not need it, and other people who are perhaps not getting anything more than a phone call when they need something more. The alternative way to do it is to drive everything by prices from Whitehall, in which case you have to have your prices right. If you get them wrong, you will get creaming and parking. We have taken steps over the last four years with FND and now with the Work Programme down the route of driving the whole system by prices, but we have not got the prices anywhere near right yet. How important is the black box? Well, if you want to carry on down the route of letting providers do whatever they can, you need to fine tune the prices and get them right. We are nowhere near that yet. The alternative is that we take a step back and say, We have got our fingers burned, this is not working. We will go back to demanding things from Whitehall. Let s have minimum performance standards and mandated tasks that every provider has to do. I personally think that that would be the wrong way to go, but if we are going to make this thing work, we have to have a much better understanding of what prices are needed to drive performance. Q21 Stephen Lloyd: What in your opinion would be right way to go? Ian Mulheirn: I think using prices to drive the market. Q22 Stephen Lloyd: So, when you say prices, that means adjusting the variables even higher for people who are on IB and so on? Ian Mulheirn: Yes. I think it mainly involves getting a better understanding of the costs to the public purse of the array of jobseekers who are out there and then working out how prices should be allocated on that basis. There is a huge amount of money that can be saved here, but only if we are offering the kinds of rewards for providers to make progress. Q23 Stephen Lloyd: Okay. That is a point well made. Two of you have touched on minimum standards, but just to reiterate, some prime providers minimum service standards are non-specific and lack detail and others are more detailed, as Tony mentioned at the beginning. Are the minimum standards

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Ev 8 Work and Pensions Committee: Evidence 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson sufficient to ensure that all participants receive an adequate service in the way that they are framed at the minute, or is it pretty irrelevant? Tony Wilson: I am not sure that minimum standards written on paper will ever be sufficient to ensure that people receive the service they want or think they are entitled to. You would see the same evidence. One of the issues is that, as you will know, over decades different governments in different parts of the world have gone between these spectrums of deregulation, regulation and re-regulation. The Wisconsin Works model started out as black box and five years later was quite heavily prescribed. In Australia, it started out as black box. By the second contract, it was being prescribed and by the third a bit more and so on. Most countries that have experimented with black box provision have introduced prescription as they go in response to concerns about equity and standards of service. Having a service guarantee as they have in Australia that says that you will have an action plan, you will be seen once a month and that you will have x, y and z is never enough on its own because a canny provider can always tick those boxes. I think the key here is that, if we care as we should about creaming and parking from the perspective of both job outcomes and equity and the quality of service that people receive, you have to monitor quality. For example, in Australia, the survey of participants is a hugely powerful tool which informs the star rating of providers. Participant satisfaction with the services informs how providers are judged by the Department, but where is the survey of participants that informs how satisfied people are with the Work Programme? Q24 Stephen Lloyd: That brings me on to the next important question. It is on monitoring in the sense that, in 2010, the DWP discontinued Ofsted inspection of welfare to work provision. Are you saying that is there a case for reinstating either that or some independent monitoring for Work Programme providers, or for establishing a completely independent inspection regime? Tony Wilson: In my view, yes, but Ofsted was not working, and it was right to end Ofsted inspection. You can do one of two things, or both. One thing I think that we should definitely do is surveying participants. The other is independent inspection. Most countries do not; I mean, in Australia, there is not an independent quality inspectorate, for example. In Great Britain there has been in the past, and Northern Ireland retained it in its programmes. I think that there is a role for independent inspection, and I personally would favour independent quality inspection. But it does increase costs; it increases compliance costs, and that has knock-on effects. It also risks bringing in people who do not really understand the programme and who do not have the depth of knowledge that DWP and Jobcentre Plus do. Q25 Stephen Lloyd: But, in principle, you would support it. Tony Wilson: Yes. Q26 Stephen Lloyd: Ian and Roy, would you agree generally about having independent inspection for this? Do you think that it is of value, or a red herring, or something else? Professor Roy Sainsbury: Tony made exactly the right point. With service standards you have quantity and you have quality, and it is very easy to measure quantity but it is sometimes fairly meaningless. We have one provider manager who said, What is better: that I see someone every week for 10 minutes, or that I see them once every six weeks for an hour? The quality would probably be in the hour every six weeks, but then you are not getting the quantity, so you need to disentangle quantity and quality and understand what you are looking for. Certainly, at the moment there is nothing built into the Work Programme design that has any measure of quality in it. Whether that is addressed by an independent inspection I will withdraw that slightly because the contract and performance managers within DWP are meant to be monitoring performance levels, but they are measuring different things. As we all know, the minimum service specifications from each of the prime providers vary wildly from a few lines that say they will see someone occasionally when they feel like it, to they will see them at 5 o clock on Friday afternoon. The DWP people are monitoring very different things, so people are getting very different quality all over the place. Looking at client satisfaction data is one way of doing it, and it is done routinely in many Government Departments, I think. The research that we are involved in, the evaluation programme, is in the field now or it has just finished doing our first participant survey. That will serve as a first proxy of that quality indicator from the perspective of the users, and we will be doing that again, later in the evaluation period, to see how things have changed. So that is one way of doing it. Q27 Chair: When will that information be available will it not be until 2015? Professor Roy Sainsbury: No, the first survey of participants is going on now, it will be analysed in the new year and it will be published when the DWP decides to publish it that is not in our control. Tony Wilson: It will not be provider and contract package area level satisfaction data. Professor Roy Sainsbury: No, it will not be able to supply that detail; saying whether Ingeus are doing well, or not well, or whatever. It will not be at that level. Q28 Stephen Lloyd: But it will be participants? Professor Roy Sainsbury: Absolutely, and it will give an indication of whether people think they are getting what Q29 Stephen Lloyd: And regional spread? Professor Roy Sainsbury: Yes. It is a big survey. You will be able to have that some time next year. Chair: I think that Ian is waiting to say something. Ian Mulheirn: I was just going to chip in on that. With the inspection regime, Tony s distinction between asking service users how things are going

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Work and Pensions Committee: Evidence Ev 9 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson actually, from looking at some of the evidence that service users or clients have submitted, you do think that somebody needs to see whether these problems are common, because they are quite worrying stories. That aside, the problem with the other kind of topdown inspection is that it is the same problem as with the mandated minimum standards from the centre. There is a real danger that you get a tick-box attitude, which would be hugely expensive, hugely costly to monitor and would lead to resources being diverted to the wrong area. Mandation and minimum standards and ticking boxes might make us all feel better from the centre, but it will not solve any of the problems. The primary thing is sorting the prices out. The second thing is finding out from service users how the thing is performing from their perspective. Q30 Debbie Abrahams: On the participant survey, I understand that all the caveats mean that this will not necessarily relate to specific programmes, but will you have data on different participant groups? I am thinking about BME 3 groups, disabled people and so on, but not necessarily the category of claimant. Professor Roy Sainsbury: The sample is big enough to allow for some of that sub-group analysis. Q31 Debbie Abrahams: I think that is really important. I hope that you will analyse it in that way. Professor Roy Sainsbury: That is the intention. Q32 Anne Marie Morris: I have a question for Roy, because he is the one who has been doing the research into the black box and what is in it. To what extent do the black box tools include the opportunity, advice and help for self-employment, or are all the black box tools geared towards other employment? As a supplementary question, to what extent is the content driven by the payment system? Professor Roy Sainsbury: That is a really interesting question about self-employment, because selfemployment has been promoted over many years as a good route out of unemployment and coming off benefits. The evidence is patchy so far, but we are beginning to see a sort of increasing push towards trying to help people into self-employment from Work Programme providers. There certainly are programmes and some specialist provision within the supply chains that is meant to address people s needs when they want to enter self-employment. The tools are there in the black box. I will not say that they are everywhere and in every contract package area (CPA), that they are the same or that some are better than others. The evidence will emerge in due course, but self-employment is certainly being seen by Work Programme providers as a really useful way of getting people into work. This is something that we are going to be watching very carefully, because there are some dangers here. Q33 Stephen Lloyd: It has good and bad. There are good opportunities and there are dangers. Professor Roy Sainsbury: It is very easy to get someone to be self-employed. I could set you up immediately as self-employed by asking you what 3 Black and Minority ethic your hobbies are and saying, Set yourself up as a teacher of golf, bridge or something. You could do that. You could register yourself as self-employed, and you could even claim tax credits immediately even though you are making no money. Can you see? It is a very easy route. You could stay there for a while even six months or a year before anyone really takes much interest in you from the tax credit perspective. I am beginning to feel that there is an easy route here for Work Programme providers to channel people into self-employment. Q34 Stephen Lloyd: Which is why we just need to watch it. Forgive me for coming back to this I agree with you, trust you, you have been around a long time, you are absolutely right, but I also know that there are opportunities to get it right, capture the spark of aspiration for someone, and they fly, so I agree that it needs watching very carefully, but it is also an opportunity. There are no two ways about it. Professor Roy Sainsbury: It is a route out of unemployment that many people do not even consider for themselves unless someone suggests it to them, so it is something to keep an eye on. Chair: That answers one of the questions that we had in the next section, which is on overall job outcomes. Q35 Graham Evans: Something that Tony was talking about was interesting. You mentioned Australia and how you had the black box and then you came out of the black box. When I was in business, I used to have regions and performance, and I used to analyse my managers and their sales teams. There was always an outperforming team compared with another team. There was always a load of Billy Bullshit about the reasons why people could not perform as well others. There is always an excuse for why this team did well, but when you looked into it, there would be a recipe for success. There was the right way of doing things, the middle way and then the wrong way. When I analysed the best performing teams, they took the right way to do it and improved it. I know you are dealing with people and not selling products and services, but the best performing teams used to take the right way and made it even better and they would teach me a thing or two. The middle teams would say, Oh all right, and the bad teams should not have been working for the company and ended up not doing that. I cannot help feeling that it varies from region to region and from Jobcentre to Jobcentre. The Departments mean well in what they are trying to achieve but they do not always get it right. If you follow the recipe for success to a certain degree I am always open to places like Australia where it works why shouldn t it work here? Why do we have those differentials? Isn t it all about outcomes? If those teams do not serve those people this is taxpayers money trying to help people get into jobs and are not serving them right, why can t we change them? Can t we incentivise them in some way to do the right thing? This is the recipe for success. We know it works. It is proven in parts of the country. Look at the best performing team in the country and say, What is it that they are doing? Whether it is the north-east, the north-west or the south-west, what

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Ev 10 Work and Pensions Committee: Evidence 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson those managers and those leaders and the middle leaders are doing, can you get that, turn it into a recipe for success and then duplicate it around the country? Don t just leave it at that: spot those who rise to the challenge and reward them for that. For those who do not rise to the challenge and who do not perform, you have to take very difficult decisions. That is my question. Can t we take what works from elsewhere in the country and the world and just duplicate it across the country? That is what successful businesses do. Tony Wilson: Yes, we can and we should. That has been a driving force in welfare to work programmes for the last decade or so. Successive UK governments have been very good at commissioning research and looking overseas for lessons on what works and how best to design programmes. Focusing right in on performance variation within GB though, there is a number of factors. One is obviously the economy. We cannot escape that. There are areas where performance is lower because economies are weaker. There are areas where it is higher because economies are stronger. That cannot explain all of it because in the Work Programme for the first time we can compare performance of contractors in the same area, who should have, because they are randomly allocated, exactly the same profile of claimants to see how they are performing against each other. You see wide variation between providers in the same area. So there are other things beneath this. If you then, as we have done, look even closer at local authority level performance and try to work out whether the minimum performance level targets have been met to a local authority level, we think that, in 25 of the 40 contract areas, at least one local authority area was above the minimum performance level. Part of that is the economy. Part of it is that there is huge variation within contract areas, within supply chains, within provision. Providers focus on this relentlessly and forensically. Why are some areas doing better than others? Put the worst performing areas in special measures essentially. Make them go and visit the highest performing areas and see what they are learning. Take managers from the highest performing areas and put them in the lowest performing areas and so on. It is easy to say, but if everybody were performing at the highest level, or even, if you just knocked out the bottom performing quarter, let s say, performance would be significantly higher. Part of the secret here is simply to reduce those differentials. Why are there those differences? As you said, it is a people business, ultimately, welfare to work. It is about how effective and good your advisers are and how inspirational they are and how effective your managers and leaders are. There has been a problem over successive programmes and it exists in Jobcentre Plus as well I worked in Jobcentre Plus and the DWP in respect of really successful, inspirational leadership and also highly professional front-line advisers. Many of the advisers are absolutely brilliant at what they do. But the lack of formal accreditation of those skills, of continuing professional development as recognised across the industry, and of common standards is a major issue. One important thing that has happened in the last year, and which the whole industry needs to get behind, is the Institute of Employability Professionals (IEP), which is being funded through the Growth and Innovation Fund from the UK Commission for Employment Skills. For the first time it is introducing those professional standards. I think that should be part of their Merlin assessment and everything else. Are you part of the IEP? Are you doing that continuing professional development for your advisers and how effectively are you giving that support and raising those standards? Looking beyond that, there are clearly some areas where innovative techniques or practices are used, particularly in employer engagement, which we tend to find varies significantly, and also in how discretionary funding is used to help people meet the transitional costs of moving into work and various other things. Yes, there is a case for saying, How do you bottle some of that? My final point is that I would not leave that all up to individual providers within their contract areas. Part of that is the job of DWP. They effectively own the Work Programme. They should be drawing out best practice, and they should be disseminating it because a provider will not. Why would they? It is their meat and drink; it is their business. Glenda Jackson: What is success as far as the DWP is concerned? Is it getting people into work or getting people off benefit? They are not the same thing. Q36 Graham Evans: I agree with that. Tony, Inclusion has recommended that DWP scraps its current Work Programme minimum performance level measure, and replaces it with something more responsive to economic conditions. How would this operate in practice? Tony Wilson: There are a number of ways this could be done. We would not have started with the minimum performance level, as it is currently constructed. One of the problems is that it is not a cohort-based measure. In other words, we are not assessing the performance of individual groups of claimants. When Ian talked about the 50% Flexible New Deal, that is a relatively straightforward calculation. Of people who enter the programme in a particular month, 12 months later how many have a job? That is a transparent measure of performance. You can set targets on that, and you can manage performance against that for each successive month of the programme. How individual cohorts do is the measure DWP should have used rather than a minimum performance level, which takes your total outcomes divided by your total inputs up to that point. That makes it hugely more complicated. Q37 Glenda Jackson: You just told us what DWP were doing and that this was going to be what the subcontractors were going to provide for the hardest to reach and the most difficult. Tony Wilson: But the DWP performance measures are not measured on a cohort basis. We still think that should be adjusted for the economy. You can do that prospectively by setting different targets and potentially adjusting your payment on the basis of changing forecasts for the future. You can potentially do it retrospectively as well by recognising that one

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Work and Pensions Committee: Evidence Ev 11 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson impact of lower-than-expected economic performance has been effectively that the Work Programme has seen a massive reduction in funding per participant because the outcomes have not been achieved. In some cases, it is likely to be 25% lower unit funding simply because outcomes are not being achieved. One thing that you could do retrospectively is to look at ways of making that money available in ways that do not reward providers for failure, but ways that, for example, create greater local control over additional funding, but essentially as a consequence of poor economy. Q38 Chair: Are you saying that, in areas where there is high unemployment and low economic activity, the provider should get paid a higher rate for getting someone into a job than in an area such as Aberdeen where the economy is booming and unemployment is low? Tony Wilson: As well as adjusting for the outturn of economic performance nationally compared with what we expected, I think that one of the major issues with the Work Programme is the failure to recognise that, within CPAs in different areas, you have higher and lower performance, and a failure to set performance targets and certainly price incentives to reflect that. There are five parts of the country where more than 5% of the population are on the Work Programme: Blaenau Gwent, Wolverhampton, Kingston upon Hull I have forgotten the other two, but they are the areas where you would expect high concentrations of worklessness. It is not right that the payments are exactly the same there as they are in Worthing, my home town, which is at the top of the league table. Ian Mulheirn: Tony is right. One of the problems is that the funding for the service is effectively being cut as the economy tanks, which is exactly the point at which you want to increase it. It is hardwired into the payment system. They get fewer outcome payments, so they have less to spend on the front line. There is no other service where we would accept that to be the case, especially not one when we want the funding to go the other way. This is a major problem. I will suggest a slightly simpler version of what Tony is proposing. Effectively, he is saying: let us strip out the effect of the economic cycle and let us pay people well if they do well relative to other providers. In our evidence from the Social Market Foundation, you can see the distribution of provider performance. It is quite wide at the moment. Some are clearly doing some stuff well, and some are clearly not. That distribution will probably shrink over time, but the challenge is to incentivise the best and incentivise learning from the best, and not to cut funding in the middle of a recession. That is a fundamental problem with the payment by results mechanism that is based on absolute measures of performance. Instead, perhaps we should consider relative measures of performance. Q39 Chair: Is it too early to do what Graham suggests, which is taking contracts away from the poor-performing providers? Should that happen now, and should we give them over to the ones who are better performing, or is it still too early? My original question was, is it still too early too tell? Ian Mulheirn: You need a DWP statistician to answer that question. There is some variation in the numbers that you will see, because there haven t been enough people going through the system yet. That variation is rapidly reducing and very soon you need the statisticians to tell you when you will be able to say with a high degree of confidence, These people are not performing well. I don t know whether that point is being reached, but it should be soon. Tony Wilson: I expect that DWP will say that their market share shifts can start from two years in. I wouldn t be surprised if they do start to try to use the market shift shifting a proportion of referrals towards the more successful providers as early as spring or summer next year. That brings with it a huge host of risks, where similar things have been done in the past in other countries. There will be a short-term performance hit from that, but you also risk, ultimately, getting much closer to monopoly provision, but hopefully you are re-contracting and introducing competition and innovation. Ian Mulheirn: One of the other dangers with the share shifting is that you may be condemning the other 40% to the poor provider Tony Wilson: Absolutely. Ian Mulheirn: It will then be getting fewer economies of scale, performance is really bad and things spiral out of the control. At that point, you probably want to see reallocations and things like that if you want to improve performance. Chair: We will move on to job starts data. We have probably covered quite a bit on the labour market. Q40 Anne Marie Morris: Lies, damned lies, and statistics, they say. With regard to the job start data, I guess we are trying to drill down to how useful they are, and what they really tell us. While we have a figure of 207,000 job starts, does that mean that, for each of those starts it is a different individual, or are these multiple job starts? Tony Wilson: These are the figures produced by the Employment Related Services Association (ERSA). They are individual job starts. There are 207,000. Q41 Anne Marie Morris: You mean individual people? Tony Wilson: Individual people who have entered employment. Q42 Anne Marie Morris: Okay. That is good news. Tony Wilson: It is, absolutely. Q43 Anne Marie Morris: Do you think that that figure indicates that performance is building in the pipeline? Does that figure give you some comfort or confidence? Tony Wilson: Our analysis suggests that yes, it does indicate that performance is building in the pipeline. It is useful that they have published it. We would hope that they will publish it as frequently as possible, in as much depth as possible maybe even for individual providers and contract areas. It suggests that the next performance figures will see some improvement. Ian Mulheirn: I slightly differ from Tony on that. ERSA have put out figures like this before, and they

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Ev 12 Work and Pensions Committee: Evidence 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson have said since January or February 2012 that their figures show that everything is going fine, but that hasn t been the case when we saw the final figures. I am very sceptical that these are very useful. That is partly because people throw around different measures of measuring the performance of this thing. The only measure that counts is the outcome measure, which is jobs for six months over 12 months of referrals. Even the Government put out 14 monthsworth of data, which weren t comparable to its own figures. We need to focus solely on what this programme is supposed to be assessed on, which is those performance figures. The job entry figures, we don t know how many will sustain. We just don t know whether the state of the economy means that there are more temporary jobs, or fewer. Even with the good analysis done on this, you don t know that it is consistent over time, or that it is comparable over time. I would put no weight on these numbers at all. Tony Wilson: Yes, but they have helpfully been broken down for us by month of entry to the programme and percentage entry in work at each subsequent stage. You do see after six months that in the early months of the programme, it is typically 15% to 18% who have made an entry to employment. In the later months of the programme, it is above 20%. We are seeing improvements. Q44 Anne Marie Morris: In terms of this figure, 207,000 what? would be my question. How much of that is self-employment? Is there any division by industry sector? What does it tell us in terms of where the job opportunities are, because you clearly need to match these individuals to where the opportunities are, rather than where they are not? Do you think that data is going to be forthcoming? Would it be useful? Is it something that we should be looking to encourage to be published? Professor Roy Sainsbury: We certainly do not know it yet, but it is a really interesting question. Some of the survey data that we will be producing will show you where people have gone when they have got jobs. It is not guaranteed that all our sample have got jobs, but when they have, we have asked them which sector it is in, whether it is self-employment, how many hours they do, whether it is temporary and what sort of contract they have, so there will quite a lot of fine detail from that survey. Again, that will be repeated later in the evaluation process. If you really want to understand what is going on, my answer to your question is: Yes. It would be incredibly useful to have that sort of data. Certainly, that data lies with the prime providers at the moment, who have to keep those sorts of overall records to be able to claim their performance payments, so you will have to ask the DWP how much of that information at that level and of that fine-grain detail is being passed up to the DWP for analysis. It would be really useful to see which ones of those, such as those in self-employment, are actually managing to stay on from job entry to six months to 12 months and so on. Anne Marie Morris: Indeed. Professor Roy Sainsbury: If you can press for that sort of analysis, then yes. Q45 Anne Marie Morris: Excellent. We are of the same mind. This is a question for Tony. Looking forward, Ministers reckon that 30% of participants who started the Work Programme in June 2011 have spent 13 continuous weeks off benefit. How many of those people spent that 13 week period in work? To add to Glenda s point, there is not necessarily a correlation between the two. Tony Wilson: DWP has done a research report on claimant destinations across all benefits, which was published last year. On the JSA data, 15% to 20% of people who were not claiming a future benefit were not in employment. Typically, the reasons for that are that they have gone abroad, entered further educational study or have lost their entitlement to benefit, which could be because they are no longer entitled to contributory JSA or that they have been sanctioned. You might expect in the Work Programme that, of the ones who leave benefit, something between two thirds and three quarters, or four fifths, have entered employment and that the rest are not in employment. They are either in study, are no longer entitled to benefit or have gone abroad. Those are the most common things. They could also have retired, for example. There will be a group, and, in effect, that is a dividend to the Department. They can bank that saving without having to pay it as outcomes to providers. However, that has always been the intention in the design of the Work Programme. Those AME 4 savings are captured and recycled into programme payments as well. Q46 Anne Marie Morris: I have one final question regarding a point that Professor Sainsbury made, which was that you have the job starts, but where does that then go to? It is a specific question about selfemployment, because the challenge with selfemployment is that you start up and you do not get kerching! a salary. It builds over time. In terms of the way the system works and rewarding providers, is there enough incentive going forward? You have the start, but then the thing has to continue to incentivise them to really encourage the self-employment route, because judging whether there has been a success in six months is almost impossible. Professor Roy Sainsbury: I think it is a really interesting issue. I have tried to allude, without pointing fingers, to the fact that it is very easy for a self-employed person to keep in work for six months, but making no money legitimately because they are building up their business. You obviously know this stuff. We have just finished a project for DWP on self-employment and Universal Credit looking forward. We get this picture from people that says, Yes, I have started my business, but I had to build up my client base, my stocks, my production and so on. It will be at least a year, possibly 18 months, before I turn round a profit for the first time, but it is a viable business and that is how businesses go. We know from self-employment research, or any business research, that it does take time. My feeling is that it will be easy for people to reach that six-months point 4 Annually Managed Expenditure (the part of the DWP budget from which benefits are paid)

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Work and Pensions Committee: Evidence Ev 13 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson because they will be supported by tax credits. Work Programme providers JCP staff know this as well get self-employed people on tax credits, and that helps them. It is a useful buffer. Tax credits provide a guaranteed income while they build up their business. I think that we will find in the stats that most people who start self-employed will still be self-employed in six months time. That will be a higher figure than those who go into paid employee jobs. That is my hypothesis. We will find out whether I am right, but I suspect that I am. Q47 Anne Marie Morris: Sure. I shall make one comment because I appreciate that we are short of time. In conversations with providers, I have been told that not only do a lot of them simply not have the ability to provide the advice and support but there is not enough reward to incentivise them to try to take people down the self-employed route. I have also spoken to sub-contractors who have been lined up to provide that self-employment support and who have now left because no one has referred anyone to them. Professor Roy Sainsbury: A quick response. I am sure that that is right, but we have also found some areas where self-employment seems to be being mentioned as a possibility to virtually every single client who comes through. Q48 Anne Marie Morris: If that is the case, that is brilliant. I am getting very different stories about whether there is a benefit win or a benefit loss, and I am hearing more about how there is a problem rather than an opportunity. The devil is in the detail, and I am conscious that we do not have time. Professor Roy Sainsbury: It is a bit too early I am afraid. Q49 Graham Evans: I can understand people being uncertain about being self-employed; I fully get that. Our colleague, Gordon Birtwistle, comes from a traditional small and medium-sized enterprise (SME) engineering company. He always goes on about the shortage of engineers and about that traditional engineering technical skill that they cannot get from the young people coming in. An ageing work force in the company is looking for young people to take on those traditional things. What struck me was that those traditional engineering skills from 100 years ago are actually still relevant today in engineering. We have a mismatch; a gap between that 50-something-year-old chap who is coming towards the end of his career and the 20-somethings coming through. How can we fill that? We have SME engineering companies in any community, certainly in the Midlands upwards, crying out for good-quality people to take on real, long-term jobs a proper career if you like. The skill will stay with those people for the rest of their working career. Any town has such vacancies in engineering companies, yet we have been talking for the past couple of hours about trying to get people into jobs; about trying to persuade them to come off benefits. There are clearly real, well-remunerated jobs in real companies. How do we fill those vacancies with the people whom we are talking about? Professor Roy Sainsbury: You have gone much wider than the Work Programme. You are talking about skills training, apprenticeships and so on. The answer is that all these things have to play a part. Work Programme providers are probably not in the business of providing apprenticeships. Q50 Graham Evans: I was not talking about apprenticeships. The employers say that if you give us a good person, we will do the rest. They are not asking for anyone to provide the skills. They will take a good person who is work-ready, who is willing to turn up and learn and they will do the rest. They will train them in the skills that are required. It is not necessarily the wider thing. It is these individuals whom we are trying to persuade into proper jobs. How do you get people into those positions? They are starting an apprenticeship within the company. Sheila Gilmore: How many such jobs are there? Graham Evans: There are lots. In most communities you speak to Gordon Birtwistle SME engineering companies are looking for 20-something people to replace their ageing work force. They are trying to get the next generation of technicians. Chair: I think we are going too wide. That is a whole issue about skills training and so on. Graham Evans: With respect, this is not skills training. I know that is a wider issue. If we have an individual who does not have the skills and employers who are willing to take them on, how do we connect them? Chair: If that is true, the prime contractors will presumably be wise to that and be engaging with employers. Tony Wilson: I think they would really know whatever they needed to give them those employers details. There is an issue about employer engagement. There is also an issue I accept that it isn t this issue about how effectively Work Programme providers are being able to join up with apprenticeship providers with other skills provision. How many apprentices were previously on the Work Programme? We don t know, but it is going to be single-figure percentages it is not a large number. There is an issue about that join-up, but there is certainly an issue about employer engagement. ERSA and the CBI have been doing some really good work about trying to do more Work Programme-wide marketing of the Work Programme offer. One of the problems with providers is that you are building relationships with employers, but you are one voice among 40 at a national level, and Jobcentre Plus and any number of private recruitment agencies. I think that how we get those employers to those providers is a big challenge. Chair: We will move on to the next section, which is about performance across different groups. Q51 Sheila Gilmore: Looking at Professor Sainsbury first, there was a comment in the report that creaming and parking, which we have dealt with before, is routine among Work Programme providers. Do you think that that is the case? Professor Roy Sainsbury: So far, the evidence is that it is there. We cannot put a number on it, but it is still disappointing to find it, and to understand that the

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Ev 14 Work and Pensions Committee: Evidence 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson reasons for it are the same as they always were. One of the great selling points of the Work Programme was that the differential payment regime was going to deal with the problem of creaming and parking, because providers would be incentivised by big payments to focus help on those hardest to get into the labour market. So it is still going on, and that is from the mouths of provider staff themselves, who say, Yes, we give more of our time and energy to those closer to the labour market. They have often got explanations for why they park people, although they do not use that language. They say that they haven t got the financial resources to be able to help them. Q52 Sheila Gilmore: Is that something to do with the structure of such an outcome-based scheme? Everybody signed up to paying for outcomes rather than just for doing things. However, for some of these groups, as was raised earlier, some people have very specific long-term problems. The evaluation report, and indeed some people within the minimum performance standards, seemed to recognise this more than others. People might have health problems, and apparently that is greater than anticipated, even among JSA claimants, although that is not surprising when you see the outcome of the WCA. There are people who may have personal issues and debt issues. These are supposed to be addressed. I am sure that we all had presentations from local providers about what they were going to do they were going to identify these people and so on. That takes time and effort. If you want to help these groups, would it be more sensible to structure it around partial payments for achieving certain levels, rather than saying, Yes, you ll get 13,000 if you get this person into sustained employment? It is all very much in the future. Professor Roy Sainsbury: It is really interesting, because the payment regime was meant to be the answer. Again, the early days caveat must be applied, but the evidence so far is that it does not seem to be having that effect. Staff at the front line are not being influenced by the 13,000 carrot six months down the line for getting someone into work, because it is not going to be six months down the line it s going to be two years down the line, because it is going to take a long time to deal with their health issues, debt problems, housing or whatever. The evidence so far is that the people at the front line are still making those judgments Can I get this person into work? What do I need to do to help them? Oh my God, that is going to cost a lot of time and money. We will put those to one side for the moment. That is what we have found from previous welfare to work programmes as well. At the moment, the evidence is that the differential payment doesn t seem to be having that hit. Does that mean that it is not enough, and that if it were doubled, somehow providers would think, Yes, we want our front-line staff to really help these people, because 26,000 is a real pay-off? I don t know. Q53 Sheila Gilmore: The other suggestion I was making, which Ian may have made in his written submission, is rather than say, Okay, let s go for the 26,000, and that will be a big incentive, maybe go for something that recognises achievements along the road. Some of the providers, especially the more specialist providers, of which there is one in my constituency, have this sounds a bit like Alcoholics Anonymous a several-step programme that they aim to achieve with groups of people. Ian Mulheirn: That risks going back to the idea that there are two ways of doing things: you either do things by prices or by stipulating things from the centre. This moves back in that direction, because the milestones are set from the centre and you have to say, Can you make sure you tick a box when that has been done? That opens you up to questions about how much improvement there has really been, and how much was just recorded. You get into all sorts of murky questions about whether you are actually getting the progress it looks like you are getting. It is just running a programme in the way in which old New Deals used to be run. We say, We want you to do this, this and this, and then people make progress. It is just a different way of approaching the problem, and I would argue that it is not very effective. However, the bigger problem is that we have not tried offering nearly enough money for some of these groups yet. It is too early to tell whether creaming and parking can be avoided. The discussion about creaming and parking always comes up when it comes to payment by results programmes. It is important to recognise that it is not a phenomenon that occurs only with things like the Work Programme. It is hard-wired into Jobcentre Plus. The reason why many of these people do not get the help they need in the first year under the JSA regime is because they are too expensive to help and they need specialist help. Many of them have to wait a year to get to that point. Now, that is parking by the public agency. Another way of thinking about parking is that it is getting the most jobs for the least money. You might see that as cost-effectiveness. But you might not see it like that, because you might find that you have left somebody on the scrap heap for years, which eventually costs people a lot more money. Nevertheless, political imperatives to get the most jobs for the least money drive parking. If we are worried about parking in the Work Programme, it is a function of the payment system, which is not working. But it is something we see in Jobcentre Plus too; it is not just something that exists only in the Work Programme. Tony Wilson: That is absolutely right. A feature of trying to support people back to work is that some people will not get the support that they think they should get, or, arguably, that they need. The difficulty that the Work Programme has demonstrated is whether it is feasible for a programme to have only jobs as its objective. Where do we want people who do not achieve employment outcomes to be two years after they have entered the programme? What sort of position do we want them to be in emotionally and psychologically, in terms of their readiness for work? That comes back to Ian s point about the long-term costs and

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Work and Pensions Committee: Evidence Ev 15 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson consequences of not offering any support at all. That would be extreme, and there is no evidence that anybody is being left with absolutely no help at all. However, those long-term costs could be significant. The Work Programme is the first time in two decades that we have had a situation where people could be on JSA potentially for three years or more without receiving a meaningful intervention. In every other programme there was always something, whether it was training, employment or anything else, as a backstop. So we need to think more carefully about objectives. If a majority of people are going to come out of the programme having not secured sustained employment and even if the programme exceeds its objectives, the majority will come out having not secured sustained employment where do we want those people to be? That points to the need for minimum standards around keeping jobseekers close to the labour market, for example, and keeping them active, motivated, confident and maintaining their skills. I think those issues are really important. People who have health conditions should be supported to help manage those health conditions and maintain some attachment to the prospect of returning to work. Setting that as interim milestone payments is one way. You could set it as minimum standards. I think you can have a focus on job outcomes and have minimum standards. Most countries systems recognise that. The Work Programme is one of the only ones that says that you cannot have both. I believe you can have both. I have one final point. Many people predicted two years ago you predicted it in your inquiry two years ago that setting high outcome payments is a bit of a red herring, because what matters is outcome payments multiplied by the percentage into work. Many people said to your inquiry two years ago that the amount of income earned from ESA groups will be lower on average than for JSA groups, because the likelihood of people moving into work would be much lower. What has happened is a sort of vicious circle. Performance has been even lower than expected, so payments have been even lower than expected, so now providers are faced with stick or twist. Do I put more money in and massively invest in the prospect of beating what all evidence tells me cannot be done, which is a DWP benchmark for very hard-to-reach groups, and get these very high outcomes, or do I retrench? Do I focus on getting the job outcomes that will be easiest to get? That is the perversity of the high outcome/low outcome payment the unintended consequence. I think it has driven providers to focus even more on JSA groups. They need to get them into work as quickly as possible, because they have to wait six months for the job outcome. Q54 Stephen Lloyd: The DWP are not stupid. They are seeing the self-fulfilling prophecy that we warned them about 18 months ago. How are they responding? Tony Wilson: At the moment, the Minister will say, as he has said publicly, that nothing changes. The payments and the performance expectations are not going to change. If we have to wait three years before we can have that discussion again about what we want support to look like for people who do not get a job, that will be too long. We need to think about what support should like for people who are in the Work Programme, or indeed outside it and a long way from the labour market and perhaps not receiving the support that they need to get a job. Q55 Stephen Lloyd: It is not just that. It is the thing that you were talking about before: the differential payments that we and others flagged up 18 months ago for the ESA claimants. Because so few are getting into work, they are actually earning less than they would have done under previous schemes. Have the DWP responded to that now that the data are showing that? Tony Wilson: There is not a strong incentive to, because 90% of the programme participants are on JSA. The programme has turned out to be a JSA programme with a couple of ESA people on it. Q56 Stephen Lloyd: It was supposed to be the other way round. Tony Wilson: It was supposed to be two-thirds/onethird, more or less. It would be hard now to reopen the contracts, change outcome payments and introduce intermediate milestones and whatever else. But we should still care about the groups that we cared about two years ago. We need to think about what support should look like, and it may not be employment over all else. It may be employment, and if not employment, support to manage your condition and to maintain an attachment to work, or whatever it may be. Ian Mulheirn: Tony s point about the stick or twist nature of this do you put the money on the table to try to get these very high payments or not? is part of the wider thing going on in the economy at the moment. Unless people can see growth, jobs and demand coming, they are not going to risk that money, because the chances of getting some of these people into work are very low. There is a real acid test. Many of these programmes the Work Programme and Flexible New Deal were designed in good times when we did not have such a problem with long-term JSA. We worried more about the long-term inactive. In a sense, that group is now getting forgotten while we try and cope with mounting numbers of long-term JSA claimants. When things get back to normal, these kinds of payment structures for the long-term ESA claimants may be appropriate, but we are not going to find out for a long time. Q57 Chair: So basically there is a mismatch between the policy intent and what is actually happening on the ground. The rhetoric of the Government says, We are not going to let people lie about in their beds with the curtains closed when their neighbour s going to work. We are going to get that group into work. But in reality they are the group that nobody is touching, because they are too difficult and too expensive. It is the next-door neighbour who has just fallen out of work who is getting the help. Ian Mulheirn: The black box explicitly encourages them to leave those people, because the prices aren t right. You either get the prices right and have a black

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Ev 16 Work and Pensions Committee: Evidence 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson box, or you get rid of your black box and tell providers what to do. Q58 Debbie Abrahams: We had an inquiry in the summer about the Youth Contract and getting young BME people into that. The All-Party Group on Race and Community also conducted an inquiry recently on BME women and unemployment. Bearing in mind the question that I posed around the participant survey that you had already done, what evidence is there for the success or not of ensuring that BME groups can access employment? A number of barriers were identified for example, in the race inquiry at JCP and also at work provider level. Is that matched by your experience and your information? Professor Roy Sainsbury: I do not think we have enough yet, to be honest. The survey will produce its results. The work that we have done so far is on a much smaller scale and is qualitative. It is too early to draw any conclusions about how the Work Programme is operating for any small groups like young black men or women or whatever. I am sorry, but we have to wait. Tony Wilson: In the performance data that is on the DWP website, you can create those datasets. We have done that and there does not appear to be a significant difference between ethnic minority job outcomes and outcomes for non-ethnic minorities. But it is very early, and part of that may be, as Ian hinted at earlier, a result of the fact that there aren t huge numbers coming through. Some of that could be statistical, but there aren t big differences. Where there is a big difference is for disabled people, and also for lone parents. Those do see big gaps. But just one shameless plug: we will be having a conference on ethnic minority employment, looking at exactly these sorts of issues, in the spring. We will make sure that we invite you. One issue has been that there are a lot of specialist groups, particularly in London, that are simply not engaging with the Work Programme. I spoke to the chief exec of one of those a few months ago, and they said that they just could not do it: they could not make the numbers add up, and so they could not get the money. Now they are being funded through private finance, charitable donations, philanthropy and whatever else. They will talk to providers if providers talk to them, but otherwise they will do their thing, which is with young black men in south London. Debbie Abrahams: Thank you. I look forward to that. Q59 Chair: Can I ask, if somebody has run out of their six months of contributory JSA and has a working partner in their household, or savings or whatever, is it possible for them, and for large numbers of people like them, therefore to avoid going anywhere near the Work Programme? Can they just opt out of the system? They are not in receipt of benefit; they could have 30 years of national insurance credits, because they are in their 50s and have been working for 30 years. Do we know how many people do that? It goes back to Glenda s question: the offbenefit check is not the same as the in-work check. How many are in that position? Ian Mulheirn: We know the difference between ILO 5 unemployment and the claimant count. Tony Wilson: About 1 million are ILO unemployed and not claimant unemployed. That has increased significantly since JSA was introduced in 1996. Yes, people who are not claiming any benefit fall through; they are never the subject of inquiries or the subject of ministerial thoughts on how you design employment programmes or anything else. There have been good examples: Action Teams for Jobs, which Jobcentre Plus ran for a number of years; in Wales, they have programmes called Workways and Want to Work, which are both trying to reach people who are not on any benefit. So these things do happen. But on the whole it is hard to have a benefit-funded, payment by results programme for people who are not on benefit. With the focus on reducing benefit rolls, they get lost. Q60 Chair: But many of the people who are still in their bed behind the curtains, and whose next-door neighbours think are the terrible benefit cheats who have never worked, are not actually getting any benefits at all. Ian Mulheirn: It is worth looking at the gap between ILO unemployment and the claimant count. There was almost no gap back in the mid 90s. Successive governments, particularly over the last 15 years, have tried to get people off JSA, basically, and to get those rolls down. That has led to a divergence of people who, as you say, perhaps have other means of support, and perhaps are not claiming so much anymore. You end up with this situation where the ones you are putting on programmes are only a subset of the real group of unemployed. Q61 Glenda Jackson: This section is on the prime contractor model and its impact on subcontractors; in the main you have already answered it. Essentially, is there any evidence to show that voluntary sector subcontractors were used by the primes as a kind of bid candy that they stood a better chance of getting the contract if they could produce this kind of supply chain from the voluntary subcontractors? We are hearing from those subcontractors you have said it yourself that they are simply not being called upon to do anything at the moment. Ian Mulheirn: I would not be able to give a definitive answer to that question, but there is probably some of that going on, and lots of people seem to suggest that there is; but also, because of the fact that, as Tony said, this has become mainly a JSA programme, the flows on ESA have been much slower. That has meant that the kind of jobseekers who specialist subcontractors might have expected to be getting just have not been coming, so Q62 Glenda Jackson: But part and parcel of the initial awarding of the contracts by the DWP was surely that the people who won those contracts assured the DWP that the hardest to reach were their target client base. They are not delivering on that. You have just said they are not delivering on it. They are concentrating on JSA. 5 International Labour Organisation one of the standard measures of unemployment

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Work and Pensions Committee: Evidence Ev 17 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson Ian Mulheirn: My point was just that there are many fewer ESA claimants than we expected there to be, so it is not surprising, in a sense, that many of the specialist providers are saying, Hang on. Where are our jobseekers?, and the primes are saying, Well, we haven t been sent any either, so we can t send you any. There is some of that going on, and stripping out the bid candy versus the flows issue Q63 Glenda Jackson: You mean they said to the DWP, Look, we re in the perfect place to assist the group of claimants that you are most concerned about I ll use IB because that is what we were told about and now they are sitting there saying, Actually, none of these people are coming through the doors to us. There is no obligation on any of these contractors to get out there and look for the group of people that they told the DWP were going to be their prime targets to help. Ian Mulheirn: It is up to Jobcentre Plus to Glenda Jackson: Oh, so it s Jobcentre Plus, is it? Tony Wilson: Not only is there no obligation to find volunteers. Even if they do, they have at best a 50:50 chance of seeing them, because they are randomly allocated, so in many ways there is a disincentive to go and find volunteers, because you might find a whole load of work-ready people and find they are all with your competitor. This has been part of the problem. I will just make three quick points. Partly, it is about the evaluation. Roy probably wants to talk about that. There has been much less spot-purchase provision. The evaluation has also suggested that providers were reluctant to refer people to spot-purchase provision, on cost grounds often. The second point, which leads on from that, is that part of this is about the contracts that organisations signed. That itself is a consequence of the speed with which the programme was commissioned, which was too fast, I think, and did not allow for voluntary sector organisations to have a strong hand in negotiations. In addition to that, the DWP code of conduct on procurement, which has existed since 2008, should have, could have, provided some of those protections, but was not enforced as fully as it might have been. The third issue is that part of this is a consequence of less money being in the programme. That is one area where providers appear to be cutting costs. There is another point related to this, and it is worth bearing in mind. The DWP were saying that the voluntary sector was delivering one fifth 20% of Work Programme provision. The previous Minister for Employment made this point a number of times: 20% of provision is being delivered by the voluntary sector. If you roll back a few years to 2008, the Third Sector Task Force, which was chaired by David Freud and by Tony Hawkhead, the chief exec of Groundwork, found that one third of provision was being delivered by the voluntary sector at that time. So the voluntary sector, even on the best estimates, has seen its market share fall by a third in the space of three or four years, in a shrinking market. Q64 Glenda Jackson: But the voluntary sector are telling us that the primes are taking too big a share of the money, so there is no money to pass down to them. But the primes are not actually delivering on those contracts. Tony Wilson: There is the point, though, that inevitably you will tend to hear from the voluntary sector providers who are having difficulties or issues. I do accept that that does appear to be a significant issue and problem, but there are many voluntary sector providers who are in the Work Programme I have spoken to many of them and who are doing a very good job. Q65 Glenda Jackson: I am sorry: I am not being clear. The question I am really trying to ask is this. The voluntary sector are saying that the contractors are keeping too big a share of the money to start off with, and you have told us that the bulk of what they are doing is with JSA, yet we were told by the DWP that those contracts, when they were awarded, had, as a sizeable part of their winning those contracts, their commitment to work for and on behalf of the hardest to reach what we call IB claimants. This clearly is not happening, so what should the DWP be doing about it? Surely these contracts should be taken away from these people. Tony Wilson: The volume of ESA claimants is onethird 34% of the level that the DWP envisaged, and this is at the root of a large number of these problems. So the DWP need to do two things. They are trying to increase the volumes of the hardest to reach that enter the Work Programme. They will also need to look at how far providers are delivering what they said they would, in terms of engaging with those organisations and those contracts that they said they would and delivering the services they said they would, which comes back to where we started minimum service levels and how effectively those have been enforced. Q66 Glenda Jackson: No, it does not come back to minimum service levels at all. It comes directly back to commitments that were made by the Government on how they were going to spend public money in this area, and a bidding process for the contractors, who agreed with the Government that that was going to be the target. We had them sitting in front of us and they told us that they were going to cover the whole range, whether it was mental or physical ill-health or whether it was the kind of illnesses that fluctuated one thing and another. That was their prime target. Tony Wilson: And they should be held to that. I absolutely agree. They should be held to deliver what they said they would do in their bids, and what they said they would do in front of you. Part of the issue has been that those people are not in the programme, and part of it has been: where they are on the programme, are they delivering those services? I absolutely agree; there is no disagreement there. I do think there remains a broad issue about the role of the voluntary sector in the Work Programme and how that compares with previous programmes. The voluntary sector are playing a smaller role in this programme, and I think that presents a whole range of its own issues and problems. The voluntary sector are not always perfect and they may not always be

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Ev 18 Work and Pensions Committee: Evidence 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson best, but we are seeing less specialist provision. That was predicted before the Work Programme was commissioned, and I think it is a big problem still. Professor Roy Sainsbury: The evidence of the research we have carried out so far just backs up what you have said. There is less use of the subcontractors, the specialists and the spot providers than we expected. When we look for explanations, it comes back to Graham Evans s point that the poor performers will always come up with I love your phrase Billy Bullshit. There are always reasons why we are not using specialist and spot providers. We have it explained to us that it does not make economic sense to us, as a prime, to do this, so we bring the work in-house. That is when you get the specialist providers making those very comments: They are taking all the money themselves. Yes, the evidence so far is that that has happened. Q67 Glenda Jackson: Are the stats there to prove that? Professor Roy Sainsbury: I do not think that the stats come from our research. Q68 Glenda Jackson: But should they be there? The contractual obligations, surely, should be part of the public Professor Roy Sainsbury: It should be possible to find out how many of the people in the supply chain actually got things. The survey of participants we are carrying out is asking them, What have you had? Who have you been referred to? That will furnish us with quite a lot. I think we will find my hypothesis is not a lot. That is what has come out of the qualitative work we have done so far with participants. Very few have got that sort of specialist provision. Q69 Glenda Jackson: So, essentially, one of the main targets that the DWP told us of the Work Programme was the hardest to reach. These specialist organisations are not being utilised for those specialist groups, so it ain t going to work. Professor Roy Sainsbury: Not at the moment, no. Ian Mulheirn: I think the broader point about not so much the third sector but the subcontracting tier whether private, third sector or whatever is that those who are in and are getting referred people are taking on a huge amount of risk. When we look at the invitation to tender, that document explicitly prohibited organisations with a turnover of less than 20 million from bidding. The reason for that was sound; it was that this is a risky project and if you do not have a big enough balance sheet, you cannot carry out risk. But now what we are seeing is that, for three reasons, these large organisations are because there is no money in the system, there are no jobs passing that risk on. First of all, many of them are taking the easier people who are closest to the labour market and referring on the harder to help. That was always intended, but it does mean that you are very unlikely to get any outcomes for those people, and certainly not quickly. The second is that there are not very many people being referred. If you are a specialist you have only got a small number of people, and there is a very high risk that you are not going to get anyone into a job and, therefore, that you will get no money at all. The third is the terms. The proportion of the payments based on outcomes that is going to the subcontractor is higher, in many cases, than the proportion of payment on outcomes that the DWP is offering to the prime, so the prime is taking less risk even though it was there explicitly because it could bear more risk. We have got this inverted system where the prime, instead of being paid to bear risk, is just delivering a contract management service, and the subcontractors are taking on risk when they were explicitly prohibited from bidding for the prime contracts because they could not bear that risk. The system is a bit upside down at the moment, and that is the thing that DWP needs to look at if it is not completely to wreck the innovation of the subcontracting layer. Q70 Chair: Can I ask about onflows coming into the Work Programme from the ESA WRAG? The Government have changed the mandating, so anybody who has a 12 month prognosis will be mandated. On the surface, we could say that is good news for the voluntary sector because they might get some of those people. But, actually, those people are going to be even further away from the job market than the ones they are getting at the moment, so the chance of getting them into work is even less. They end up with a lot more referrals but of people they will not be able to do anything with because they are too ill. Even by Jobcentre Plus s analysis they are still at least 12 months or more away from being work ready. Tony Wilson: That is absolutely right. Essentially, the proportion going to get jobs is likely to be lower and therefore the unit funding is likely to be lower. Therefore the risk is greater, as Ian said. Q71 Chair: Can I ask just one question about the Merlin standard? We heard a lot about that when we were doing our last report, and how it was going to solve everything and protect the subcontractors and the supply chain. Is it? Is anybody doing anything with it? Tony Wilson: Merlin is doing what it was established to do, which is to ensure that providers have followed the contractual terms that they said they would and that they have met the code of conduct set by the Department. It is doing some good work around some of the more proactive sharing of practice and setting standards for the future. What it is not is a proactive regulator of supply chains. If we want it to have that role and I think there is a strong argument for that for it to be successful, it needs a code of conduct that has the teeth to give it things to regulate and enforce. The reality is that if a subcontractor signs a bad contract, they are in trouble, whichever way you cut it. Merlin will never address that. Chair: That was one of the points we made in our recommendations. It really needs teeth. Have colleagues got anything else they would like to ask? Q72 Nigel Mills: Can I just ask one quick probably difficult question? Is there anything that you think

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG01 Source: /MILES/PKU/INPUT/028832/028832_o001_db_Corrected WPC 19 12 12.xml Work and Pensions Committee: Evidence Ev 19 19 December 2012 Ian Mulheirn, Professor Roy Sainsbury and Tony Wilson DWP needs to change urgently with the Work Programme to stop this going off the rails? Do you think it is a case of hoping the economy is better for the next year, things should tick along and it ought it work as planned? Tony Wilson: If I go first, briefly. I don t think the Work Programme will go off the rails. I just don t think that, without change, it will be the tearaway success the Government were claiming it would be 18 months ago. The change that I would consider making would be to recognise the fact that funding per person is lower now as a result of the recession, potentially significantly lower. Identify the level of that shortfall, if you like, and think about ways that you can localise that funding: put it in a dual key in the hands of local partners, City Deals for example, Local Enterprise Partnerships (LEPs) or, indeed, local authorities, at local level. Let them and the Work Programme Providers work out how they want to spend it, to do additional stuff that would not have been done otherwise. That would be exactly the sort of stuff that providers at the moment can t afford to do because they have had to cut costs. That would be what I would do. I would also use it to address the fact that there are areas of the country where the economy is far weaker and those are the areas that we should target. I would do that as well, by the way, with the Youth Contract money. When I appeared on the Youth Contract inquiry, I said, Give it to Work Programme providers. I have changed my mind now and say, Give it to the city deals and let them sort it out, and let them combine it with other funding. Ian Mulheirn: Tony is absolutely right. There will not be evidence of it going completely off a cliff, because providers can just cut their spending at the front line. The profit maximising thing to do here is to spend absolutely nothing and wait until some people get a job of their own accord and take the money for free. That is the way the system works. You won t see anything going off the rails. But, if you want to have a decent service that will stop people becoming long-term unemployed once the good times return, you need to ensure that there is a service provided somehow. I think Tony is right that you need to use the shortfall in money the Government are unexpectedly saving and reinvest it in some services somewhere in order to try to keep people attached to the labour market. Professor Roy Sainsbury: I would sit tight for at least another year. However, if I were DWP, I would start to think about the differential payment regime and start playing around with alternatives, and I would start to think about the possible consequences and implications of the loss of the attachment fee. It has been a complete buffer and cushion that has kept the whole thing going so far: 400 per claimant, 300 per claimant, nothing. That is going to have a big impact. It possibly needs to be re-thought. Q73 Graham Evans: I think we should look at the LEPs and the Chambers of Commerce, the point I alluded to earlier. If you get people who know the local businesses getting involved in this, I think that is the long-term future. That is the local knowledge rather than the DWP based in bloody Whitehall and down south. Get those regions on a local basis that can match the long-term unemployed to businesses that are looking for new workers. That is the longterm view. Professor Roy Sainsbury: I think you are right. In the end, you have got to match up what the Work Programme does, which improves the labour supply a lot, with the demand for labour: where it is, what is required. Stephen Lloyd: Within that, if I could make one point. One of the good things in the system is that you will be able to see within your local areas which of the primes or subs are doing better than the other. When they come up the next time or in two years I can t remember exactly when I would expect the more successful contractors to get a very hefty bonus by having more of the ESA and JSA claimants sent their way. Chair: The more difficult ones. Stephen Lloyd: Reward success. That is part of the process. One of the good things that I think will be an asset is that success will be rewarded, though it is very challenging. Chair: May I say thank you on behalf of the Committee for coming along this morning? It was very interesting and illuminating. Your evidence will be very useful to us.

cobber Pack: U PL: COE1 [SE] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Ev 20 Work and Pensions Committee: Evidence Wednesday 30 January 2013 Members present: Dame Anne Begg (Chair) Debbie Abrahams Mr Aidan Burley Jane Ellison Graham Evans Sheila Gilmore Glenda Jackson Stephen Lloyd Nigel Mills Anne Marie Morris Teresa Pearce Examination of Witnesses Witnesses: Paul Anders, Senior Policy Officer, DrugScope, Sophie Corlett, Director of External Relations, Mind, Laura Dewar, Senior Policy and Parliamentary Officer, Single Parent Action Network, Duncan Shrubsole, Director of Policy and External Affairs, Crisis, and Robert Trotter, Senior Research Officer and Public Policy Advisor (Employment and Skills), Scope, gave evidence. Q74 Chair: Order, order. Can I welcome you all here this morning? This is our second oral evidence session looking at the claimant experience of the Work Programme. Can I thank you very much for coming along? Before we get into the questions, can I ask you to very briefly introduce yourselves and the organisations you are from? Robert Trotter: My name is Robert Trotter. I am from Scope, the disability charity. Duncan Shrubsole: My name is Duncan Shrubsole. I am from Crisis, the homelessness charity. Laura Dewar: My name is Laura Dewar. I am from the Single Parent Action Network, a Bristol-based charity that has a national reach. Sophie Corlett: I am Sophie Corlett. I am from Mind, which is a mental health charity. Paul Anders: I am Paul Anders. I am from DrugScope, which is the membership organisation for the drug and alcohol sector. Q75 Chair: Thank you very much for coming along this morning. What we are keen to hear about is the experience of your clients, members or the people you support when they are engaged in the Work Programme. Can I just begin with a more general question about the relationship between Jobcentre Plus and the Work Programme providers? The initial report of the Work Programme evaluation concluded that despite an aspiration to deliver warm handovers from Jobcentre Plus to the Work Programme, participants often initially had a poor understanding of what the Programme was about, why they had been referred to it and what was expected of them. Is that your experience and, if it is, how prevalent a problem is it and what could you do about it? Sophie Corlett: Yes is the short answer. People find that they are not really sure what is going on when they are in the system. Their experience of it is that it is quite a harassing, bullying system. They have gone through the WCA 1, which for many people with mental health problems is extremely stressful. It feels very adversarial. They come to a Jobcentre Plus; they end up in the Work Programme. They are not really sure what is expected. The first conversation with the provider when they appear in the Work Programme is 1 Work Capability Assessment around sanctions. People do find it very disorientating. They are not quite sure what is expected. The public expectation is that this is something that is going to help you find work, but that is not how it feels at any point. Yes, I think it is very disorienting, and it does not really set people up in a way that makes them best placed to be positive about looking for work. Duncan Shrubsole: From the perspective of homeless people both working with them directly and researching with other charities this issue about Jobcentre Plus is central to what is happening around the Work Programme. People s needs are not being adequately assessed either at Jobcentre Plus or when they first go over to the Work Programme provider. Information reaching one is not being passed on to the other. For homeless people, it is particularly important, because like ex-offenders and some other groups they are potentially an early entrant group. If they are identified as homeless, they can get more support in the Work Programme. Instead of around 4,000 a head it would be 7,000 a head. That completely changes what the Work Programme conversation could be and what the offer will be. We have even had examples of homeless people who are sleeping rough on the streets not having it picked up in their assessment that they do not have anywhere secure to stay. They are being passed to a Work Programme provider who does not understand that either and are getting a much more standardised offer, when the whole aim of the Work Programme was to get a more personalised offer. This issue about the identification of people being homeless is an issue with the Work Programme. More broadly, however, we have also done a lot of work with Jobcentre Plus, particularly in City and East in London, where we helped them to try to understand who is homeless, what the hostels in their area are and what the services are to try to identify homeless people for the Work Programme and other services. There is a real lack of training and skills on the ground, with a lack of direction from the top: Jobcentre Plus should make this a priority. At later stages in the process, this lack of communication is coming into sanctioning as well, where poor information flows between the Work Programme and Jobcentre Plus mean that people are being

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Work and Pensions Committee: Evidence Ev 21 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter inappropriately sanctioned, often at the very first stage. Chair: We have some questions on that later. Q76 Sheila Gilmore: My office was told on reasonably good authority although I do not believe everything we are told that one of our local Jobcentres was only giving every person with an employment advisor a four-minute slot to come in and talk about what they have done and where they might be going. You may not know the answer to this and maybe we will ask Jobcentre in due course but is it your experience that people get enough time initially with JCP for these sorts of things to be done? If you do not know, it does not matter. Duncan Shrubsole: I cannot comment specifically on the four-minute thing. However, no, I do not think enough time is being spent to assess needs. This is a problem that is happening throughout the chain. From research that we did with St Mungo s and Homeless Link, 58% of people said they were not getting their needs adequately assessed by their Work Programme provider either. This assessment of need is crucial and it is not happening at the start of the process, whether by the JCP or by the Work Programme provider. Q77 Stephen Lloyd: A very specific aspiration of the Work Programme is for JCP to do what the Chair called a warm handover with Work Programme providers. That is a very specific aspiration for the very reasons you are saying. In all of your experience, very briefly, are you telling me that within your client group that is tending not to happen between JCP to the Work Programme? Paul Anders: Broadly speaking, from my experience and the experience of my colleagues, it is not happening. If I could just expand a little bit to put forward some reasons why I believe that may not be happening, there certainly are concerns around caseloads. This is about how practicable it is to do that warm handover. I am not sure what the caseload is at Jobcentre Plus, but certainly, from the Work Programme provider angle, caseloads of 200:1 are not that unusual. There is a capacity issue in providing those warm handovers. To say a little bit more about that, where people with histories of drug use in particular are different is that there has been some work to try to encourage closer joint working between drug treatment providers, Jobcentre Plus and Work Programme providers. That has come from work done jointly by the NTA 2 and the DWP. It is a problem that has been acknowledged. Looking at the original protocol that has been in place for some years and the new one that came out towards the end of last year, however, we are starting to see a little bit of movement and a little bit more communication happening. I would not want to sound overly positive about that, however, because it is very early days. It is something we will be paying close attention to. The early signs are mildly encouraging. If I could also say a little bit about disclosure: this was something that Duncan touched on. Again, 2 National Treatment Agency notwithstanding the NTA protocol, this is something that we are seeing as a very major problem within the drugs sector. I would echo much of what Duncan said. There is an issue with the skills, ability and time available to Jobcentre Plus advisors to have the kind of communication that enables somebody to disclose. There is a second issue relating to the disincentives to disclose. I would acknowledge the positive messages being sent out by Jobcentre Plus about people being able to disclose and receiving a more tailored approach. People s experience has shown this is often not the case, which makes people reluctant to disclose. Particularly for drug users, it raises issues that they may actually be disclosing something that relates to criminal activity. They may also be disclosing something that may be of concern to people who are parents or have caring responsibilities about social service interventions and so on. We need to recognise that people are probably balancing the encouragement that is coming from Jobcentre Plus and the Department for Work and Pensions against the very strong disincentives that militate against that. Q78 Stephen Lloyd: Thank you, Paul. Very briefly, Laura, before it goes on to Adrian, in your experience from your group, is there that warm handover or not? Laura Dewar: I based my evidence to the Committee although I have a wider context of the work that I do with single parents on a study that I did towards the end of last year, where I interviewed 16 single parents. Over half of them talked about the problem of the lack of co-ordination between Jobcentre Plus and the Work Programme. I only had one example of someone who thought it was particularly positive that before they transferred over they saw a lone-parent advisor at the Jobcentre who updated their jobseeker s agreement before transfer. They saw that as very positive. As a group, single parents are different in that, as well as being a jobseeker, people have responsibility for a child. There are inbuilt lone-parent flexibilities, which, although they are called lone-parent flexibilities, are actually about the wellbeing and the protection of children. For instance, these might be around the hours that someone can work or being able to turn down a job if there is no suitable childcare. Actually, the co-ordination between Jobcentre Plus, having good action plans and having those translated over to the Work Programme is incredibly important. I have examples of the Work Programme not taking account of those flexibilities. There is an issue about children s wellbeing because of that. Q79 Mr Burley: I wanted to follow up on Paul s point about disclosure with Duncan. You can understand the reasons why drug users might be reluctant to disclose that sort of information, but it almost beggars belief that it would not be picked up that someone was homeless. I was wondering if you could give the Committee a bit more information. Presumably this is a question that is asked at the initial stage. There are address boxes on the forms. Why do you think such a basic issue is not being picked up?

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Ev 22 Work and Pensions Committee: Evidence 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter Duncan Shrubsole: You would think so. One of the things is that on the address box people will put down the address of a hostel, but Jobcentre Plus will not recognise that it is a hostel. I can say that we have done some training with Jobcentres where they thought there were two hostels in their patch and we told them there were 20; they did not know that. Again, it goes beyond the Work Programme; it is actually about Jobcentre Plus understanding the locality people are in. That can include mental health projects; it can include homeless hostels; it can include a range of things that are indicators. There are not standard questions that say, Are you homeless? The reason why this is important, as I said before, is because they can have access to the early entrant group. It is also about understanding unstable accommodation or expensive accommodation that is high-rent because it is supported accommodation. Those are key factors shaping someone s ability to move into work, never mind other issues they may have. It might be tackling mental health, substance misuse or whatever, associated with their experience of being homeless. Again, many people who are homeless do not want to go around shouting about it. If this is a conversation about going back to work, they know their experience of approaching an employer and saying they are in a hostel, they are in unstable housing, they are getting by on someone s floor or they are actually sleeping rough is not going to get them a job either. That is why the whole purpose of the Work Programme was supposed to be personalised, tailored conversations by skilled people who would tease out some of the barriers there are and put in place the right support to help people tackle them and put them on a positive back-to-work journey. That is what is needed, but even some of the basics like the right forms or asking the right questions are not happening either. Q80 Chair: We have more questions about the minutiae of how the Work Programme works coming up later. Large numbers of people who have been referred to the Work Programme by JCP do not know that is what has happened to them. They have been told, You have to go and see this company at that address, or Phone this number. That is all the handover they get. I am saying this from my own constituency caseload, where we get phone calls in the office and people say, We have to go and see this person. They have no idea why or what the reasons are. Is that too simple? Duncan Shrubsole: It is partly true. We were trying to do some research and we put posters up saying, Tell us if you are on the Work Programme. We had to put in six or seven prompts: have you been sent to this organisation? Did JCP give you this letter? Did they give you this one? People do not understand, quite often, that they have gone onto the Work Programme and how it is different. The only thing they may get is a letter, which lists that they might have a problem with their benefit sanctions. Robert Trotter: I agree with most of what has been said, so I will keep this brief. On the relationship between JCP and the Work Programme, one of the issues disabled people tell us is paramount is the lack of clarity amongst DEAs 3 in the Jobcentre Plus about which scheme is appropriate for whom. There will be clients for whom the Work Programme is not the most appropriate form of employment support. There are other schemes out there; there are things like Work Choice. DEAs are not quite sure about who to refer when. Some kind of gateway mechanism would be extremely welcome, in terms of placing people on the appropriate scheme at the appropriate time, firstly. Secondly, another issue is addressing the question of information and addressing the idea that people are not 100% clear on what it is they are going through, who it is they are going to talk to and what it is they will be asked to do. Addressing the issue of clarity about programmes and people s own understanding of the process that they go through would be extremely welcome. Chair: They might need a handy guide. Q81 Graham Evans: There is some evidence that Jobcentre Plus staff are not promoting the potential benefits of the Work Programme to claimants. Have you found this in relation to the claimants you represent? Do organisations such as yourselves have a role to play in positively promoting the potential benefits of the Work Programme? Paul Anders: As a second-tier organisation, we do not have as many conversations with clients as some other sorts of organisations do. Certainly, what we are hearing anecdotally is that it probably is not being promoted as well as it might be. However, turning to what our role in that should be, we have to think in terms of whether this is a programme we could realistically and responsibly promote. What the research we have done with service users is showing us is a number of risks, which can broadly be separated into the risk of being parked which is something we have seen quite a bit of and the risk of being placed in an environment where sanctions are applied more intensely than they might be in other environments. If you are asking whether this is something we can promote, we would like to see improvements in the Work Programme to better meet the needs of people who might struggle to engage before we could do that. Q82 Graham Evans: That is great; I am keen to hear the others. That is an entirely negative answer, if I may say so. If you are looking at what we are trying to do here, we are trying to get vulnerable people, in many cases, or the long-term unemployed into a job. You have the Work Programme, which has a lot of positives. I take on board some of the things about being parked and so on and so forth, but do you not feel that you as representatives have an obligation to say something? Yes, there are always going to be some negatives in anything anybody tries to do to try to help people. You might say, Yes, there are some negatives. I have heard some anecdotal evidence. However, these are the positives. Whenever you try to put the positives forward you will always get people who say, I have 3 Disability Employment Advisers

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Work and Pensions Committee: Evidence Ev 23 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter tried this and I have tried that. You might say, Always look at it as if the glass is half full. There are positives in there. If you go through this Work Programme, let us know if there are any negatives and we will make representations on your behalf but for God s sake, at least give it a try. Do not use the negatives and the anecdotal information you have heard about as a barrier to stop people even trying to go through it. Paul Anders: If I could just respond to that, as an organisation we are entirely supportive of the line of Drug Strategy 2010, which views employment as being one of the routes into sustainable recovery. We are entirely supportive of that. We welcome the Government s recognition of recovery capital. We share the view that employment is something that everybody who is able to undertake it should strive towards. We also have to acknowledge that within the drug and alcohol sector there are programmes that sit outside the Work Programme that might actually be more suitable for people with that kind of history. In many cases, those programmes are delivering stronger outcomes than the Work Programme appears to be doing at the moment. I would not for a second want to give the impression that, as a sector, we do not see employment as a priority; we absolutely do. However, the reality is that we would want people to make informed choices. There are programmes like Addaction s NEXT, for instance, which deliver good outcomes. It may be that we might point clients who are able to join that programme in that direction. Duncan Shrubsole: The starting point for us, as Crisis, is that we are passionate about helping people who have been homeless into work. We think this is the long-term route out of homelessness, getting people back into society and giving people self-esteem and confidence. Our starting point is that we want to get people back into work. We come from a different perspective: we have a small Work Programme sub-contract, although the referrals are very low. That is an issue I might come onto later. We continue to run a series of employment programmes from our own resources, even though we did not win other Work Programme contracts, because we believe it is the right thing to do. Interestingly, the experience of our clients is that they are getting jobs through the services we are providing, not through the services that are provided on the Work Programme. At its worst, Work Programme providers have rung us up and said, We have discovered that you have got someone a job; can you let us know, because we will then claim the money. This has been the experience. Some 58% of people we surveyed said they did not just feel their needs were not assessed, but that they were not treated with dignity and respect by the Work Programme providers. Homeless people as a client group are not like others; they come with a range of issues and need more in-depth support, which we hoped the Work Programme would provide. We started out referring people on an early basis to it, but too often it is not happening. We want the Work Programme to work. Lots of government money is going into it. That should be the basis of doing it. We have advocated for clients. We want it to work and we advocate for clients for Jobcentre Plus, anyway. The challenge is whether it is actually getting people into work. There is a big question mark over that. We and other charities are continuing to do so outside of the Work Programme, because we believe passionately in the issue. Q83 Glenda Jackson: I am essentially going back to the question Aidan asked on the issue of people not knowing that someone was homeless. I accept both the point that Jobcentres Plus might not know the number of hostels in their areas and the issue of the caution of drug users towards actually laying that on the table. These people are not going into Jobcentre Plus for the first time in their lives, are they? What I am trying to nail down is that they must be regularly going into Jobcentre Plus; they are regular claimants. Where is the gap between the people who must know who they are and actually pushing them in the right direction? Are you finding that every time they go into a Jobcentre Plus it is a different face across the desk? Laura Dewar: Can I just say something about that in practical terms? Sheila Gilmore was talking about people seeing someone for a very short time. What tends to happen in Jobcentres is that people sign on with someone who is usually an assistant advisor. They will have a very short time with that person. What people should also have is an advisor. Those people have now become generalists. In the past there used to be, for instance, lone parent advisors when people were on Income Support. They would get very holistic support. It is much more generalist support now. What people mostly see is that every two weeks, when they sign on, the meeting is really short. There is an assistant advisor, who could easily be someone different every week. Q84 Glenda Jackson: So it is that fact that nobody really knows who anybody is at the moment. Laura Dewar: Yes. Q85 Debbie Abrahams: Mr Shrubsole, in terms of what you were saying before about programmes that you are operating getting good job outcomes and the providers hearing about that and wanting to claim, that is potentially fraudulent behaviour. Could you clarify that and what evidence you have? I would not say that it does not happen, but we need to be very careful about making statements like that. Do you have evidence to that effect? Duncan Shrubsole: Yes. A couple of individuals in question did a training programme though us and we took them on as employees. The Work Programme provider then got in touch with us and said, Can you give evidence of employment? We want to claim that as an employment outcome. Debbie Abrahams: That is very serious. Duncan Shrubsole: I would not necessarily judge it as fraud. The reality of what is happening on the Work Programme at all stages is that it is not quite the clear and comprehensive programme that was envisaged. People are being told that if they go on the Work Programme they are going to see somebody and they might not see somebody. We have had one client who was told, Don t come back until four months

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Ev 24 Work and Pensions Committee: Evidence 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter time, or they are seeing them once a month. It is not a very close relationship. Clearly, they are carrying on doing other things. We talked about high caseloads at Jobcentre Plus. Because of the extent to which referrals to the Work Programme are very highly concentrated on the JSA 4 end, which was not necessarily envisaged, there is not much money per client. They have high workloads and they want to get people into work. The DWP s research was clear that people are being parked. In a way, that is an entirely rational thing on the part of some of the providers. When people are getting help they are not necessarily being referred to specialist providers down the supply chain. Those specialist providers tackling homeless people within London, for example, have all withdrawn because they were not getting referrals. People are being referred to free courses and other things that are paid from Skills Funding Agency money or whatever. Your Work Programme provider will have a chat with you eventually. They might find out that you have a job; therefore, they want to claim that money. It is a symptom of the fact that in-depth support is not being provided for people. People who want to get into work are not going to sit around if they are not being provided with that support; they are going to work with other agencies that can. If people want to work, we want to help them into work and we are going to carry on doing so. Q86 Chair: However, the money does not follow them. Presumably, once somebody is contracted to a Work Programme provider that is it. It is almost like a form of bondage: they are there for two years, regardless of what happens to them elsewhere. Duncan Shrubsole: Yes. The money follows the chain. That is one of the challenges about the Work Programme. The chain of contracts is not following what the individual would actually benefit from. Q87 Graham Evans: If I may continue, Mr Shrubsole, you clearly see the Work Programme as not working in terms of the claimants you represent. You have experience of helping them get into employment. What would encourage you to link up with the Work Programme to perhaps change the Work Programme for the people you represent? How different would the Work Programme be with your claimants, if you got involved in it? Duncan Shrubsole: That is quite a lot of questions. Graham Evans: What would you do differently? You have criticised the Work Programme based on your personal experience, but what would you do? How could we encourage you to work with the Work Programme to make it work in the way you describe for some of these claimants? Duncan Shrubsole: One example is that we actually do have one small sub-contract in the North-East, where we were expecting 100 referrals and only had 20. I said we had a range of roles; we are part of the Work Programme in that instance. We are not getting the referrals through and we know that other agencies St Mungo s, Single Homeless Project and others wanted to work within it, did not get the 4 Jobseeker s Allowance referrals and have pulled out. Referrals are one of the challenges. The second challenge is the point I made about early identification. If homeless people are identified as one of the early-entrant groups, more money can flow so they should get more support. There is a big issue about the extent to which the Work Programme is based on benefit groups anyway, but also with the WCA process a lot of people with higher needs are coming along because they are on JSA, when actually they should be getting a level of support that an ESA 5 claimant might get. Again, more money flows. If you have more money, you would hopefully then be addressed to more support. Ultimately, the primes need to be much better at assessing people s needs and then building a programme around those needs to bring in the specialist contractors and others who can help them. What is happening in the Work Programme colleagues here will talk about other client groups is that rather than a tailored, personalised service it is quite a standardised process, which is also focusing on things like CV, job matching and job search, which are quite standard, generic out-of-work skills, not how we help people tackle literacy, debt, housing issues or mental ill-health as we all hoped and what Ministers promised when they established the scheme. Q88 Graham Evans: Okay. How would you change that standardisation? What would you do about it to cater for that for me, it is the American phrase: same meat, different gravy depending on the claimant groups. What you are saying is that it is standardised. How would you, as a group of people, help the Work Programme to change for the various groups you represent? Laura Dewar: Some of it is about identifying where things work well. In my written evidence, I gave three examples of where the Work Programme had worked particularly well for three single parents. One was provided with a really excellent service, but for all three of them it was about recognising that they were a parent and giving quite an imaginative service. Someone wanted to set up their own business: the Work Programme printed flyers for them; they paid the postage for that; they paid for that person to go to a job interview in another city. I think they did really amazing things. One of the roles of the work that I do is to show where things work well so that practice might be shared. I am unclear how that practice is shared and how it is dealt with when people get a very poor service. I am going to talk about that later, but I mean people who are actually turned away from the Work Programme because they have children. They cannot physically get to the offices of the Work Programme if they have children and then they are threatened with sanctions. That is obviously very poor practice, but that is going on. However, yes, I think there is a role in showing where things work well and where the Work Programme has worked well. I am more than happy to do that. Robert Trotter: From a Scope perspective, I would strongly take this back to the issue of assessment. One 5 Employment Support Allowance

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Work and Pensions Committee: Evidence Ev 25 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter of the things we are seeing is huge numbers of inappropriate referrals coming through: people who have been found fit for work who are a long, long way from work. The problem we have there is that people are coming through the Work Capability Assessment, which is a test that effectively assesses medical functional capability, rather than assessing readiness for work. For instance, the idea that if you can stand up in a shower for 15 minutes or something you are able to go into work seems inappropriate as a way of measuring distance from work. Actually, in terms of your question about improving the scheme, one of the things we could do would be to look at the Work Capability Assessment and look at if there is a way of introducing a distance from work test which looks at readiness for work. Chair: That question will be coming up. In fact, we are in danger of answering all of the other questions on our brief in this first one. Remember that we are supposed to be talking about Jobcentre Plus and the handover. Q89 Glenda Jackson: You said and we have heard this before that the primes do not refer to you. When they obtained their contracts, did they quote you and the other organisations you refer to as being people they would refer to? Did they include your names? Duncan Shrubsole: Where we had this sub-contract in the North-East, we actually entered it after the Work Programme was initially launched. It was a later negotiation. The core question is that when people listed who was on their contracts, there was not much differentiation in the public announcements between whether they were end-to-end specialist subcontractors or spot sub-contractors. A spot contract could be, We might use you to do a couple of job-coaching lessons or use your furniture workshop or whatever. Their name might have appeared, but, potentially, what they might offer would not be very in-depth. However, those spot contractors are not being used very much at all, because there is still an expense involved and many of the primes and the subcontractors want to use other, free courses instead. With sub-contractors, what is happening is that many of the people being referred to them might not actually be from the client group that they were set up to serve. One of the things that Crisis does is run a network, talking to over 200 small and specialist organisations across the country. Some of them have managed to make the Work Programme work, but you can effectively either make your sub-contract work or you can serve the client group you were set up to serve. Most people cannot do both, because the referrals you are getting are just whoever the prime has decided to send to you. You might be a disability charity, a homeless charity or whatever and they are sending you a range of people with a range of needs. You do what you can to help them with the best intentions and do what you need to do to meet your contract, but that will not necessarily be for those who you are set up to serve, which is homeless people, disabled people or whoever. Q90 Glenda Jackson: What I am trying to drill down to here is this: when we have asked the Government these questions and, indeed, we have done so in a variety of ways we have said the most vulnerable are the hardest to reach and get into work. We have argued that the primes have a responsibility to engage with those specialist groups, some of which you represent. That seemed to me to be contingent upon the primes being awarded the contracts. What I am trying to find out is whether they exploited you to obtain contracts. Now you have given fairly telling evidence they are simply parking the most difficult. Paul Anders: Could I possibly say a few more words about that, if that is okay? Unlike the homelessness sector, the drug and alcohol sector is quite well represented on Work Programme supply chains across the country. There are several organisations delivering in total about 35 contracts. Broadly speaking, there is at least one specialist sub-contractor in each contract package area (CPA). In a sense, we have quite a good overview of what is going on in terms of where the referrals are flowing to specialist organisations. This backs up what Duncan has said. For organisations that are delivering on a spot purchase basis, we have seen very low take-up of that. There is one organisation which had anticipated having around or possible a little bit above 1,500 referrals in the first year across several CPAs; it has received four. I have spoken to another organisation that is delivering end-to-end. What we are seeing there is something very different, which is a much larger number of referrals. Again, as Duncan said, these are not necessarily a good fit with their expertise. The one thing they have in common is that they are all a very long distance from employability and a long distance from the job market. You might see that as being quite rational behaviour on the part of a prime, because you outsource that risk, let somebody else provide the service at some cost and you hope that, at some point, a job outcome payment and sustainment fees come in. We are seeing a real mix, depending on what type of sub-contractor an organisation is. Q91 Glenda Jackson: The bottom line to all of this is that your client groups are not getting the absolutely tailored, flexible service that the Government told us they were going to receive. Paul Anders: We have not seen that so far. Q92 Graham Evans: Can I get back to the original question? How are you engaging with the Work Programme to try and get that tailored service for the people you represent? If I may, can I ask Sophie: what do you regard as good practice in terms of handover co-ordination between Jobcentre Plus and the Work Programme, based on the people you represent? Sophie Corlett: We would like to see this does not exist at the moment a really good assessment of what somebody would need in order to get back into work. What is it that is holding them back? Obviously, the WCA is looking at their functional capabilities, but if we are talking about someone with mental health problems it will be issues to do with confidence, anxiety and employer attitudes. Those are

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Ev 26 Work and Pensions Committee: Evidence 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter probably going to be the two big issues, as well as their mental health. We would like a proper assessment of that. We do find some Jobcentres Plus that are doing that. In fact, having done that they are thinking, This person is not appropriate for the Work Programme. They are encouraging or supporting them to appeal, sending them to a local Mind where they can get support to appeal, or they are sending them to Work Choice. One of the things we are finding is that at the beginning of every month the DEAs in Jobcentre Plus because you can only send a certain number of people to Work Choice every month are sending off huge numbers to Work Choice, because they realise that you actually get a better service in Work Choice than you do in the Work Programme. To have a little look about what that is about, it is about a specialist understanding of what an individual needs; it is about doing that in a much more supportive environment, so it is not couched in this sanction and mandation culture, which is quite difficult if you have a mental health problem, because, as I said, one of the issues is confidence. That is akin to a psychiatrist saying, Pull your socks up; it is your problem. That is not an encouraging culture. There is another thing as well. The best services for getting people back to work are based in health services, including IPS. There is a really good evidence base for IPS. They are dealing with people who have moderate to severe mental health problems. They are dealing with people in secondary care; that is not an easy group. Q93 Chair: You used the acronym IPS; what does that mean? Sophie Corlett: Sorry, that is Independent Placement and Support. It is a very radical approach. It says, Let s get somebody into the workplace very fast, within a month, and support them when they are there. It might not be full-time work; it might well be under 16 hours, but it is work. It is recognition that people want to work, they can work and that the issue is not to do with motivation but to do with confidence or employer attitudes. It is based in the Health Service and works very closely with the employers. The key thing that it does is integrate health and work advice. One of the things that the Work Programme does not really do is integrate that. People are getting different advice, a different message and a different service from health than they are from work. Q94 Graham Evans: What sort of communication and liaisons have you had with the Work Programme to make those changes you have just described? Sophie Corlett: We have tried to work with different providers. Some of them are trying to set things up. Some of them will have counselling support and all sorts of things. Rather than just being based on the goodwill of providers, part of the expectation could be that they integrate with the support somebody was getting from their GP, secondary care, psychiatrist or community care support. If that was part of the expectation for all the providers, it would make quite a significant difference. Q95 Graham Evans: Are you making representations to the Work Programme to put that coordination in place? Sophie Corlett: I would have to see whether my colleagues nod or not. Yes. Graham Evans: What I have noticed here, Chair, is that there are lots of good ideas and suggestions. The Work Programme is working to a greater or a lesser degree; how do you improve it? In anything one tries, a journey of a million miles starts with the first step. You can change it on its way, but you should perhaps not just say, This does not work; that does not work; we are going our own way. Rather, you might say, Let us look at the Work Programme. How can I improve it for the people I represent? You are doing this and not doing this. You could explore the ways that you can improve it. Sophie Corlett: We think it needs to be part of the system. At the moment, some providers are doing one thing and some are doing another. There is an assumption that Work Programme providers will come to this on their own. We have been talking to the DWP about making that part of the expectation. We have had conversations with individual providers as well. It is a system. Chair: We are getting bogged down. You are answering all of the other questions we have to come and everybody is asking all of the other questions that are meant to come up. This section was meant to be about the co-ordination between Jobcentre Plus and the Work Programme. We have all of the questions on the black box and everything coming up. Can I stop this discussion there? I am sure everyone will get a chance to say what they want to say later, but, Graham, you have a question on sanctioning and mandation. I will get you to ask that one; we will then move on. Q96 Graham Evans: Do you accept that mandation and sanctioning has a role in encouraging participants to engage in the Work Programme? Sophie Corlett: I would like to start on that one. I do not think it works as an encouragement for mental health. I used the metaphor before of a psychiatrist who is telling an individual to pull their socks up. For us, it has exactly that impact. We know that people with mental health problems have one of the highest want-to-work rates. They are very keen to get back into work but confidence and anxiety about their ability to do that are the issues. Sanctions and mandation, right from the beginning, are the wrong prescription based on the wrong diagnosis of what the problem is. The other problem that we find is that people are not looking into the reasons why somebody has missed an appointment. One person reported to us that they had been there in the waiting room, but their anxiety levels were such that, when somebody had been saying they were not there and that this was terrible and they would have to take steps, they did not even feel that they could say, I am here. They went away; letters followed. There is an assumption that people are acting in a particular way, which I do not think fits the facts. It does then have a negative impact on individuals and

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Work and Pensions Committee: Evidence Ev 27 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter precisely on this issue, on their confidence level to progress. We would like to see a different approach. Work Choice, where people are involved voluntarily, has much better outcomes. It seems to us there is a message there about sanctions. Robert Trotter: The issue around conditionality is whether it supports the policy intention of supporting disabled people back into work. The DWP evaluation of the Work Programme has found that conditionality and sanctions are making people s lives harder without necessarily making them more likely to meet the programme requirements, which implies that it is not supporting the policy intention. The issue with conditionality is that in supporting people back into work we have to focus on all the barriers they face into work, whereas the conditions and the sanctions are focused on one particular barrier, which is a lack of motivation. It is saying, If you are not motivated into work and do not attend the appointments, we will sanction you, rather than saying, What are the things that will help you? What are the things we can incentivise? What are the steps that we can take to reward you? The evaluation showed some clear themes of things that do work, which are things like: building human relationships between advisors and individuals; being able to involve users in their own journey back to work; or being able to say to a disabled person, What are the things that you would like to do? What are the things we can support you to do? How can we work together to make this work better? The third aspect, which is related to that, is actually finding a placement that meets the aspirations of the individual, rather than just finding any placement and saying, This is something you could do. Those things will help conditionality; it does not appear to be working at the moment. Duncan Shrubsole: Building on that, for the more than 300 people whom Crisis got into work last year, we used a positive coaching methodology, which was about saying, Where do you want to go? Let us help you aim for something. These are people who have often had negative experiences of education or previous employment. It is about saying to them, Where do you want to go? What are your aspirations? It is realistic, challenging and often uses tough love. It is about trying to achieve something positive, not just looking at the negative things that have happened. The research is clear: 77% of homeless people want to work now and it is 97% at any one time. Yet one fifth of them, in a year s operation of the Work Programme, have been sanctioned. The DWP s own research highlighted how many of those who had been sanctioned had been sanctioned because of confusion over the JCP-Work Programme relationship about when the initial meeting was to happen. There may be a place for sanctioning, but the evidence so far is that sanctioning has not been applied correctly and has not helped people; it has been more of a barrier. We have seen letters in relation to this. The first letter people have had from a Work Programme provider has not been, We want to help you on your journey, but of course you need to do these things. It has basically been, Hello. Turn up. If you do not turn up we will take your benefits off you. That is not the start of a helpful, productive relationship that helps people get back to work. As everyone has said, it increases anxiety, trepidation and an unwillingness to disclose because you think whatever you might say might be used against you. Actually, when people get back into work it is because they have been positively encouraged and supported to think differently, do differently and have aspirations to achieve, rather than thinking, What do I need to do in order to avoid a penalty? Chair: I know you have a lot to say and we do have your written evidence as well but I am going to move on, otherwise we will never get past the first section. Laura Dewar: Could I just give one case? It was something that happened at the weekend. We have an online forum. We have someone who has been sanctioned, who has an eight-year-old child. All of her appointments are either given at nine o clock in the morning or three o clock in the afternoon. Last Monday, she took her child out of school so she could make a Work Programme appointment. Her son is eight. Is that the point of a sanction? Do you want to encourage people to take their children out of school? I am sorry; I just had to say it. Q97 Stephen Lloyd: Let us move on to the black box. Quite a lot of this has been covered already, so we can go through it quite quickly. As we all know, the black box concept, which was taken from Australia, was supposed to be the silver bullet that would allow creativity, imagination and specialist providers who had expertise dealing with particular groups to play a key role in the Work Programme. Clearly what we are hearing indicates that this does not seem to be working terribly well. Let me drill down on a couple of questions, so that I can be quite specific. It will assist us with our report. In your judgement, do providers need to be free from the over-prescription from Government about the services they deliver, in order that services can evolve and be responsive to the needs of different claimants? Essentially, my question there you can answer it quickly because I have a more detailed one afterwards focused on the principle of the black box that you do not have over-prescription from the Government. Do you think that is a good thing or a bad thing in principle? Paul Anders: If I could say a couple of words about that: in principle, yes. However, the black box, in conjunction with incentives that are not necessarily aligned to somebody s needs and barriers and a complete absence of minimum standards, does create an environment in which people can receive an ineffective or, in some cases, completely lacking service. Sophie Corlett: We have heard enough disturbing stories to feel there needs to be quite a lot more transparency. It is one thing to have a black box to encourage innovation and encourage people to do new things although I am not sure we have seen anything particularly innovative, to be frank. Actually, the black box also means that there is a lack of

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Ev 28 Work and Pensions Committee: Evidence 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter transparency about how people are doing things. We would like to see a lot more about ensuring that people are treated with dignity and respect, that they are not parked and that that is much more evident to the outside world. Laura Dewar: The single parents I interviewed wanted some predictability. I do not think that that precludes innovation. In fact, some of the people who fared the best were the ones who knew exactly what was on offer. If they were not going to be seen as frequently, they would say, I will see you a lot over the time you have a job interview. It was really clear: there was predictability and an understanding of the basics around the service. Q98 Stephen Lloyd: Do you mean a very clear communication to each client of exactly what they were going to receive? Laura Dewar: Yes. Duncan Shrubsole: I agree with everything about the need for transparency and better diagnostic tools. The challenge is that the black box is being asked to do two different things. There is one thing that says, We as the Government ask you as the provider to do whatever is best to get someone back to work. If that flexibility was there in reality it would be good, but with the black box the Government is actually also saying, We give you, the prime provider, the ability to devise whatever supply chain you want. If you were going to a disability or homelessness charity and saying, Do whatever you want to get people into work, that would be one thing. However, the black box has meant the prime provider based on, as Paul said, a payment mechanism that is not supporting the most disadvantaged into work is being left to devise the supply chain. What they are doing is hedging the risk they put in; they are working with the easiest to help. They are behaving entirely rationally in that black box to protect their income stream, their contract and all the rest of it. That is not the same as giving a black box approach to the client on the ground. We have ended up confusing two things: a flexible approach to help our client with an individualised, tailored response, and a hands-off contracting where the DWP says, We do not want to individually sub-contract like we used to. Q99 Stephen Lloyd: In a sense, one of the challenges for you as groups representing clients with particular challenging needs is that you understandably would want a minimum standard. I can appreciate that. By the same token, you would want an element of transparency so you could see what works within a black box and what does not. The problem with that is that the direction of travel eventually means that we will not have a black box; we will just have a set of minimum standards and guidelines that we all adhere to, which means we will lose the creativity. Maybe another way of looking at the black box is to say, Forget all that. The only thing that counts is the outcomes with the hard-to-reach groups. Maybe another way to set the creativity of the black box concept free would be to say, Forget about minimum standards; forget about transparency; forget about that. What counts is getting jobs for 75 homeless people or people with mental health problems by the end of the month. Is it perhaps sensible for us to go to that sort of creative extreme? Otherwise, all the things you are describing, which I understand are wholly about minimum standards and transparency, mean that you actually do not have a black box concept. Robert Trotter: That is an extremely interesting point. The issue for us around the black box is the question of accountability. How do you hold providers to account for delivering the services they intend to deliver for disabled people? One issue in terms of how we get around that is involving disabled people more. One way of allowing providers to have innovation whilst holding them accountable for meeting a central Government set of things that need to be done would be to devolve the question to disabled people and involve disabled people more in the initial planning process about what kind of support they will receive. Once that plan has been agreed with the disabled person, use that to hold the provider accountable. That would get around some of your issues, in a sense. Q100 Debbie Abrahams: I just wanted to get comments from other members of the panel on what Mr Shrubsole said, which was that a financial model is driving what is being provided, rather than it being innovative, flexible and person-centred interventions according to what the client needs. Is that what you would all agree with? Sophie Corlett: None of this applies to everybody, but this is certainly what we have found. One of the problems perhaps this relates to Stephen Lloyds s question as well is the system of payment by results even if you said it would be based on getting so many people into work or such a proportion because you would then go for the people either who are going to bring you the most income or who are easiest to get into work. So long as you could come up with a financial incentive that was sufficiently nuanced that it really did represent the amount of support and time you would need to spend on getting somebody into work, it would be fine. People are going to be motivated by whether they think they are going to be able to make a success of that individual client. They are businesses; it is payment by results. They are not paid if it does not happen. At the moment, the system is not that nuanced. Q101 Stephen Lloyd: If I could ask one more question, very quickly, to each of you again, if you would, because it feeds into the report, what would you define good employment provision looking like for the claimants you represent? Let us start with Sophie from Mind. By the way, Sophie, I would be grateful if you could send to the Clerk the information you had about IPS. I would really like to see that; I am very interested. Sophie Corlett: Yes. Stephen Lloyd: This is to each of you very quickly, because we have many more questions. What would you define, for your client group, as a good employment outcome?

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Work and Pensions Committee: Evidence Ev 29 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter Sophie Corlett: Do you mean a good employment outcome or a good employment service? Q102 Stephen Lloyd: I mean good employment provision. A good outcome would be a job. Sophie Corlett: Yes, a good sustainable job. I would go back to IPS, because what they do probably sums it up. It is integrated with health, which is not going to relevant for all the client groups. It is integrated with health and other needs such as housing, debt and other sorts of advice people might need. It is extremely ambitious on behalf of the person. It looks to their aspirations and is uncompromising in saying, Yes, you can get a job, and being supportive in that way. However, it is ambitious without being punitive. It assumes that the person can and does want to cooperate, rather than starting from the assumption that the person s motivation for a job might be low. It then builds on that; it is extremely successful within IPS. Stephen Lloyd: I will hold you there, Sophie. That is really good. I want to get everyone in. Paul Anders: In a sense, there is no great secret to it. Lots of organisations are doing it. It is a multidisciplinary approach. It is something that brings in health, psychosocial support and people who are skilled in supporting people to deal with other barriers they may have, which could also include housing. A lot of provision includes accredited training. Some agencies use something that is very similar to the IPS approach; others will do more to engage with key employers and support people through that. A final thing that is possibly of particular concern to this sector is staff who are, in effect, skilled intermediaries liaising with employers about the individual concerns they may have as employers about recruiting people with a history of drug dependency and, in some cases, criminal records. Laura Dewar: I would echo some of those points. Single parents are a very broad group. I was quite struck by the fact that quite a lot of the single parents I interviewed were perfectly well qualified. Many of them were teachers, social workers or psychiatric nurses. There was a whole range of qualified people. It was that there are not jobs for them to do around their children. Again, I would support working with employers. I know the local Partnership Agreements that Jobcentres Plus have are not as strong with the Work Programme providers. Those things take time to build up. For single parents who are not as skilled, it is about helping them in training. Some of them have not been in employment; they need a basic computer course. Also, it is about helping those who do have qualifications to work with employers and the public sector having a role in thinking about how jobs are designed. I had an example of a single parent who was a qualified teacher. The Work Programme paid for her to do a food hygiene course to become a dinner lady. In terms of conditionality in the longer term, although it might be some stepping stone to work I am not quite sure whether that is making the most of someone s skills. It is not going to help sustain them into the future. It will mean they have more contact, over time, with the Jobcentre. It is not going to help them sustain their family. Stephen Lloyd: I think this is about childcare provision and growing that but that is for another day. Duncan Shrubsole: I agree with everything everybody else has said. Crucially, you have to link an employer with an individual who wants to work and provide everything that is needed in the middle to tackle issues and motivate people to be able to go into a realistic job and make a success of it. One of the things we talk a lot about is that the Work Programme at the moment is very generic. There are groups of people, many of which we represent, who need some kind of pre-work Programme support. We need joining up between the skills agenda, the funding of that and what is going on in the Work Programme. They remain a perennial problem of Government. Those two bits of Government remain entirely separate. Lastly, going back to your earlier question about how we might see the Work Programme, the challenge is that Crisis, as an organisation not all would take this view has said, We believe in our employment services enough that we would actually go out and fundraise or seek money from other sources to get people into work and be paid by our results, by whether we achieve that. You cannot do that in the Work Programme currently, because the black box is a rigid box and a contracting line that people are pushed down. It is not payment by the results you achieve, in terms of getting people into work; it is payment by whether you do what was on your contract, which was all that was available. Stephen Lloyd: That is a very useful and important point. Thank you, Duncan. I know it will be noted; I have certainly noted it. Robert Trotter: I would also endorse much of what has already been said particularly Duncan s point about pre-employment support. I would make five quick points, if I may: firstly, good employment services give you time to build relationships with the client; secondly, placements that meet the aspirations of disabled people; thirdly, user involvement, i.e. getting people involved in defining the process they will go through and the modules of support they will receive. Stephen Lloyd: The Coalition is expanding Access to Work to include work experience and internships. I would assume you would endorse that heartily. Robert Trotter: I would absolutely endorse that. Fourthly, try to have a focus on non-employment outcomes. For a lot of disabled people, the Work Programme is medicalising people and saying, You have x amount of time before you will be better. Once you are better you will be able to get a job. For some people, voluntary work, work experience or work in the community are all real achievements and are of benefit to society. We should recognise that. Finally, there is the point others have made about wrapping services around the individual. I am thinking of things like social care in particular. Childcare is another excellent point. Q103 Jane Ellison: I would just follow up on something a couple of you mentioned about the liaison with employers, particularly with hard-to-reach

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Ev 30 Work and Pensions Committee: Evidence 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter groups or people who are further away from the world of work. A lot of employers the majority, I imagine do not really have a lot of insight into specialist needs. I wondered, as advocacy groups, how much work you actually do or contact do you have as different groups with employers. What medium is that through? Duncan Shrubsole: We put a lot of effort into working with employers, because we know they will be sceptical, ultimately, until they see the white of your eyes, as it were, and you can tell them, Actually, a homeless person can achieve things, this is the support we provide and they will be good workers. Here is an example of someone else who has done it before. That is the key to getting them into work. We have employer partnership events, where we get employers to meet potential clients. We do work placements and various things like that. One of the challenges about the Work Programme is that in some instances it has cut across what had become quite well-established relationships with employers. Partly, in this scramble for jobs, some areas have developed good vacancy-sharing arrangements that were quite open. Employers and organisations that might be best placed to do it would come. Now, people have said, That is my employer. Jobcentre Plus is keeping one set of employer relationships; the Work Programme is trying to do it separately; the charities are trying to do it separately. That is a real challenge. It goes back to the closeness of the relationships. If you have to use a Work Programme provider who only has one set of relationships and they are trying to get people into work, again, they are going to suggest to the employer the person who is more readily going to appeal and look like they are going to make a success of it. The homeless person, the drug user or the person with mental health issues are not likely to be pushed forward. We have to rely on doing it ourselves, to make the employer aware. Q104 Jane Ellison: You have employer events; that was one of the things you said. Sophie Corlett: We do a lot of work with employers. Employers are part of society; they share the same prejudices society has. One of the more recent and slightly discouraging findings we have had is that 40% of employers think that people with mental health problems would be a significant risk as an employee. We are quite up against it in that respect. We have two big campaigns. One is our Time to Change campaign, which we run in conjunction with Rethink Mental Illness. It is based broadly in society but has had and does have specific aspects that are based around employers. It is focused quite a bit on employers supporting people they already employ. One of the things we find is that employers think they do not employ anyone with mental health problems. Once they realise they do and that they are good workers, it obviously changes their attitudes towards recruitment as well. That is one of our pieces of work. Mind has its own campaign, Taking Care of Business, which works very closely with employers on developing their policies for recruitment, HR and management approaches, so they can work much better with employees within the business. That is where we are working generally with employers. Duncan or Rob pointed out earlier that when you are talking about trying to get someone into a job, it is about making a particular connection between that individual and that employer. It is about thinking through some of the practical concerns about that particular line manager or the particular flexibilities that that individual will need. All the work that Mind and other organisations can do with employers will not substitute for that individual piece of work that needs to be done with the individual when you are talking about trying to get someone a job. Laura Dewar: We do not do direct work on that, but we work with the Working Parents Group and do work to try to influence how jobs are advertised and the legislation about people starting work. At the moment, if you are starting work you have no right to request working flexibly, which is a big issue for single parents entering the workforce. We deal with those broader issues and also around the role of the public sector in how jobs are advertised. Some of it is a structural thing about jobs. Organisations like Women Like Us in London have done research on the part-time jobs that are advertised; they are the most poorly paid jobs. Only one in 17 jobs pays a pro rata wage of 20,000. Yes, you can do work with individual employers around saying, Why do you not advertise a job part time? However, it is a more endemic attitude about the quality of part-time work. Q105 Jane Ellison: Picking up on that last point, if you were advising someone, would you be a bit discouraging about going for one of those jobs that you thought was poorly paid? Laura Dewar: No, there is a role for jobs as a stepping stone. The overall policy about single parents moving into work and the whole principle around it was around addressing child poverty. There should still be a place for trying to make the most of people s skills. There is a balance. Yes, some jobs are a stepping stone. If the Government are looking at the longer term and whether they want to address the poverty of this group, I do not necessarily think if people are qualified teachers, social workers or whatever Q106 Jane Ellison: Would you advise them to stay on benefits? Laura Dewar: No, I would not. What I would want is more effort to try and design jobs better. A lot of these are public sector jobs that could be designed better. Maybe the Government should subsidise job shares in the public sector if they need full-time hours. Economically, that might be better and might help more families out of poverty than getting someone who is a qualified nurse to go into a very part-time job being a dinner lady. Q107 Graham Evans: Job shares are there now. My nine-year-old is at school and he has two part-time teachers. That is a job share. Laura Dewar: It is still the exception, though.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Work and Pensions Committee: Evidence Ev 31 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter Graham Evans: Personal experience. Q108 Anne Marie Morris: Stephen very sensibly asked you what good looked like, in effect, in terms of the experience of this black box. They do say that what gets measured gets done; the answers you gave to his question had some common themes, but clearly they were different given the different groups you represent. Is there any way you could articulate and describe what quality is? Could we and should we try to measure it? In some sense, this might get us away from purely looking at the finances, which is now actually the focus and the prime measure. Indeed, there was the suggestion Stephen came up with, which was looking at outcomes, as in whether someone got the job. Do you think this issue of quality is one that we could articulate, could measure and should measure? Paul Anders: Could I start off by saying that I am aware that in some similar systems in Australia, for example feedback from users of programmes is sought as a matter of routine? That might be one step towards addressing it, as would a broader approach to quality assurance. We are well aware of the evaluations of different sorts that are in place for the Work Programme, but my understanding is that they will pick up the experience of different groups as part of the process but that is not part of the intent. They are not in any sense a substitution for a different approach towards quality assurance. It is certainly something we would welcome. In terms of moving away from outcomes I say this entirely conscious that it is somewhat swimming against the tide for some customers, not necessarily entire customer groups but for some people within those groups, the reality is that it will take rather more than two years of what can be sometimes a very light-touch programme to move people into employment. I wonder if there might be some merit in looking at steps towards employment. I know this will start to look a bit like a minimum standard or a distance travelled model, but perhaps the Department should consider whether for some customers there would be value in that. It might move providers away from the feeling that if somebody cannot go all the way into employment there is not much point in doing anything, because it does not count. Q109 Anne Marie Morris: My concern is that then will end up being a financial measure, rather than a genuine quality measure. There is a difference between having a minimum standard and quality, if you see what I mean. I understand where you are coming from, which is trying to ensure there is progression that moves along the quality spectrum, but there is also ultimate quality. Paul Anders: Yes, I see what you mean. In a sense, there are two different aspects, aren t there? There are things you could do to try to drive quality and things you could do to try to monitor quality. Anne Marie Morris: They are not the same. Paul Anders: Yes. Q110 Anne Marie Morris: Do you have any suggestions for how we might do that? Apart from your stepped approach, how could you actually measure quality? Paul Anders: First of all, taking a very systematic approach to the customer experience, one self-described by the customers would be one step. Also, given that the Minister is now talking about a perspex box rather than a black box, the DWP could take more interest in what goes on inside, even it retains that hands-off approach. Q111 Anne Marie Morris: Your approach to this is very much getting feedback from the user groups. What about an independent assessor? I do not know whether you have some thought about that. Paul Anders: There have been in the past and there might be value to seeing if that could bring about some change in future. Anne Marie Morris: Might be, or from your view Paul Anders: From my position, there would be to be clear about that. Q112 Anne Marie Morris: Sophie, what are your thoughts on quality and whether we should measure it and how? Sophie Corlett: Should we measure it? Yes. How should we measure it? I do think it is difficult. The ultimate goal is for somebody to get a sustainable job out of it. There are interim points for people. This is a two-year programme, and for some people 16 hours might be something you have not reached yet or you might be in voluntary work. At the moment, if people do not think you can get there in two years, the incentive is to park you. It may be that they could get you into voluntary work and park you there, but at least you have gone a little bit further. There are these things about quality drivers and actual quality and how they intersect. An independent assessor might well be a way to begin to get to the bottom of what is happening and maybe to help understand those drivers a bit better and to adjust them so that they are more useful. I do think an independent role could be helpful, at least in that respect. One of the things about what quality would be and how you would measure it people might say that this is much too subjective for people with mental health problems one of the big issues for them is confidence. Something that looks at individuals satisfaction with the process and whether they feel more confident that they are able to get a job would be a genuine measure of their ability to look for one and project well in an interview and all of those things. Q113 Anne Marie Morris: In a sense, your measurement rather like Paul s is a staging approach and looking at the smaller and then increasing outcomes. What about the intervention itself? One of the comments Laura made was that there has not actually been much innovation here. Much of the same old stuff is being put out. In a sense, if we are just measuring the outcomes, is that going to help motivate the whole innovative piece, which is not there, to get some quality that is a quality not just of the outcome but of the tools we are using to try to raise the game. I do not know, Laura, whether you have any thoughts on that.

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Ev 32 Work and Pensions Committee: Evidence 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter Laura Dewar: Yes, it should be very much be rooted in the experience people have had. It would not be that difficult even now. The thing that worries me is that time ticks on for a lot of people and a lot of people are not having any intervention at all. They could be on the programme for two years; what is going to happen to those people? As a first measure, not that many people have moved into sustainable employment. Interview them; find out what works; be a bit positive about it. Q114 Mr Burley: What is your definition of sustainable employment? A lot of you mentioned that word this morning and I am not clear what sustainable is. Laura Dewar: There are different payment groups. If someone gets into work for six months they get a certain payment, and if they are in it for two years. Obviously, it will not have kicked in for some people. The current measurement is those who have been in employment for six months. Q115 Mr Burley: I am conscious that they get paid if someone is in work for six months, but is that your definition of a sustainable job? Duncan, you mentioned it earlier as well. Short-term shelf stacking in a supermarket would not be your definition of a sustainable job, would it? Laura Dewar: That is what they define it as. Q116 Mr Burley: You would not, however. You sort of laughed; is it that you would not define that as a job? Duncan Shrubsole: We think that any work, providing it is safe and legal, is good in terms of experience. At the moment, people we get into work will be doing all sorts of things. There is no snobbery about it. You get people into work; they can do it. Sometimes there are zero-hour contracts, because that is the nature of the game, or it might be two months or whatever. Q117 Mr Burley: Are you telling me that any work is good? Duncan Shrubsole: Yes, providing it is safe and legal, as I said. There is a lot of work out there that is not safe and legal, because it is for gangmasters and under the radar. Q118 Mr Burley: Laura was saying earlier that she would not encourage someone to be a dinner lady if they had been a teacher. That is still work. Laura Dewar: I was not saying that, and it is still work. What I am saying is that if the agenda is getting single parents to not rely on the state, tax credits and housing benefit, it seems very short term to automatically think that someone will go into a very low-skilled job when they have skills and qualifications. That is very short term. Q119 Mr Burley: Why? Is there not a dignity in work? Is it not good that they get back into the workplace? Could not being a dinner lady lead to them being a teacher again, working in a school? Laura Dewar: It is quite common. If a single parent is going to be a breadwinner in a family, they are going to be the person who is going to sustain that family into the longer term. I agree with you: lots of parents want to move into work and they see lots of very positive things in doing that about pay or being a role model for their child. I am just saying that you might be creating a time-bomb around conditionality for that group if all you are relying on is jobs that are advertised part-time and you are saying that people must take them. You are going to be much more restricted in the jobs you can apply for if you need to work part-time because you also care for your children. I am just saying that if the Government policy is around addressing child poverty, that might not be, in every instance, the best thing to do. Q120 Mr Burley: It is not just about income, is it? Laura Dewar: No, it is not. Mr Burley: There are other advantages to work: being in a workplace, meeting colleagues. Laura Dewar: There are programmes that have happened in America around sustainable work. They are about it being not necessarily work first, but about holding on for a job. For instance, I work with someone who was told this was not the Work Programme; it was the Jobcentre to apply for a job that was miles away from where she lived. She is a single parent; she has no other family support; she has a six-year-old child. She is a qualified graphic designer and that is what she did before she had her daughter. She was going to be sanctioned if she did not go for this particular job, which was an hour and a half away. She was very worried about it. In the end, she found out more from our organisation about some of the flexibilities that might be open to her around the hours that she worked and she stood her ground a bit with the Jobcentre. The Jobcentre and other agencies then worked with her and she now works in the art department of a school. It is a job that is near to where she lives and it is sustainable for her. It is sustainable for her because it is about her in the round. It is a job that has prospects. It does not pay as well as being a graphic designer and the job she used to do, but that is the sort of stepping stone job. Q121 Mr Burley: That is based on transport; that is different from the nature of the job. If the original job was too far to commute, that is different. Laura Dewar: It is a bit of both. Sustainable work for single parents is seen as being a more local job, being part-time and being a flexible employer that allows them to sustain that work. Otherwise, someone will cycle back to benefits. Sophie Corlett: I would just like to add a couple of things. For people with mental health problems there is lots of evidence that work is a really positive thing towards their recovery, but there is also good evidence that the wrong job is bad for your mental health. You do have to take into account somebody s mental health and what would be stressful for them, but also somebody s aspirations and abilities. Those are two things that can make a job even if it is legal and

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Work and Pensions Committee: Evidence Ev 33 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter safe not a good choice for you and not sustainable in the long term. The other thing for sustainability is that the job you do whether it is being a dinner lady or a shelf stacker might be sustainable if the support you get continues, so that when you have built up your confidence and you are a little bit better, the support is still there to help you to get to the next step. It might be working on the till; the next step might be that you eventually move into management or become chief executive of Tesco or whatever it is. Those things are available to you, but only if the support to you and to the employer continues so that they can see that just because you have a mental health problem it does not mean shelf stacking is all you can do. There are both sides to that. Shelf stacking might turn out to be absolutely the wrong thing or absolutely the right first step even if your abilities are way beyond that. Q122 Anne Marie Morris: Back to quality: you came out with five points, didn t you, in terms of what you thought good looked like. What is your take on quality? How do we measure it? Can you measure it? Robert Trotter: I would strongly come down on the side of user experience and perspective. Something is conspicuously absent at the moment from the evaluations of the Work Programme, as we have statistics that show the Work Programme is not working for disabled people. One in three of the people on the scheme are disabled people, but only one in five job outcomes are for a disabled person. We have those figures: they are pretty clear; they are pretty damning. We have the evaluations that have been carried out by academics, which are telling us some of these things. However, one of the things that is missing is a systematic way of collecting user views. Q123 Anne Marie Morris: What do you think about the independent assessor idea? Robert Trotter: There is potentially some value in that. The thing I am thinking of is the Work Capability Assessment. There was the Harrington review, which was an independent review. It went through three iterations and there are still problems in the Work Capability Assessment it is fair to say. The question in relation to an independent assessor is the leverage and bite they would have to make changes in the programme. Duncan Shrubsole: You are going to need a variety of tools. Minimum standards are one thing; people need to be clear this should not be a minimum people do not go above. At the moment, 58% of homeless people have not had any proper assessment of their needs and understanding. Distance-travelled tools are out there, which are not just about the progress you have made but also about the confidence the individual feels. Lots of organisations do client feedback. It should be there. It does not mean you mandate a single system, but you have a system that is verifiable and you report that to DWP and, crucially, to your clients and other organisations. Mark Hoban has started taking about progression payments when you are in work. That should be looked at in the pre-work journey, particularly if you are in a work placement or volunteering. There is the Merlin Standard, which DWP will probably come and talk about and say is really good. Glenda Jackson: They can t even define it. Duncan Shrubsole: There was supposed to be a framework. It should be used to look at the supply chain and see what is happening there. Ultimately, the DWP needs to do a bit more. They need to pick some areas and do some digging around and see what is actually happening on the ground open up that black box and see the woodlice crawling under the stones and see what is happening in different areas. In some areas, if there were poor performance they could take a contract and, effectively, a supply chain in-house to try to get a better sense of what was going on. They really need to understand more what is happening. We also need to look at the basic payment processes. Most of the referrals have been on JSA and have very high levels of need. You cannot do it all with payment by results, but what we have achieved with payment by results at the moment is not fine-tuned enough to recognise what is going on. You do need to look at that. Q124 Anne Marie Morris: I have one final question about complaints. An awful lot of people say the system is not working; why is the level of formal complaints, relatively speaking, so low? Laura Dewar: People do not know how to complain. In fact, they are not told how to complain. A lot of the single parents I interviewed, when they went to their signing on at Jobcentre Plus, would go, I am not happy about this. What do I do? They would be told, You are on the Work Programme; you are nothing to do with us. There is low understanding of how to complain. Q125 Chair: So you are saying that most people do not know that the Independent Case Examiner exists. Laura Dewar: No. Sophie Corlett: A lot of people with mental health problems do not have the confidence to complain. That is a big issue. People underestimate the impact of mental health problems in that respect. Some people actually drop out of the benefits system, which is probably chalked up as a success, sadly. Actually, the person just cannot interact with it anymore. Another very sad point is that when people are getting a very poor service, for instance, if they have been parked, some people with mental health problems are so grateful to be left alone by a system because of the WCA and that initial interaction that says, You will now need to do the things that we say because otherwise you will be sanctioned and have not heard anything further, the last thing they are going to do is raise their head above the parapet. That is very unfortunate, because it means we are not finding out the full implications of what is going on. Q126 Anne Marie Morris: What could we do differently? What is the magic bullet that is going to enable people to understand and make sensible use of that complaint process? Sophie Corlett: I have said this before: if you could take the initial bad experience out of the WCA, it

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Ev 34 Work and Pensions Committee: Evidence 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter would be helpful. If your initial interaction with the Work Programme was a much more positive one, it would be something people would have expectations of and want to be involved in. They would then feel motivated to complain when they were not getting what they felt they had been promised. Paul Anders: This does speak a little bit as well to the issue of minimum standards again. You can think about minimum standards in two ways. Should it be something that, in effect, comes from the DWP and all providers have to meet, or is it just the case of all providers being expected to provide their own minimum offer that they can be held accountable for delivering? As I am sure the Committee knows, each provider has done that but in some cases they are quite general and not very specific. It might be, You will have regular contact with a member of staff, which does not specify who, how or how often, for instance. As a bare minimum, it might be getting providers to work up their own minimum standards to something that is a bit more advanced and clearer, to which people can say, Hang on; I am not receiving this. Anne Marie Morris: I think that moves us on to the next section. Chair: Yes, indeed it does. We will move onto payment groups, which we have already covered, but I will leave Glenda to ask this question. Glenda Jackson: Can I raise one point, Chair? Chair: It was your question, Glenda. Glenda Jackson: I know, but this question relates to the previous exchange. I personally found it deeply, deeply unacceptable that Mr Burley implied that a single parent who was a trained teacher did not want to be a dinner lady because she preferred to be on benefits. Mr Burley: That is absolutely not what I implied, nor would I ever say such a thing. You are misrepresenting the previous discussion. Glenda Jackson: Could I point out that single parents work extremely hard? They have to be two parents, and that is work? Perhaps we should be examining the old, old requirement many, many years ago of keeping women at work but paying them a vast amount of money because of all of the jobs that they actually do at home. Chair: I think our witnesses were very clear in explaining that. Glenda Jackson: I just wanted it on the record. It is completely unacceptable. Now I will come onto my question. Q127 Glenda Jackson: This is for Sophie. You have said the payment groups within the Work Programme are too broad. Presumably you would like to see claimants classified differently; how would you do that? How many payment groups do you think would arise if that happened? Sophie Corlett: This is a really difficult question. Glenda Jackson: That is why we are asking it. Sophie Corlett: We have created a system that depends on a financial incentive, which potentially is the problem. We are going to start off with a system that is based on a financial incentive, which I do not know would be the way I would go. Q128 Glenda Jackson: You mean that payment by results would not be your chosen path in this way. That is what it essentially is, isn t it? Sophie Corlett: Yes. It is very difficult. Once you are going to give anything to a provider who is going to be motivated by the income, you are going to have to find a system that incentivises them in some way. The result is what the system wants out of it. We are stuck with that, but it would be good to look more at what the other mechanisms and drivers might be. This relates to Anne Marie Morris s question about how you mitigate some of the implications of that. I have not really thought about how many groups you would have, but what you would want to have is an assessment process that looked at and categorised people on a range of different issues, rather than, at the moment, focusing on a functional assessment of somebody s disability. It does not take into account confidence levels; it obviously does not taken into account skills and experience at working; and it does not take into account the difficulties people face externally in terms of employer attitudes. How you could put all of that into a system, I do not know. That would be a challenge for bigger economic heads than mine. Paul Anders: Could I say something very briefly? Glenda Jackson: Absolutely, you can all chip in. Paul Anders: I am aware that this was raised by some of the experts in the previous session. There might be some value in the Department looking at or potentially trialling an approach similar to the Australian JSCI, the Job Seeker Classification Instrument model, which, as the Committee may know, has been developed and refined over a number of years. I am not going to claim it is perfect, or that in its own way it is not without its own problems, but it is probably a more reliable indicator of needs, barriers and the amount of support needed to overcome them than this very crude, broad payment-by-benefit-type system that we have at the moment. Q129 Sheila Gilmore: I hope people who are watching this do not think people on this side of the room are not interested in the subject; it is just the way the questions have fallen that we have the second half and are now running out of time. If we had a test like that, who would do it? It is relevant to all of these questions. Is this something that Jobcentres should do? Should the Work Programme provider do it? If it then defines what money you get, should it be a Work Programme provider who does it? Duncan Shrubsole: Ideally, this is where you would have a warm handover. There would be a three-way between the Work Programme provider, the Jobcentre and the individual themselves. At the moment, as I talked about, there are higher payment groups such as the early-entrant groups, where you would get an extra 3,000 if Jobcentre Plus identified them properly; they are not currently. There is a challenge here that you do not want to do it completely with the Work Programme provider, because they might start finding barriers to work that were going to chalk up. It is going to involve time and effort, but a calibrated system with a range of individual payments reflecting

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Work and Pensions Committee: Evidence Ev 35 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter barriers and needs would ideally be done on the basis that Jobcentre Plus understand it and are clear, the Work Programme provider understands it and is clear and then the support they are referred to is the best support. The fundamental challenge at the moment is that we have said it should be a system based on need, but we built it around benefit types. The benefit type you were on does not necessarily reflect your need, particularly, because we have the WCA process as well. Potentially, the WCA process lands you not only in a category that is putting conditions around you to move into work, but you might actually be able to make it into work but you are not then entitled to the support that would allow you to do that because you are put under the JSA group rather than the ESA group. You cannot take away from the fact that this WCA-Work Programme interaction is a real problem for any system that relies on payment by benefit type. Sophie Corlett: I do not think Mind would want to see one assessment that covers both the benefit and the need. The level of anxiety that relates to the WCA process and will always do, even with a fantastic system, because it relates to someone s income is not a good basis for a good discussion about needs. Duncan Shrubsole: They still need to be separate. Paul Anders: We would agree with that as well. Q130 Glenda Jackson: That leads on very neatly to the next question. If the Work Programme does move away from classifying the claimant according to benefit type which you have already said is the wrong way round is it not going to become excessively complex from an administrative point of view? Could that not have a knock-on deleterious effect on the claimant? They would actually slip further and further down the system. We are seeing, at the moment, are we not, that the concentration is on JSA? The hardest to reach are effectively being parked. If this changed, could there be a knock-on effect of leaving your client groups further down the chain? Robert Trotter: There are two things. Firstly, there is the issue of how we assess distance from work and vulnerability, which comes under the Work Capability Assessment thing. That is one issue. The second thing is a gateway mechanism into the Work Programme, which is what Duncan is talking about, where you have the individual concerned, the provider and the Jobcentre Plus advisor all working collaboratively to decide what happens. Is there a question around complexity? Would that make too many categories that are too difficult to administer? I would strongly argue that it would not. The reason I would argue that is because person-centred planning has become the gold standard across a range of different public service types: things like social care, for instance, would be the best example. That has not added to the complexity; rather, it has streamlined it for the user. Rather than starting from the perspective of bureaucracy, you start from the perspective of what the user s experience is and what they want as they go through the programme. By building it around the individual, you achieve all sorts of positive knock-on effects, but reduce the complexity for them. It is interesting; there are two separate issues. Q131 Glenda Jackson: Where is that support going to come from? You are talking about a perfect system of people who absolutely understand, which we were led to believe by the Government was going to be inherent in this programme but it clearly is not. You have mentioned the Work Capability Assessment. The complaints we all receive as constituency MPs on that are growing exponentially. Where would you look for that kind of support? Paul Anders: In many cases, those specialist organisations are already on Work Programme supply chains but are not being used. Q132 Glenda Jackson: So it is the linkage, is it? Is it already out there, but nobody is tapping into it. Paul Anders: It is the linkage and, if the route we are going to go down is really around tinkering with incentives to align them, maybe we also need to look at some of that payment being reallocated and coming at different points. For example, if what is needed I am thinking specifically about people with a history of drug use is some form of very specific assessment followed by some psychosocial intervention, which is then handed back over to a mainstream provider, this is something that should probably come reasonably early in the process. There could be an argument that the money to pay for that should be accessed earlier, rather than being contingent on an outcome. In terms of whether the specialist support is out there, it is certainly out there and in many cases is nominally if not in reality in Work Programme supply chains. If the incentives are going to be the levers, it is about whether they are pushed left and right as well as forwards and backwards, if that makes sense. Q133 Glenda Jackson: Where should the responsibility for that referral lie? Should it be Jobcentre Plus? Paul Anders: Within the current system it lies with the prime contractor. We may be going back to this idea of how quality is monitored. One of the things that would be of interest in terms of assessing the quality of the Work Programme is whether those options to refer people to specialist services are being exercised. Glenda Jackson: We were told they were; that is how they got their contracts. Sophie Corlett: In the best circumstances, this is what happens anyway: people receive a good assessment and then they receive support, advice, guidance and interventions appropriate to that assessment. In the best circumstances, this can support somebody to get sustainable work. Making a system that did that routinely would actually not be an administrative burden; it would smooth things out fundamentally for everybody. Jobcentre Plus has a role to play. Whether everybody should be going into the Work Programme or whether more people should be going to Work Choice or whether there should be other things available at that level is worth looking at.

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Ev 36 Work and Pensions Committee: Evidence 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter Q134 Sheila Gilmore: I wonder if I can ask a follow-up to something that Graham asked earlier; I wanted to ask it then. For those, initially, who may have had experience as sub-contractors: Graham s challenge was whether you were feeding your expertise into the system. My question would be this: if you have been or are contractors, have you ever been asked to feed that into the process by the prime contractor you were working with? Sophie Corlett: One of the things we have had most referrals on, which some of our local Minds have contacted us about, has been when either the Jobcentre or the contractor has contacted them because they have had people who they feel should not be involved in work-related activities at all and should be in the Support Group. They have had them referred back to them to support them with an appeal. Some of the contact we have had has not been the contact we expected to have, which has been very interesting. Paul Anders: As an umbrella organisation, our input has been sought by providers. Treatment providers have been asked to go in and provide training to Work Programme providers. It is that kind of thing. It is going on; it is maybe not having the impact at the scale we would like to see it. Q135 Sheila Gilmore: Can we expect this from voluntary organisations? Contractors, it seems to me, pitched for this work on the basis that they could provide all of this. I am uncertain why you should be being asked to provide all this expertise, apparently for free. Duncan Shrubsole: In some instances, voluntary organisations are subsidising the Work Programme because they are doing things like continuing to run training, employment, supporting employment opportunities, work placements and more in-depth help around housing or other issues but they are not getting paid for it out of the Work Programme supply chain. We do it because we are charities and we want to ensure that those needs are met. There are challenges about what is happening. Graham, you asked, Are we feeding back to the Work Programme? The problem is the Work Programme is not a thing. In every area it is a range of different bodies. Your issues might be at a whole range of different points. People are not necessarily clear themselves, as sub-contractors, why they are not getting referrals. Is it because Jobcentre Plus is not passing the referrals on? Is it because of the prime? There are a whole series of conversations that you have to have, which takes time. Crisis is focusing on the Jobcentre end, and we are trying to provide training and expertise about better identification there. Other people are working on being able to make their supply chain work, but it takes time and effort to follow up the supply chain or individual complaints or client experiences. Q136 Sheila Gilmore: When WCA was introduced there was a second stage to it, which was the Work-Focused Health-Related Assessment. It was done at the same time which may be problematic, perhaps, as Sophie said earlier. It was in the system initially, but it was dropped by the Government a couple of years back and has not been reinstated. The aim of that, effectively, it seems to me, was how somebody s condition could be managed and how they could be helped into work. That seems to be closer to some of these distance-to-work conversations you are having. Robert Trotter: I would have to look into the evaluations of how that worked; I do not know the details of it, unfortunately. Sheila Gilmore: I do not think it ran for very long, which was part of the problem. Of course, WCA was only introduced in 2008. This was dropped in 2010. Robert Trotter: I would strongly support anything that brought in to the Work Capability Assessment more measures of employability and measures of the barriers disabled people face, rather than focusing on medical capability. It is important to focus on the big question around WCA, which is the fact it is placing on the Work Programme disabled people on Employment and Support Allowance, who are a long way from work, who need a great deal of support and who are not being supported through the Work Programme. We know the figures overall for the Work Programme, which are that one in three are disabled people but only one in five of the job outcomes are from that group. For the ESA group those statistics are far, far worse. It is something like 1.3% of claimants who come on to the Work Programme from the Employment and Support Allowance have a job outcome. For those who come off Incapacity Benefit and then onto ESA, the figures are even worse. We are looking at 0.3%. Scope s statistical analysis says that only around 30 people from that group are getting jobs through the Work Programme. The Work Programme is not supporting this particular group into work. That problem is compounded when you look at the overall picture of the employment support landscape. We have spoken a lot about Work Choice today, which is a pretty successful scheme in comparison to the Work Programme: there is a 24% to 25% outcome rate there. Again, only 16% to 17% of people on Work Choice are in the ESA claimant group. There is a group of people who are not being supported by the Work Programme, who are not being supported by Work Choice and who are falling through the gaps in those programmes. I would draw that back to the issue around the Work Capability Assessment. Q137 Sheila Gilmore: Sophie was suggesting that if you test people for their eligibility for a benefit and you mix that up with the other assessment, would you suggest they probably should not be done at the same time, because the purpose is different? Sophie Corlett: Yes, I would separate them out. It may well be appropriate to consider how difficult it is for someone to get a job in terms of deciding what their benefit is. A conversation about someone s income should be separate from a conversation about what support they get. Whatever goes into the conversation about what benefit you receive, when you start to have a conversation about how Jobcentre Plus will help you or what we can put in place to support you or what you need to do and what you want from us to help

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Work and Pensions Committee: Evidence Ev 37 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter you do that: all those sorts of conversations need to happen in a much more positive, less anxiety-inducing environment. Paul Anders: Certainly, for JSCI, it is very much not something that could realistically form part of the WCA, in that it is looking at different things and is, as much as anything, a predictive tool. Q138 Chair: When the Government suspended the Work-Focused Health-Related Assessment or WFHRA, as it was called they said it was because they were introducing the Work Programme and the initial interview that a referee had with either the prime or the sub-contractor would be the equivalent. From what you are saying and the evidence we have, that does not seem to be happening. Is that right? Paul Anders: Yes, it is, from our experience. Some of the prime contractors have been kind enough to share their diagnostic tools with me. The questions might be specific and detailed with regard to issues around transport, travel or physical health. The questions then start to become vague when it gets to anything that might be considered a more socially difficult subject to raise. For things like accommodation, drug use, alcohol use, mental health, the questions start to get a little bit vague and, in some cases, euphemistic. Certainly, there is scope that, if people do not volunteer that information or are unable to read between the lines of the questions that are being asked, the information will not be picked up by the Work Programme provider at that point. Sophie Corlett: What Paul said underlines that it is an assessment rather than a discussion. Duncan was describing earlier having a conversation with the individual, Jobcentre Plus and the Work Programme provider, who might be providing that support. The conversation might be, What are your aspirations? How might we get you there? What we have is this. What is in the work environment at the moment is that. That is not a list of questions and writing down some things in a form; that is a conversation. This is the beginning of the process. I think that is a qualitatively different approach. Q139 Glenda Jackson: In those situations, would it be helpful if the individual claimant had someone with them who, if they dried up for a minute, could act as their voice? Do you think that would be valuable and useful? It would not cover everybody, because, of course, there are people who have no one they could take with them. Sophie Corlett: It would be really valuable for mental health. They might not even speak up for the person, but having them there is confidence-inducing in itself. Duncan Shrubsole: Going back to that thing about assessment, the thing we need to be clear about in the Work Programme is that much of what is happening is based around a model of a generic jobseeker. Some of those questions about travel and so on are barriers. They are also barriers in the sense that people think, If I give them some money to help cover travel, it will cover that. It will help them to prepare a CV. Much of it is what was previously happening in Jobcentre Plus or under New Deal or other programmes. It is not to say it is not important or that it does not help people to think about travel and budgeting and whether you can get a suit and how to improve someone s CV. However, what the Work Programme was supposed to be was more than that. That is why we, as a set of client groups, are here. We generally represent people who need more than that to tackle those issues around debt, housing, mental and physical health, self-confidence and all the rest of it. We are never getting to the point where that is being unlocked in the supply chain. We are saying, We will provide this range of in-depth, tailored support, which we really need to help these people get into work. What is happening is there are exceptions a lot of fairly standard conversations. We had a client who was sent off on a literacy course to improve his English because he was from an African background. Actually, his English was perfect. That was a case of the computer saying, You go off and do a literacy course. We had people hauled off programmes and training they had been doing and which were good for them. This has happened under previous programmes as well. They are told, You will go off and do basic Word or whatever, even if you are actually quite good at computers. What we need is a tailored approach and what we are getting too often is standardised assessment and standardised offers. Q140 Teresa Pearce: I am going to make a point about what was said earlier about the amount of time that is spent in Jobcentre Plus and personalising it. I was on Jobseeker s Allowance when I took a voluntary redundancy. I did not really need it; I wanted my stamp paid, so I had to claim. I remember saying to the person there, Actually, I am thinking of going on a course instead of looking for a job. She tried to refer me to Resources Plus, which is a place that does numeracy and literacy courses. I had just left a six-figure salary job. I clearly did not need that. The point was she did not look at me as a person or even look at my CV. If she was giving me the wrong advice, which I could reject, what sort of wrong advice is being given to other people? It is exactly that. The people who come through need to be customers, not commodities. It seems to me that the Work Programme policy is good, but they are delivering a contract rather than a policy. If the policy fails, it will be because of the contract not because of what everybody wants, which is for people to have sustainable work. Robert Trotter: The Work Programme, as delivered through payment by results, is a step change in policy and process. It does not seem to have delivered a step change in outcomes yet. Some of the people on previous panels have mentioned using prices to drive improvements in the system. It is worth raising some scepticism about that. To give you an example, there is one young man in his mid-20s, who is one of Scope s customers. He has learning difficulties, mobility impairments and epilepsy. He has been on 17 different employment support programmes and has not yet found a job. He is incredibly motivated; he sees the value of work; he wants to get into work. He is an ex-ib claimant, so he attracts the highest placement fee for the programme

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Ev 38 Work and Pensions Committee: Evidence 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter and he has not yet been found a job. There is some scepticism about whether making him of greater monetary value to a provider is necessarily going to deliver the right kind of support and quality of support to get him the kind of job placement he is looking for. That is an issue worth raising. Paul Anders: There probably needs to be a balanced approach, looking at the range of levers that are still available the ones that have not been surrendered as part of the black box process. Clearly, the direction of travel is that the price incentivisation is a part of that, but I would not call it a complete solution to any extent. Q141 Nigel Mills: We have covered a lot of the specialist expertise areas. The people you are trying to support need specialised support. Do you see the prime contractors getting slowly better in this area and learning how to deal with people, or do you see it still being as bad as it was at the start? Paul Anders: There is some improvement in some areas, around the type and frequency of communication that goes on. As I said earlier, there are some encouraging signs around that. The problem that comes into the Work Programme is that, if one looks at performance against expectations I do not want to go too far into that, other than to point this out at its current level of performance, I would assume their income flows will be below where they were expected, which could create further difficulties in accessing specialist support. Is there, in a sense, a financial imperative to retrench somewhat and concentrate on the core business of getting the easiest to help back to work? The more expensive business of supporting those with additional barriers gets put to one side. Yes, there are some small encouraging signs in localised places, but I am still very concerned about the future. Q142 Nigel Mills: You are not seeing, say, x contractor in x city, where they have a big incidence of mental health issues, becoming quite good at supporting those people? Are you seeing that kind of specialism being built up by certain contractors in certain areas? Paul Anders: Yes, within some prime contractors probably less so in others. Laura Dewar: In terms of the single parents I interviewed, there was not much evidence of people being transferred on to other services. It was always internally focused. The one person who did move into employment had a lone parent advisor on the Work Programme. They had a system that when people were referred to the programme that is who they would see. It was really effective. All the evidence from the DWP research is that lone parent advisors within Jobcentre Plus were really effective. I was not seeing much specialism at all overall. That is a real issue and it does not seem to be changing. It is more expensive to have that specialism, but it definitely helped that person move into work because they were seeing in the round very much that they also needed to care for their child, negotiate with an employer and do all sorts of things to help someone move into work. They were also very good at supporting that person once they were in work and giving ongoing support. Q143 Nigel Mills: We are in a situation where we probably need more specialist sub-contracting or spot contracting, but there is less money around for contractors, given they have not hit their targets. Is the only fix for that the Government should mandate some contractors and say, You must sub-contract people in these categories somewhere? Laura Dewar: It could be internally. This was a lone parent advisor within the provider; it was not a moved-on service. Paul Anders: Part of the problem of updating something is that it is not always easy to identify people who need that sort of service. We have spoken about how that need is not always identified at Jobcentre Plus. Similarly, it is not always picked up at the Work Programme stage. Q144 Nigel Mills: That does not mean you could not mandate it. Paul Anders: It would make it very difficult. Sophie Corlett: When it comes to mental health, very large numbers of people within the system, including people on JSA, have mental health problems of some sort. Those issues might not be the primary reason why they are not in work, but have become an issue for them. To have a very fixed system that says, If you are a single parent you go here; if you are homeless you go there, does not actually take into account the complexity of people s lives. There does need to be external expertise, but that will, again, be no substitute for having a good understanding and level of expertise actually within the prime. Laura Dewar: If I could give a small example, lots of single parents, before they move into work will get a better-off-in-work calculation, which they used to be able to get at Jobcentre Plus. That is very important for someone moving off benefits and into work. There is not that expertise within the Work Programme, yet single parents on the Work Programme will say, Who can give me that calculation? They are told, We do not have that expertise. Yet they cannot go back to the Jobcentre and see someone there, because they are on the Work Programme. Things like that might seem slightly mundane, but they are actually very important. From some of the examples that I have seen, it was actually stopping people moving into work. Duncan Shrubsole: There are probably three sets of things they could do. One is about better transparency and ensuring the existing contracts work. Secondly, DWP has the right to terminate some contracts. There might be a stage where it says, Okay, we need to terminate a prime contractor s contract, and re-let it when there is better specification around disadvantaged groups and the use of sub-contracts: when they appear on a bid they are in the supply chain and there is clarity over referrals etc. The third approach is to say that, for the Work Programme to work for everyone who is out of work, we perhaps need some more differentiation and more programmes like Work Choice but for other groups where there is some more direct contracting

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:27] Job: 028832 Unit: PG02 Source: /MILES/PKU/INPUT/028832/028832_o002_db_Corrected WPC 2 30 01 13.xml Work and Pensions Committee: Evidence Ev 39 30 January 2013 Paul Anders, Sophie Corlett, Laura Dewar, Duncan Shrubsole and Robert Trotter of specialist providers outside the arrangement through the prime. That might be better value for money and might at least deliver better certainty of who is going to be worked with, what they get and understanding what the outcomes are. Q145 Nigel Mills: That is going to be hard, isn t it? If I am a prime contractor, I might be doing really well with people who have been out of work a long time my statistics are pretty good and I have met my contract requirements but I might be terrible at the harder to reach, because I have prioritised the ones who are easier. How are you measuring missing their contract requirements? You could take the contract away, but it would be quite hard, then, wouldn t it? You would be getting quite granular in the detail of who is getting helped by what contractor. Sophie Corlett: Maybe that is where a much better assessment conversation with Jobcentre Plus and a much better understanding of who you are passing on to the provider and what their needs are would be very helpful. That granularity would then be available, because you would know because you would have the assessments who the provider was prioritising and who they were putting aside. Maybe, it would be for Jobcentre Plus to make better decisions. You might have a system where you perhaps say, That is fine. You are very good at that; carry on being good at that, if that is what you are good at. These other people we will give to somebody who is good at that. There is no reason why we should assume that a one-size-fits-all system would work. In fact, we know it does not. Q146 Chair: You seem to be saying that financial incentives have not really been there for the prime contractors to sub-contract unless it is an end-to-end, but for very small bits of the customer journey that has not been financially viable. That has been why you have been providing that service free. Laura, you gave an example of a lone parent advisor working for the prime. Within the way the contract is, there is presumably nothing to stop the primes directly employing people with that expertise and then doing the triaging of their own client groups. Laura Dewar: Yes, that is the example that I had. Chair: If the primes perhaps themselves started rather than, as Nigel says, looking at the low-hanging fruit of the easy ones looking at all the others, would that get over a lot of the problems we have been talking about regarding lack of financing and specialist help? Duncan Shrubsole: We should stand up for the client group, primarily. If they are going to be helped by a prime contractor who has put in place, in house, the range of support, it is a good thing. That would then be an individual who is then getting helped back to work. The challenge is that is not what we are seeing. Chair: That is not what is happening at the moment. Duncan Shrubsole: If they wanted to do that, they could take the view, We want control of our staffing, our referral numbers and a much closer view on what we deliver. We will have it in-house. That would be fine, but this is not the experience that is happening. Laura Dewar: Additionally, some of the expertise the primes and what worked was around things like people with a HR specialism within a prime contractor of the Work Programme, which is very effective for some single parents. They knew what agencies to refer them to: they helped them write their CV in a better way, a competence-based CV rather than a chronological one, because they are not going to have such a long career history. Yes, I agree: prime contractors can have that expertise. Chair: These are questions for us to put to the prime contractors. Thank you very much for coming along this morning. It has been quite a long morning. It is always difficult when there are five witnesses and everybody, quite rightly, has their own views. It is always difficult to fit everything in. Can I thank you all for coming along this morning? Your evidence will be very useful to us when we come to complete our report. Thank you very much.

cobber Pack: U PL: COE1 [SE] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Ev 40 Work and Pensions Committee: Evidence Wednesday 13 February 2013 Members present: Dame Anne Begg (Chair) Mr Aidan Burley Jane Ellison Graham Evans Sheila Gilmore Glenda Jackson Stephen Lloyd Nigel Mills Anne Marie Morris Teresa Pearce Examination of Witnesses Witnesses: Dave Allan, Managing Director, emqc Ltd, Martin Davies, Chief Executive Officer, The Pluss Organisation, Michele Rigby, Chief Executive Officer, Social Firms UK, and Jonathan Cheshire, Chief Executive, Wheatsheaf Trust, gave evidence. Q147 Chair: Can I welcome you here this morning a nice, bright but cold morning? Thanks very much for coming along. This is our third evidence session into our inquiry looking at the claimant experience of the Work Programme, so thank you very much for your attention. Can I ask, perhaps starting with you Martin, if you can introduce yourself and your organisation, just briefly for the record? Martin Davies: I am Martin Davies; I am chief executive of Pluss. We are a social enterprise and a social firm, a specialist disability employment provider. We deliver services to DWP in the form of Work Choice. We are on the peripherals of the Work Programme, and we deliver specialist employment programmes for local authorities and health trusts. We deliver services to about 5,000 people a year who have disabilities, and we think that what is unique about Pluss is that of our 600 or so staff, around about 50% have a disability themselves. That is what we major in, but we are a specialist disability employment provider. Chair: Okay. I meant a bit briefer than that. That was a good advert. Jonathan Cheshire: Hello. I am Jonathan Cheshire. I am chief executive of Wheatsheaf Trust. We are a charity operating in Hampshire, and run a number of employment and training programmes and advice centres. We are an end-to-end subcontractor on the Work Programme, but we are also running the Troubled Families programme, the Youth Contract, the National Careers Service, and one or two other programmes funded by charities and the Big Lottery things like that. We have been going about 15 years in various forms, and like Martin, I am quite proud of the fact that about a third of our frontline advisers are people who actually started out as clients, came through the system and joined our staff. Dave Allan: Good morning, Chairman; good morning everyone. I am Dave Allan. I am managing director of emqc Ltd, a national business improvement organisation. We were appointed in January 2012 as the assessment body for the Merlin Standard. We also are the sole body for the National Standard, for the Matrix Standard for careers information, advice and guidance, and other national quality standards. Michele Rigby: Hello. I am Michele Rigby, the chief executive of Social Firms UK. Social Firms UK is a membership and support body for social firms and other work integration social enterprises. Social firms are social enterprises that seek to employ at least 25% of the people who are far from the labour market through disability or severe disadvantage. Work integration social enterprises are similar, but rather than necessarily providing jobs, they provide some steps along the way to integrated employment. Q148 Chair: Apart from Dave, who is slightly different, you are all here because you are part of the supply chain for the Work Programme. Can I begin by getting the definitions right? I understand that the Wheatsheaf Trust is a Tier 1 provider, but Social Firms are classed as Tier 2 providers. What is the difference between those two? What are the differences between a Tier 1 and a Tier 2? What is the relationship between the two as well? Jonathan Cheshire: I think it varies slightly, but as we think of it, we are a Tier 1 end-to-end provider. Basically all the clients are passed through to us by the prime contractor and we are responsible for them throughout the whole period of the Work Programme, whereas I think a lot of the Tier 2 providers have specialist knowledge and expertise to help particular client groups. Q149 Chair: So you are always a Tier 1 provider. Everything you do is end-to-end; you get the whole lot the whole claimant journey. Jonathan Cheshire: In the Work Programme, yes. If we have got a client with a particular need, we may then ourselves use another organisation to help them, but we are still responsible for the whole process. Q150 Chair: So do you then subcontract further? Jonathan Cheshire: They are not normally formal subcontracts. We work in partnership with a whole range of other local charities, so we will refer people on to them and if necessary, we will pay them. But we won t normally have a formal subcontract. Q151 Chair: Now that is an interesting phase if necessary, we will pay them. So you are actually using other organisations to deliver your service that you are not necessarily paying. Jonathan Cheshire: No; if it is part of the Work Programme then we will pay them, definitely.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Work and Pensions Committee: Evidence Ev 41 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire Q152 Chair: Is it a spot purchase payment rather than any formal contractual arrangement? Jonathan Cheshire: It would be spot purchase. We would pay for the service, rather than paying by result. We get paid by results, obviously. Q153 Chair: There will questions about whether that is covered by the Merlin Standard later. But in terms of Tier 2 then, what about Social Firms? Michele Rigby: Social Firms UK as an organisation is not involved in the Work Programme, but our members are, and some of our members are Tier 1 while some are Tier 2. Some are end-to-end, some provide spot purchase opportunities, and others provide services for no payment at all. Q154 Chair: If you are Tier 2, do you have a relationship with the prime? If you have come down the supply chain to Tier 2, do Tier 2s generally have a relationship with the prime, or do they only have a relationship with the Tier 1? Michele Rigby: I have not come across any of our members who are in the Tier 2 category who have a strong relationship with their prime. Martin Davies: But that is an option, and there are primes who actually hold lists of Tier 2 providers specialist providers that their end-to-end providers can call off. So I think it is a mixed picture of some Tier 2s contracting with Tier 1s, and some Tier 2s actually having a relationship with the prime. Q155 Chair: I have got some figures here that there are 112 Tier 2 subcontractors listed as subcontractors to one prime in a single contract package area. That seems an awful lot. Martin Davies: Yes. Q156 Chair: How on earth can you have a relationship with all of them, or anybody have a relationship with all of them? Martin Davies: I think the answer to the question is that I do not think you can. It is a result of primes and subcontractors wanting to paint as complete a picture as they can or they could during the procurement process. Q157 Sheila Gilmore: I hope I am not stealing a question from later on, but if you are a Tier 1 contractor and you do end-to-end, how much of the eventually available fees does the Tier 1 contractor get and how much goes to the prime who appears to not do anything? Jonathan Cheshire: There is no precise rule about that. Each contract is different. I am not sure whether I am supposed to say this under the terms of our contract, but I know that certainly a prominent prime contractor in our area takes 12% of the attachment fee. I am not sure how much they take out of the outcome payments. We would not know that as a subcontractor. We would not be told that necessarily. Martin Davies: As a potential prime, we were not offered any terms that we considered viable, so we did not enter into any end-to-end provision on the programme. Sheila Gilmore: As a tier 1? Martin Davies: As a Tier 1. Q158 Chair: We will be coming round, obviously, to the money side of things as well. Can I just tease things out about the number of subcontractors that are available versus the number of subcontractors that are finally used? 112 are available in an area, but some of the evidence we have got suggested that very few of them are actually being used to deliver any bits of the Work Programme. Is that a fair submission? There are a few nodding heads. Michele Rigby: It certainly is an experience that is common amongst our smaller members, particularly. They would offer very specialist, very local, and very supportive services, but find that, although they might have been named in the initial bid, they get very little work. I have heard reports of where they are being asked to take work on with no payment, with perhaps the chance of a payment for other work coming later but not for the initial work. Certainly, one of the organisations that reported that to me has since gone out of business, because clearly they could not keep providing a service without payment. Jonathan Cheshire: I think DWP and Ministers have made a big play about the numbers of voluntary sector organisations involved, for example. A more realistic measure would be how much was the value of those contracts, at the end of the day, and how much money has passed. If you measured that, I think you would get a very different picture. Chair: I think at the moment we are just trying to get the number of organisations and whether they are actually involved or not. Q159 Jane Ellison: This is to Mr Davies about Pluss, because you are delivering something quite specialist in the Work Choice programme, for unemployed and disabled people with more severe barriers. It would be helpful if you could tell us a little bit about how the Work Choice supply chain is configured, and also how that responds to individual needs, in terms of helping disabled people back to work. Martin Davies: I can only respond as far as Pluss is concerned. We deliver two out of the 28 programmes on Work Choice, but we also deliver as a subcontractor in two other areas. The whole concept of Work Choice is different. Work Choice is a programme that is designed to work with people further from the labour market, so it recognises elements of support that possibly are not recognised in the Work Programme, such as the potential in some cases for some ongoing support in work and that is not only for the individual, but also for the employer. As a Work Choice provider, we work with, I suppose, smaller volumes, which allows us to be much more targeted at the individual needs of both the individual and the employer. As far as the supply chains are concerned, when Pluss entered this seeking to be a prime, we were quite experienced within the market of disability employment programmes, and we were very careful in how we selected our subcontractors. We looked for subcontractors that shared our values, had a performance history and were specialist. We offered set minimum values of contracts and guaranteed

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Ev 42 Work and Pensions Committee: Evidence 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire referral levels, and that meant that we were not able to offer the whole range of existing providers contracts, so there were disappointed subcontractors in the areas where Pluss was successful. The types of organisations we work with and ourselves have teams that either have specialists embedded within the teams for example, mental health specialists or specialists in autism or we then use call-off contracts from specialist organisations. We have made sure that when we deal with subcontractors, subcontractors have viable contracts, both geographically and in numbers, because part of the issue if you are not careful is that you can end up with a very remote area in geography, so we try to be very fair in that. We also look to work with subcontractors who have a wider remit in those areas, and will have other contracts such as specialist contracts, disability contracts with health authorities or local authorities. Work Choice itself is actually delivered through some very proven delivery methods that are accepted both nationally and internationally, and there were the supported employment mechanisms, and also using individual placement and support, which is a mental health-type provision. So they are very specialist. Q160 Jane Ellison: Can I just ask you to expand a bit on the employer support? You mentioned that one of the things you do is supporting employers. I am quite interested in this area because I employ a disabled person. When I first started, I found it very hard to get any support or advice. There was a lot of advice about empowerment, etc, and helping people into work, but some of the quite specialist advice I needed I found was not there from some of the charities I approached. Can you give us an example of how you support an employer to help get a disabled person to work? Martin Davies: You can help an employer by doing simple things: identifying reasonable adjustments, training employer s staff, providing them with support for their procedures and policies, job coaching in particular, and mentoring. Most of the employers we deal with are SMEs 1, so wherever possible, we identify natural support within the workplace, but when that is not available we actually put in our own support through job coaches and mentors. In a lot of cases, that is a fluctuating thing, so we are in and out as and when needed when natural changes happen, either in the workplace or the individual s home environment or life and being very much there to support the employer and building up a personal relationship with their employer. We have our employment brokers, who would have a relationship with the individual and the employer. It is that personal approach. Q161 Jane Ellison: That is very helpful. A question to all of you now: before some of us joined the Committee, there was another inquiry into the Work Programme, and the view was expressed that by drawing lots of different programmes together into one single scheme, some people might be driven out of the market; some welfare to work organisations 1 Small and Medium Enterprises might leave the market. There was a view that that might perhaps be a good thing if those were the people who were not really delivering or were weakest. I just want a view from all of you quickly about whether you think the number of people in this provision of services has contracted, and whether that is a good thing or a bad thing. Martin Davies: I was particularly worried about the issue of there being a single programme. I am relieved that, at the moment, there continues to be a specialist programme for people with disabilities. In my view, the general programme works from the job-ready individuals upwards, and the specialist works from the harder-to-help downwards. Combining those two means you should be able to close that gap. If you just had one single programme, every pound you put into that programme will automatically help, in my view, people closer to the labour market. You would move up, but you need to do that in a squeezing way. Q162 Chair: Can I just ask whether, if Work Choice had gone into the Work Programme I understand that the Minister had half an afternoon to decide whether it would go into the Work Programme or stay outside, and the decision was that it would stay outside do you think you would be delivering what you are delivering today? Martin Davies: It would have been extremely difficult within the financial models to be delivering the type of service we are delivering if Work Choice were within the Work Programme. That is not necessarily the payment mechanisms. We have modelled, and we believe that through the payment model that is in the Work Programme we could actually deliver to the same customer group for the payment mechanisms in that. It is actually the motivation behind which the customers are actually provided a service. If you look at payment by results, which is an excellent and right concept, what is important is, What is the result? If the result is purely a person in work, that is the result you are going to get. If it is a person in work with a different measurement say, a social value measurement attached to it it is about how long that person has been out of work, how far that customer group is from the labour market, and so forth. If you can find a way of actually making the differential payments more sophisticated, you could actually have something that worked. Q163 Stephen Lloyd: How is it decided which people with disabilities go to the Work Programme and which people with disabilities go to Work Choice? I know that there are some disabled customers who go to my local Work Programme in Eastbourne. How does DWP manage that split? Martin Davies: Jobcentre Plus has disability employment advisers who refer to Work Choice. The issue with Work Choice is that it is a capped programme, so therefore there are only a limited number of people that can be referred to it. Demand way outstrips supply, and therefore, in my view, the same types of customer go to both.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Work and Pensions Committee: Evidence Ev 43 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire Q164 Stephen Lloyd: Are you national? Is Work Choice available around the whole of England or just in parts? Martin Davies: Work Choice is a national programme across the UK. Q165 Jane Ellison: For the rest of the panel, could you just refer to the general point about whether coming down to a single programme, excluding Work Choice, has driven some people out of the welfare to work market, and in some cases was that a good thing? Did it find out the weakest links, as it were? Michele Rigby: There is no doubt that some organisations have been driven out of the market. We know that because we have members who have closed down in the last year and cite the arrangements for the Work Programme as being a large contributing factor in that. My issue there is that, from my knowledge of those organisations, I would say that they were actually extremely useful and experienced organisations, and were able to take people who were very far from the labour market. The issue that they were able to deal with, as another of our members describes it, were difficulties in terms of beliefs, behaviour and attitudes they were able to support them into having better beliefs, behaviour and attitudes. Q166 Jane Ellison: That is a big category. Is that because of lack of referrals? Michele Rigby: Yes. There was also a great deal of confusion and misunderstanding, which goes both ways, in the setting up of contracts. Organisations were perhaps depending and had no reason to think that they could not depend on referrals, which then did not come, or, if they came I am thinking of one particular instance of an organisation in Liverpool they came without any payment attached. They certainly wanted to help and tried to help for quite a long time, but eventually it drove them out of business. Q167 Jane Ellison: Was there an expectation of payment or was somebody trying to get them to provide a service for free, basically? Michele Rigby: They were trying to get them to provide a service for free, with a sort of carrot that if they took this tranche then the next tranche might be paid for. Q168 Glenda Jackson: Was that a prime? Michele Rigby: That would be from the end-to-end, I think. I cannot be certain right now. They were certainly in the Tier 2 category. Q169 Glenda Jackson: So they were subcontractors. Michele Rigby: Yes. I think the issue that is important about all of this is that that organisation had at least 20 years experience of working with people who were very far from the labour market, and was seen as being extremely effective and a real star in the social enterprise movement. They do not exist anymore, so that level of expertise has dissipated and cannot be recaptured. It is not the same for all of our members. We have other members who are doing okay, who perhaps were better informed about the programme and are starting to take better decisions, and crucially were better capitalised, so that enabled them to take a position in the contracting hierarchy that was more stable for them because they thought they could manage the cashflow. As it happened I am thinking of one particular example the cashflow was much more difficult than expected. They were able to ride it out, but if they had really gone to the edge on that they would not have been able to. Q170 Glenda Jackson: Why did they go? If they had been going for 20 years, what was the fundamental change? Michele Rigby: There was no other way of funding the support that they were giving. Q171 Glenda Jackson: Where had the funding come from before, for the previous 20 years? Michele Rigby: It would have come from different government programmes. Q172 Glenda Jackson: So it was the creation of the Work Programme. Michele Rigby: Yes. It took all of that potential of getting small pots of money away from them. They were no longer in control; there was nothing for them to go for. Jonathan Cheshire: The introduction of the Work Programme coincided, of course, with a whole range of other reductions in public expenditure generally. A lot of small local organisations would have been supported by local authorities, possibly some small corporate sponsorships, other regeneration programmes, and things like that. There was a cut across the board, as we all know, in times of austerity. The Work Programme was introduced at the same time. Q173 Glenda Jackson: Mr Davies said that there is a cap on people with disabilities, or the most vulnerable, needing the support that they can derive. I cannot work out how this can be. If the money is there, which we have been told by the Government it is, where is the gap in the chain here? Martin Davies: The Work Choice contract, where the cap is, was not really viewed within the DEL/AME process 2. The Work Programme is based on the premise that savings on benefits will pay for the programme, but that is not really how Work Choice was designed, although I would say that it should be viewed in that way, and therefore I don t see the logic in a cap on a specialist programme. Q174 Graham Evans: Several witnesses have highlighted the issue of bid candy to set up applications to make them attractive and sweeten them up for DWP. But once they have got the contract, they are not being used or rarely being used. How 2 The Work Programme is intended to be funded by using savings from Annually Managed Expenditure (AME) on benefits to find expenditure from the Departmental Expenditure Limit (DEL) budget used for employment programmes.

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Ev 44 Work and Pensions Committee: Evidence 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire widespread do you think this practice is, in your experience? Dave Allan: From my point of view of the assessments that have been carried out so far, I have to say it is not an issue that has come out in any of the assessments that the assessors have carried out, and we did 18 on the Work Programme. We were aware of that, Mr Evans, but that certainly is not something that we have found so far, from an assessment point of view. Q175 Chair: Do you think you were ever used as bid candy? Were any of your social firms used as bid candy? Michele Rigby: Some of our members do feel that they were used as bid candy, yes. Jonathan Cheshire: In the case of a prime contractor who actually won a contract and with whom we are now working, they were very keen to work with us and we had worked with them before, so that was not true of our current prime contractor. But as I think I pointed out, we had to write bids with nine other prime contractors in the bid process in order to stand a chance of getting the work. I am fairly sure we were used as bid candy in some of those bids. Martin Davies: Pluss s concern were restricted to two subcontracts. One we considered was an end-to-end, which afterwards turned into a Tier 2. Subsequently we have withdrawn from it because of a lack of referrals. The other was an arrangement where we had a full cost recovery where we placed our specialists in a prime s team. That model has now been subsequently changed and we now no longer provide that either. Q176 Graham Evans: If you are invited to participate in the bid as a Tier 2, do you have the conversation about how much business you are going to get from that, and what are the numbers expected? Martin Davies: In Pluss s experience, the figures that were issued by DWP were always indicative, never guaranteed, and we have always entered into discussions with primes knowing that. That is why, when we analysed our position in the market, we took a very risk-averse position. Q177 Stephen Lloyd: Can I pile in there, if that is all right Graham? Mr Cheshire and Ms Rigby have said slightly different things to Mr Allan. In the research or survey that you were doing with a lot of organisations, you felt that the case for bid candy did not stand up, but the others seem to be saying that there was or is a sense with some organisations that they were used as bid candy. How do you square that? Dave Allan: I am just saying the assessors did not find much evidence of that in the assessments that were carried out. Q178 Chair: But you would be hunting for a negative in other words, they are not there. If they were used as bid candy, they would not be what you were looking at. They are there to get the bid, but they do not end up at the end of the process. Did you marry who was there on the framework initially in order to win the bid and who ended up delivering down the line? Dave Allan: In terms of the assessment process, our assessors were going in there and talking to a sample a selection of contractors and so forth and gathering evidence through talking to people. Subcontractors have the ability to input to the assessment, so it is just based on what assessors find in there. Q179 Stephen Lloyd: I think you have a problem; I really do, because I think some organisations have been used as bid candy. Some say they have and they have not, and it is just some wishful thinking, but I am very sure with the conversations I have had, not just locally in my own patch, but across the piece within the industry. Off the record, I have had it from some of the primes, with a nudge and a wink: We probably did do that, Stephen. From some of the subs, I definitely have. So my suggestion is that, as the assessor, there is something that possibly needs tightening up with your own process, because I cannot believe that where I have got this many groups and bodies saying, Hang on a minute; we have got an issue here with bid candy, they have not been spotted, so I would suggest to you that you revisit something. Dave Allan: We are certainly looking at process all the time. We are not saying everything comes up positive. There are lots of subcontractors saying, We did not feel that we treated right, or We did not get any feedback as to why we did not get a contract, and that kind of thing. I am not saying that does not come up at all. What the assessors have to do is look at the evidence in balance and see they are able to make a decision on the evidence provided to them. Some of the organisations have many, many subcontractors, so it has to be a sampling process; otherwise it just would not be cost-effective; it would go on forever and ever. You could not talk to everybody. The assessors are very experienced and very qualified to be able to not just ask a question and get an answer, but to dig into it and get to the roots of it. Q180 Stephen Lloyd: I do take your point, but on a pure actuarial basis, if I have got a prime who has got 92 subs, and another prime who has got eight subs, I could be completely wrong here, but my hunch is that the 92 subs is where the problem lies. Dave Allan: In terms of the assessment process? Q181 Stephen Lloyd: In terms of, I suspect I could be wrong looking at it from an actuarial basis, if I have got a prime with dozens and dozens and dozens of subs and another prime with, say, 10 subs, my hunch is that the bid-candy bids are with the prime with dozens and dozens and dozens of subs. So that might be an area I would focus down on. Certainly, just on the table here, Michele and Jonathan and we have not even heard from Martin are indicating that it would not shock them to their bootstraps that they or others that they know were used as bid candy. Dave Allan: The standards are very much about measuring the excellence in supply chain

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Work and Pensions Committee: Evidence Ev 45 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire management. It is not the assessor s role to get into the issue of how contracts are given and any of the commercial aspects of it. It is about the four principles of what they are demonstrating in their behaviours and how they manage the supply chains, how they set them up, and how they communicate with them it is all of those areas. It is not for us to get into how the contracts are given. Q182 Graham Evans: Would it be useful if it was more transparent for Tier 1, but also Tier 2 in terms of the actual amount of business given? You used the example in the evidence, Jonathan, that it costs you an awful lot of money to be part of the bid process, and management time and so on and so forth. Then your return on there is not really worth your while. When I used to do that, it took an awful lot of time to put a bid in, and you know that up front. You are not always going to win it, but if the expectation is that you are part of a bid to enable Tier 1 to win the contract, if I was you, I would be saying, Okay then; what is in it for me? I am not going to hold you to an actuality, but give us a rough figure. You have a business and organisation to run, and you would have expected some income from that. Is it not possible for the Tier 2 providers to say, We are going to put our name to the bid. We would like to have not a guarantee, but give us an indication of what we are going to get from you, Mr Tier 1? If we could have those figures in the open, then everybody could see that the expectation is, or your expectation is, that you do get some of the business, whereas if it is now, you put your name there, it is regarded as bid candy, but you are not actually putting your business case up front, are you? You are just being part of the candy and then they are ignoring you. But it is worse than that. They actually expect you to do it for nothing, perhaps, without being paid, and you end up with a situation where businesses go out. The point I am making is we should have the openness, but don t you think you need to push it? Jonathan Cheshire: Yes, I do. We would not have accepted a Tier 2 contract. We had to negotiate with nine different primes. In fact, it was worse than that at the framework stage: we had to work with 40-odd in order to be sure that whoever finally got the contract in our area would be the one we were working with. So when it came to the detailed bids, we worked with nine. Talking about the contract we eventually won, in the contract there is a percentage of the attachments in each of the areas we are working in, so we know that 50% of the referrals will come to us in a particular area. That is in the contract. One of the things I would actually commend about our prime contractor is that they were prepared to negotiate. We had four or five weeks of very detailed negotiations over the contract, and we ended up with a seven or eight-page letter of variation that was part of the contract. I think a lot of smaller charities did not quite understand that process and just signed the contract and sent it back. So I think there was a certain amount of naivety amongst particularly a lot of the smaller charities, because how on earth do you negotiate with someone like G4S or Serco if you are a 50,000-a-year local charity? You are just not in the same game, are you? Q183 Sheila Gilmore: If these contracts were being awarded, say on a local authority level basis, would you have bid to provide the service as a whole? It is still a bidding process but effectively you would have been a prime for a local government area. Would you have been able to take that on? Jonathan Cheshire: Yes, I think I understand your question. So, if the contracts came in smaller lots. Sheila Gilmore: Yes, basically. Jonathan Cheshire: Yes, we would. We are actually a relatively small organisation. Our turnover is just under 2 million something like that so we are not a huge charity and we are very local; we operate in Hampshire. We have very good relations with the local authorities that we work in. We work in five different local authorities, and they all support us themselves, which is very important to us, both financially and in other ways. So yes, in our case we would have gone for smaller contracts. In some ways it would have been slightly easier to define what we were doing. Michele Rigby: I want to answer both of those. If I could do the smaller lots one first, I think that would make a huge difference to a lot of our smaller members who are unable to provide services now, because they are known in their local authority area, they have a reputation for delivery, their structure and their means and their capacity is fairly well known, and so they would be working with people who understood the local delivery structure and how it connects. Part of the problem with these larger contracts was that a lot of our smaller organisations, who are very key to the process of getting people far from the labour market closer to the labour market, are lost because they are small and quite frankly they are also cheap. I know that sounds a bit counterintuitive, but the fact that they do feel they can deliver better services for less means that they are not necessarily that good at providing the business negotiations in a very hard way. What they really are concerned about is the delivery to the end consumer to the person who needs their support. That does make it quite difficult for our smaller organisations. We have a very wide range of members, so I am talking about the very small ones who find it much harder to put the capacity into the negotiations and to put themselves, if you like, into the hard commercial negotiations when actually they really believe that because they are delivering good services, they will continue to deliver good services and they will continue to be required. Q184 Jane Ellison: Can I just jump in there? Is that not where organisations like yours and some of the other representative groups bring that capacity? Michele Rigby: That is my very next point. Jane Ellison: We have all met those sorts of charities who are in it because they like delivering the thing they deliver and the business-acumen side is not why they went into it. Michele Rigby: That was going to be my very next point, and obviously it depends on a number of things.

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Ev 46 Work and Pensions Committee: Evidence 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire Do they have the capacity to stick their hand up and say, I need some support on this? It also depends whether that support actually can continue to be available. Over the last three years, that level of business support to third-sector organisations has decreased considerably as well. So as much as we know it is our job to do it, it is not as simple as: we do it. Q185 Graham Evans: There is 95 million, according to the Minister, going into the voluntary and community sector, so it is up to you to get your slice of that, rather than the tier 1, who rig it all up. It is an opportunity for the Tier 2 organisations to get their fair share. As they are specialist service providers, they really do need to perhaps make sure they get their slice of that. Michele Rigby: I do not disagree, and in a previous job, which was a regional job but similar to the one I am doing just now, I had some quite intense discussions with primes at the time and said, What we can offer is the ability to make sure you are getting the best out of the contracts with the smaller social enterprises, and we were used as bid candy. Graham Evans: Could we have a note from this? Is it possible to have the statistics for Tier 2? That would be useful for us to be able to monitor that. Chair: Are there no referral statistics at all for Tier 2 that you are aware of? Stephen Lloyd: What about ERSA 3, or what-have-you? Would they have them? Q186 Chair: A lot of what we are working on is anecdotal, and you are being anecdotal this morning as well, rather than giving any hard figures in terms of the referrals. Can I just ask: you are saying subcontractors have not got as much. In some cases they have, if they have good working relations with the prime. Is it not that, as the Work Programme has developed, actually the primes are able to deliver it perfectly well in-house, so they are all just keeping it to themselves, and they are not putting it down the supply chain at all? Are they able to do that? Is that was is happening, and if it is what is happening, are they being able to provide the sort of specialist service that your organisations would have expected to provide, but are clearly not being contracted to? Martin Davies: The flow of different categories is totally different than was envisaged, and it is definitely the case, I feel, that primes are able to deal with the more generic labour-ready candidates, and that is where the volumes are coming from at the moment. Q187 Chair: So the homeless, the ex-drug addicts, the ex-offenders, the disabled people we are coming on to questions about that are all being left out; that is basically what you are saying. Martin Davies: First of all, the referrals, particularly for people with disabilities, are much lower than expected, so that would be the case, and I actually cannot speak for the other groups, so I would assume that is the case. 3 The Employment-Related Services Association Q188 Chair: So the problem is not that the primes are doing this work; therefore it is not coming down to the subs. It is that this work is not being done in the volumes that were originally anticipated. Martin Davies: I think there is also an issue that, within each category of referrals, there are people who are more job ready than others. With every category, there will be people who with a limited amount of intervention can get into work. With the first year of volumes coming in, that is what you are going to see. Chair: I think we call it cherry-picking. Q189 Glenda Jackson: On the issue of the primes getting the contracts, the Government has consistently said to us that they were well aware of the most vulnerable, hard to reach and the most difficult to get into work. They were the ones that it was going to be a requirement upon the primes to be able to say, We will be able to service these clients, and yours this is broad are the specialist organisations that the primes apparently put up and said, Look, we can absolutely make sure that we are going to be able to reach the most difficult out-of-work claimants. Mr Davies said that there was a cap that for people with disabilities, there were far more than were actually being put into any kind of programme. What I am trying to dig down here is, is it that with the primes as Mr Davies has said it is simply that the easiest get into work, which we have also had evidence on? Is it simply that they have reneged, in essence, on those contracts that they are not actually actively attempting to get the hardest to get into work into work, or into some kind of work-related programme, which is why the specialist organisations are not being referred to? Who decides on the referrals? Martin Davies: You have to go back to a comment Jonathan made in his statement the fact that the labour market was totally different when the Work Programme was designed. It was designed then, in a buoyant labour market, to address people with significant barriers to employment. That is not the case now. Although the labour market is bucking the trend and there are jobs there, there are more people than there are jobs. Q190 Glenda Jackson: No, I am sorry; that is simply not acceptable. The Government s argument is that one of the thrusts of their changes, as far as the programmes for work are concerned, is to get those generations of people who have never worked back into the jobs market. Nobody would argue with that. They also added, as a rider, that within this process, those people who had been ignored as far as the buoyant employment market was concerned because they were disabled, had to be included in this process. They acknowledged that that required specialist assistance from organisations, many of them charities, voluntaries who over the years have worked with these people. We are now being told that that is simply not happening. What I am trying to drill down is why that is. Is it that the primes have simply reneged on their commitments? They are not targeting the people that we have been consistently told were the prime focus of Government policy.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Work and Pensions Committee: Evidence Ev 47 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire Silence answer comes there none. Stephen Lloyd: I think what is happening it is coming in one of my further questions is I do not think you are getting the ESA referrals, but can I come to that in a minute? Glenda Jackson: Can I have an answer? Chair: They are not the enemy in this case. Glenda Jackson: No, no. I am not for one moment believing that they are the enemy but they are people who have, I presume, day-to-day contact with the primes. I am trying to find out why the primes seemingly, as far as I am concerned this is my humble opinion are reneging on the commitment that they gave in order to obtain contracts. Jonathan Cheshire: I was trying to give you a reflective answer. Glenda Jackson: No, give me a straight one. Jonathan Cheshire: The primes don t get any choice about that. At the attachment referral stage, people are referred by the Jobcentre and they all then go to the prime. The prime will then refer those on. In the case of an end-to-end provider like ourselves, we will get what is supposed to be a random allocation of, depending on the area, 50% of those, so all of those people referred will come into the system. There are two problems. First of all, there are very large numbers of people on JSA 4 who are the low reward clients who actually should not be there. They should be on ESA because the assessment system for whether you go on ESA or JSA is seriously flawed, as we have seen. There are huge numbers of people on JSA who are actually far more difficult to get into work than some of the people on ESA, so that is one thing. I think the other thing is the judgment that a commercial provider would always make. It is not so much necessarily about the differentiation between the price, if you like, of the different benefit cohorts; it is about the time. Before the Work Programme came in, we did a lot of work with people with quite a lot of disabilities probably not quite as severe as Martin s organisation. We would work with people for three or four years and then get them into work. If you know you have only got 104 weeks, then certainly a commercial provider is simply going to look at anybody that comes through the door, and make a judgment as to whether this person, regardless of which benefit they are on, stands a chance of getting a job in 104 weeks. If they are not, looking at it purely as a commercial activity, which the primes by and large are, that is the sensible judgment to make. I am sorry, but that is the way it is. Martin Davies: The labour market will affect that. Jonathan Cheshire: The labour market massively affects it, yes. A lot of charities will not take that attitude; I very much hope we do not. The only reason we can work with pretty much anybody is that we have five or six funding streams, and in one sense it sounds a bit silly we do not particularly care which programme they are on. We will try and give them a service, because we can pick a bit up out of the Youth Contract and a bit from the Work Programme. 4 Jobseeker s Allowance Q191 Glenda Jackson: So it is referrals and time that is impacting against some of the hardest to reach? Jonathan Cheshire: I think, personally, time is just as much a factor as the differential rewards. Q192 Stephen Lloyd: The Papworth Trust told the Committee, as have a number of others anecdotally, that they were still receiving inappropriate referrals because of the Work Capability Assessment (WCA) erroneously finding some people fit for work. This is subsequent to the Harrington changes. Is that the experience, or not, of your members still? Is it going down, up or whatever? Michele Rigby: Some of the members that I spoke to in depth said that the referrals were getting better and more appropriate. There were a number of horror stories that were still relayed to me, but I really could not say at what point those horror stories happened; I did not dig deep enough. There are things like people trying to commit suicide after their first interview because they feel that their situation is not being understood or people s mental health is deteriorating through the process. Most of our members would say that once they were able to find out what the issues were, particularly with an individual, they were able to come to a supportive relationship and everybody felt better. Certainly, there is still a feeling that our members are not always getting enough information about the people that are referred to them to know how to best help them, and that takes some time. Some of those referrals are still inappropriate. Overall, there is a real feeling this came very strongly from all the members I spoke to in depth that more transparency would really help the process. That is both transparency about the individual being referred and transparency I think this goes back to an earlier question about how the whole process works, how the money is being spent, and where the costs go, so that they would understand better their role. Q193 Stephen Lloyd: Do you accept that the challenge with that is, on the one hand, some or all of your members will be saying DWP need to be more transparent about the whole process. One of the challenges is, as well as that, how does the industry generally, both the subs and primes, deal with the enormous fear that is out there? Some of the stuff on the internet is frankly off the Richter scale in terms of a factual database. What do you think your members would have to say about that, other than it is DWP s job to be more transparent and get as much information out there to try to counter the fear factor? Michele Rigby: I do not think that they necessarily think that the entire burden for transparency lies with DWP. I think they see it as being spread along the whole chain. I think that they locate that need for transparency much more with the prime. Q194 Stephen Lloyd: That is very useful. Let me keep on the WCA theme because, as you know, there has been a lot of work by the Government around the Harrington report and the implementation and the retraining with the change. Going back to what the Papworth Trust and others have told us, they have said

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Ev 48 Work and Pensions Committee: Evidence 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire that they are still receiving inappropriate referrals because the WCA were erroneously finding some people fit for work. I do not think this is Dave s area, is it? Dave Allan: No. Stephen Lloyd: Jonathan and Martin, this is a really important question because the Harrington changes only started taking place eight, nine or 10 months ago something like that. Chair: About a year ago Stephen Lloyd: A year ago. But, it takes time to change all of this. A lot of the anecdotal evidence may well be from before then, but in your own experience at the sharp end, are you still getting the same level of inappropriate WCA referrals, or more or less? Jonathan Cheshire: I think Martin has probably got more expertise than I have in this, but my feeling is that it is getting slightly better, but of course we still have huge numbers of people who were referred in the first year of the programme that we are still having to deal with, so from the point of view of our frontline advisers it may not necessarily feel very different. Q195 Stephen Lloyd: Because you are still dealing with that tranche? Jonathan Cheshire: There are still a lot of people on the books, so to speak, who are in that situation, but I do think it is getting slightly better. Stephen Lloyd: Okay. I do take your point about the long tail. Martin? Martin Davies: I would concur with that. It appears to be getting better. There are still groups, such as people with mental health issues and fluctuating conditions, that are always going to be difficult to provide that service for, particularly when we talk about transparency. When people are not in a rational place on a particular day, that is always going to be an issue. I think there is also an issue as far as the Work Programme is concerned about the larger number of people who are now being put on JSA rather than ESA, even though their conditions would have previously meant that they would have been on a disability-related allowance. Q196 Stephen Lloyd: Do you have any authority? Again, it is a very important anomaly in the system. Do the subs or even the primes have the authority or opportunity to go back to JCP 5 and say, Hang on a minute, folks; this person should really be on ESA or JSA, or do you just have to lump it? Is there any opportunity at all to go back and give a red flag on Mr or Mrs Smith? Michele Rigby: I have members who have said that once they realise that somebody has been inappropriately referred, it is extremely difficult to get them off the programme. That is as much as I can say. Stephen Lloyd: No, that is very useful. Q197 Chair: It is about the tagging, as well. Jonathan, you are saying that there is a lot of people coming in as JSA who previously would have been IB or ESA, but it appears then that they should be coming in as JSA ex-ib, or JSA with a health-related problem, but not bad enough to get ESA. That does 5 Jobcentre Plus not seem to happen. They just come in as straight JSA, and it is only when they hit your advisers that you realise that this person has got a lot more barriers than a conventional JSA claimant would have. But they do not have the money attached to them. Jonathan Cheshire: No. Q198 Chair: Is that what is happening? Jonathan Cheshire: Yes, that is true. I would defer to Martin, but I think there is a particular issue with mental health issues, which are more difficult to spot in the Atos assessment. Q199 Chair: Even if they have come through that route, they are still not tagged. Where is the tagging meant to happen in Jobcentre Plus? Somebody who fell out of work because of a health issue let us say a mental health issue who is not bad enough to get IB 6 under the old system and not bad enough to be on ESA under the new system, but still has an ill health route, because that is how they ended up; they were on statutory sick pay or whatever. That person does not seem to have any kind of label to say they are anything but JSA when they get into the Work Programme. Jonathan Cheshire: I don t think so. I would need to think about it. Martin Davies: I don t think so. Q200 Chair: They don t. Even if they are ex-ib and have been moved over to JSA, they should have a tag, but they don t seem to have that tag either. The tag seems to get lost somewhere. The tag that makes them attractive to your subcontractors because they have got money attached to them seems to have got lost somewhere in that process. Is that true? Jonathan Cheshire: They will be in one of the whatever it is six or seven cohorts at the point they are referred to the prime contractor. Q201 Stephen Lloyd: I think what the Chair is alluding to is that if they are ex-ib JSA, they get extra money. Are you finding that some of these JSAs who should be ESAs and were IB, the actual fact they are ex-ib is dropping off and somehow that extra poundage is not following it? Martin Davies: I have not come across that. Jonathan Cheshire: No. I might need to go back and ask the frontline people. Q202 Stephen Lloyd: That is fine. Just going to a couple of things on this, again, back to Martin: Michele pointed out that in her experience with the organisation she represents, if someone who clearly should be ESA and has come as JSA, you are stuck with it. Is that true from your experience or do Pluss, who are very well known in this area, have the authority to go back to DWP and say, Hang on a minute? Martin Davies: No; no authority. We can support people through an appeals process if they are on our books, but that is it. 6 Incapacity Benefit

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Work and Pensions Committee: Evidence Ev 49 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire Q203 Stephen Lloyd: They are going to be parked then, aren t they? Martin Davies: There is another aspect of this tagging or whatever we want to call it that I feel is quite pertinent as well. It is on the other side of it: that we work on a presumption of employability, so anybody could work with the right level of support. We deal with customers and clients who have, throughout their school life, home life or whatever, been conditioned that they cannot work. We are now starting to reinforce that by putting them through a process that, at the end of it, says, Actually no, you are right; you cannot work. We are having to then pick up people to whom we are saying, With the right support, you can work, so we need to be careful how we categorise people, and I can give an example. Last Friday, a young gentleman and his mother went for a Work Capability Assessment. The first thing that happened was the doctor sat down and confirmed that the young gentlemen had Down s syndrome and therefore obviously would not be able to work. That gentleman actually is in part-time employment and wants to work. So we have the reverse effect of it as well. Q204 Stephen Lloyd: Yes, that is actually why the specialist subs are supposed to be there. Let me move on. The volume of ESA referrals in the first 14 months of the Work Programme was only 34% of that predicted in the original invitation to tender. How has that impacted on specialist disability subcontractors? It is back to what we were talking about earlier, and what my colleague Glenda Jackson was talking about. If it is only 34%, then that is 66% short on a business model. What sort of difference has that made? Michele Rigby: One of our members actually had the opposite problem. They were expecting 650 referrals in the first year and got 1,000. Stephen Lloyd: That is very unusual. Michele Rigby: But it still caused them huge problems in terms of cashflow and planning. I think I do have another end-to-end who did not particularly mention that, but then obviously Pluss is one of our members and might be able to answer that. Mostly, with the spot providers, it is the lack of referrals that is the issue. Q205 Stephen Lloyd: Is that true, Martin? Martin Davies: There are various ways of looking at it, depending on where you are as a specialist provider. For specialist third-sector providers that are end-to-end, Tier 1 providers in an area, we have to remember that the primes also deliver themselves, so you could be delivering as an end-to-end alongside the prime. I think the technical term in that case is a double-whammy because you actually get a reduced level of referrals, because that is the client group you want to work with, and the nature being as it is, the primes might well also be dealing with the most jobready in that group of people. As far as I can see on that, I am not sure how that arrangement can be sustainable in the longer term. You have also got issues if you are a Tier 2 specialist. It depends in that case whether you have actually built up an establishment and an infrastructure to deliver to a volume, or you are being more prudent and waiting for referrals to come in and then expand. But if you have expanded, you have got a serious problem. Q206 Stephen Lloyd: On that, one of our expert witnesses told us it appeared that the measures the DWP has started to take to increase ESA referrals, including by mandating those with longer prognoses of ill health and disability to the Work Programme, were beginning to work. Jonathan or Martin, over the last few months are you beginning to find that this is tipping up a little, or is it too early to tell? Jonathan Cheshire: A lot of the answers on the Work Programme are going to be that it is too early to tell actually, and that is true of that one. One of the issues around referrals that we are finding is that I find it extraordinary that jobcentres cannot predict roughly what the referral rate is going to be next month and possibly two months away. It just goes up and down, from month to month. Q207 Stephen Lloyd: Is one of the reasons for that that it is very difficult, particularly when you are working with people who are longer away from employment, some decades? The challenge that Jobcentre Plus had was that they had no idea about what was going to happen in the appeals process because so many folk in that situation, for perfectly understandable reasons of fear and anxiety boom go straight to appeal. Jonathan Cheshire: Sorry; I was talking about referrals across the board, not just ESA. Stephen Lloyd: Oh, okay. Jonathan Cheshire: It ought to be possible to predict roughly. We have got figures about how many people in every local Jobcentre are on JSA and how many have been on JSA for more than six months. They must know how many are coming up to 12 months, for example. It is incredibly difficult for us to plan our work if one month we get 60 referrals and the next month we get 200. Q208 Stephen Lloyd: Is that a fairly common issue across the piece: that there is not a consistency of the level of referrals, it spikes and there is not a particularly good feedback from the Jobcentre Plus to let them know going forward that, Next month, the month after that, you should be getting X, Y, Z? Jonathan Cheshire: It is not that we necessarily want a completely flat flow. We just want a bit of warning if they are suddenly going to send three times as many referrals next month. That is all. I cannot believe that that is not predictable to some extent. Q209 Stephen Lloyd: Is that a fair comment across the piece, Michele, with your members, do you think? Michele Rigby: I do not think I can comment on it, other than a more general thing that has come through from all of the people I have spoken to. What they need is more transparency and more ability to have their concerns heard when they think things are not quite right, but I cannot comment on that particular point.

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Ev 50 Work and Pensions Committee: Evidence 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire Q210 Sheila Gilmore: I want to ask a further question about this business, particularly people who are in this Work Related Activity Group. Up to now, we have understood that people would only be mandated into the Work Programme if they had a six-month prognosis of being ready to go back to work. The Government I do not know if they have actually implemented it yet were talking about making that 12 months. Does taking people into the Work Programme who are not expected to be fit for work for as long as a year present any problems in what is a two-year package? Jonathan Cheshire: Yes, it does. Yes, obviously, I think. Martin Davies: I would suggest that is what the Work Choice programme is there to deliver, because Work Choice can work with a customer for a long-term, indefinite time if that is the requirement or the need of that individual. So I would suggest that within a two-year period, it is difficult to get those people into work. Q211 Anne Marie Morris: Dave, understandably the Merlin Standard is very much an area we are looking to you for some guidance on. In terms of the Merlin Standard, which is supposed to ensure that we actually get constructive working relationships between the primes and Tier 1 and Tier 2, what does good look like? What should that relationship look like, because I think we are getting a picture from Martin and Jonathan that actually it is quite patchy? What should it look like? Dave Allan: Absolutely. I think some issues have come around like the bid candy, the transparency and so forth. The Merlin Standard was primarily worked up in the welfare to work sector with DWP. To put it in its context, it is to promote and recognise excellence in supply chain management. It is very much about behaviours. My company has worked with the National Quality Standards for 20-odd years, with Investors in People, with Matrix and with this. I have a genuine belief you may say, You might say that; you are the assessment body but I have a genuine belief in the power of this standard. There are over 50 criteria in four elements that have to be met to achieve the standard, and it digs into all these areas of communication. That is a very strong point how do you communicate with the subs? to ensure that, in being assessed against that standard, you must be demonstrating that that is what you do. They can achieve three parts. They can be judged as excellent, good or satisfactory. There were 18 Work Programme providers that were assessed, and this is just the first year of the formal launch of the standard. 11 got good and seven were deemed as satisfactory. Q212 Anne Marie Morris: What is the difference between good and satisfactory? Dave Allan: There is a clear scoring system. Q213 Anne Marie Morris: What does it feel like? In a sense, you are giving us the theory. I want to know what it feels like. Dave Allan: If it is good, the organisation will certainly be demonstrating, through the evidence gathered, that they are meeting all elements of the standard. In each one, they must achieve a scoring of three, under the Principles. We have a lead assessor and two people who are called team assessors. Q214 Anne Marie Morris: Can I just take you back for a minute, because you are giving me an answer about the process and I can read what the process is supposed to be? What I want to know is what it feels like on the ground. Can you articulate to somebody who knows nothing about Merlin what is a good relationship going to look like? What is the prime going to be saying about their relationship with Tier 1 and Tier 2? What is the Tier 2 going to be saying? What are the characteristics? What does it look like? Dave Allan: If I flip it around and see what the subs are saying, We feel that communication has been better. In the past where the prime might have said, You are not delivering effectively; you are in breach of contract, they have started introducing performance improvement plans, so that they will talk to them and say, Look, what are the issues making the contracts not be delivered? Is there something we can do to help you? Are there some people improvement issues that we can work together on? Are we ensuring that we are getting the messages across right? A good would be meeting those areas, but there are still areas for improvement. But there are certainly examples of good practice that have been seen within that organisation. Q215 Anne Marie Morris: So what is satisfactory? Dave Allan: Satisfactory would mean that they are meeting the standard but there are definite areas for improvement. It is not enough to pull them down; we cannot get into advice, but can say, You may like to consider looking at this part in this area; you may need to look at the environment and sustainability. That has come up a lot through the assessments. Satisfactory would be happy that they meet the standards but there are areas where they can improve. Good would be where there is good practice. Q216 Anne Marie Morris: Okay, I think I understand where you are coming from. The thing that worries me is, when you look at Ofsted and schools, satisfactory is now considered to be not acceptable. I am a bit concerned that what you are talking about is actually a standard that I am not convinced should be acceptable. That is why I am trying to dig down into what satisfactory is because one of the things you said was that there were quite a large number that were satisfactory, rather than further up the scale. Dave Allan: There were seven out of the 18. Eleven were good. Q217 Anne Marie Morris: Yes, that is quite a lot. That is my concern. If I was a Tier 2 provider and I had a relationship that you deemed to be top score excellent what would my experience be? Would I feel that you had been liaising with me regularly? Would I feel that you had been looking to see whether

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Work and Pensions Committee: Evidence Ev 51 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire or not I was being considered properly for these contracts? Dave Allan: Yes, absolutely. With excellent you would feel that they would be able to talk about examples of best practice in how well they are doing. Q218 Anne Marie Morris: When you do the assessment, do you ask all the parties the Tier 1, Tier 2, and the prime? Dave Allan: Yes. The lead assessor would make contact with the organisation who will have submitted a self-assessment questionnaire. The assessor has therefore got something from the organisation about how they feel they are doing. Obviously, it has got to be validated, so they would get all the information of who they contract with. As colleagues have said, there can be huge amounts of supply chains, so there has to be sampling. Q219 Anne Marie Morris: That is what was said earlier. How do you pick who you use to sample? As the point was made earlier by Stephen, sometimes the number of Tier 2s is huge unrealistic in my view. Dave Allan: This is an area we certainly need to look at to develop. We feel we have gone as far as we can, in that we publish when the assessments are going to take place, and we invite anybody that has dealt with that organisation, whether they have had a contract, have got a contract or have been refused a contract, to submit their views on that organisation. Q220 Anne Marie Morris: Do you do that by a public notice? Dave Allan: We put it on the website. Q221 Anne Marie Morris: So you don t go directly to them. You don t send them an email? Dave Allan: Because it is, as I say, in the first year, we have made it a requirement now that the primes must contact all of their people to say that this assessment is taking place. ERSA have run some surveys, and we have done some surveys and had feedback from my team, because we are about quality assurance and we always want to improve the process. Q222 Anne Marie Morris: Have you asked how many? If an email has gone out, or however they have communicated with their Tier 2s and Tier 1s, how many responses have they had back? If you are looking at a prime and you are going to do an assessment of the prime, and you say to them you need to contact everybody whom you are contracting with. Dave Allan: Yes, that has just been implemented. Anne Marie Morris: How many of the people contacted then actually took the trouble to reply to say, I have got this comment or I have got that comment? Dave Allan: It varies for organisations. We have had some saying, We did not know the assessment was going to take place and we wanted our view to be known. We have got to look at how we can improve the awareness of the assessment taking place. Equally, to be fair, we have had comments that said, We have seen the report because we publish the reports of the organisations; they are in the public domain and subs have said, We do not feel that reflected our experience. All we can do is try to make sure that we get a greater contribution and we get as much evidence across the piece of who they contract with. What we have to appreciate is that we cannot talk to everybody because it would go on forever, and there is a cost involved to the organisation, so it has to be sampling. But not only are our assessors familiar with the sector, they have gone through lots of training, they are familiar with lots of other national standards like Investors in People, and they are able to not just take answers at face value; they are able to get underneath it and really validate. That is where the benefit of the team comes together. At the end of each day, they will say, What have you collected, how have you scored it and how does that come out as a percentage? Q223 Anne Marie Morris: Do you sense from the feedback you have had from Jonathan and Martin and others, that, while you say systems can be improved, there is definitely room for improvement and something substantially different has to be done to ensure that you get the right feedback so that you can make a proper value judgment? There seems to be this disconnect between the experience of the Tier 2s, particularly, and what is coming out of the results through Merlin. Dave Allan: I do not believe there has been substantial improvement. There are always things we can look at to see how we can do things better and how we can make sure we are getting the full amount of evidence. But we have got lots of positives to say, Yes, we have seen behaviours change, like the examples I have given of performance improvement plans and development activities. There are lots of positives coming through, and that is genuine feedback. Q224 Anne Marie Morris: I am going to ask Jonathan and Martin and go slightly off-piste. What is your experience of Merlin? Have you been involved? Have you been asked? Have you volunteered? Jonathan Cheshire: Yes, yes, yes. I think probably Dave would agree with this. What we need to remember about Merlin is that it is not about the service to the clients, and it is not intended to be. For us, that is actually much more important. We have been involved in Merlin assessments. I did talk to one or two other subcontractors about this, and one of the comments was, Well, we do not bite the hand that feeds us. If you are in a contract, you may be slightly reluctant to criticise your prime. I was told Dave may contradict me here that in fact the people that Merlin talk to are largely chosen by the primes. I don t know whether that is true or not, but that was certainly a comment I got. Anne Marie Morris: In my view, that is not truly objective. Dave Allan: The primes will tell us who they work with, and the assessor will make that call. They decide who they talk to. Everybody who has worked with that organisation has the opportunity to input to the

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Ev 52 Work and Pensions Committee: Evidence 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire assessment. But at the end of the day, we cannot guarantee that everybody will be spoken to. Q225 Anne Marie Morris: No. What about the ones that were on the list and have not actually then done the work? Do they get asked questions? Dave Allan: Absolutely. It must cover who they are currently working with, who they have worked with, and who they have said, No, you are not working with us. Q226 Anne Marie Morris: In terms of the selection, your assessors are given a list of the ones they are contracted with and then they decide which ones. What about the ones they have not done any work with? Dave Allan: Yes, that comes into the sample. Q227 Anne Marie Morris: Do they select from that group? Are questions asked? Dave Allan: Yes, absolutely. Martin Davies: I can only comment on Pluss s experience. We are no longer involved in the delivery of any subcontract on the Work Programme, as from December. We had discussions with the prime in the area we deliver in and they wanted to change the terms and conditions. We did not think that the changes were viable, so we are not working with them anymore. We would not consider invoking Merlin in any way, shape or form. We have other subcontracts with that prime, and we view primes basically as the commissioners of the future. I think we need to be quite pragmatic when we look at the relationships between subcontractors and primes. It is very difficult to understand how Merlin can be all things to all people and give that level of guarantee because it is a commercial relationship. Anne Marie Morris: That is a very important and valid point. Dave Allan: It is not DWP s view and it is not our view that it can solve every problem between primes and subs, but it is a tool for change and to drive change. Q228 Anne Marie Morris: So what happens if there is a dispute between a prime and a subcontractor? Where does that role fit? Dave Allan: It is not our role as the assessment body, but we would refer that through a mediation service, and we would refer that to DWP. We cannot get into disputes between the primes and subs. Q229 Anne Marie Morris: How many disputes have you referred? Dave Allan: There is only one, I think, at present that is going through. Q230 Anne Marie Morris: It seems odd that there is only one dispute. It just seems like an incredibly small number. Dave Allan: As I said, the number of assessments done on the Work Programme has only been 18, which has just been in the first year. Q231 Anne Marie Morris: Okay. That still does not feel quite right, but I guess if there is no further evidence there is no further evidence. What you are saying is you are purely an assessor; you have no role in trying to ensure that relationship works better? Dave Allan: We are assessing how the relationship works and how they can improve that. It is not about passing or failing, or whether you have got the standard or not. Whether they are excellent, good or satisfactory, they get a report and they will get areas to help inform continuous improvement, so they can always get better. We are not just saying you have got the standard or you have not. The teeth in the standard is that, yes, it is a contractual requirement, but it is about changing behaviour and driving improvement through meeting the standard. Q232 Anne Marie Morris: What then would be your role in trying to assist subcontractors to re-negotiate? Would you have any role in that? Dave Allan: No. Again I am sorry I will have to refer back to the criteria of how you meet the standard and what policies you have in place. It comes under conduct and how you design your supply chains. Q233 Anne Marie Morris: Jonathan, I wonder if you can help me here, because I am getting a sense that it is a measure of process, and there does not seem to be anything that actually deals with what happens when the process identifies or these checks identify that things are not quite working. There does not really seem to be a mechanism to put that right. As Martin said, because this is a commercial relationship, it is actually quite difficult. You have commercial, which is about money, and you have quality, which is something completely different. Jonathan Cheshire: We have signed a 125-page contract with lots of small print in it, saying what we can do and what we cannot do and how we are supposed to resolve disputes. I think Merlin is a good thing and I am glad it is there, but it is still relatively early days and I am sure it could be improved. Dave Allan: Yes, sure. Jonathan Cheshire: We would not see it in the first instance as a method for dispute resolution. We would first have a good old hand-to-hand with the prime before we took it outside the relationship, if you see what I mean. I am not sure I can be more helpful than that. Q234 Anne Marie Morris: Is there any problem in the relationship, then? If you are a sensible, feisty organisation and you can see a benefit in just trying to have the debate, trying to get it right, keeping the assessor out of it, having nothing to do with the assessor, that is fine. But if you are not, and you actually do provide a good-quality service, but you do not have the commercial will and fight to want to have a go and sort it out so you are there for the people who have got alcohol problems or drug problems who actually really need you, then do we not all lose out? What happens then? Jonathan Cheshire: I suspect you will, yes.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Work and Pensions Committee: Evidence Ev 53 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire Q235 Anne Marie Morris: Michele, you look like you have a comment or two here. Michele Rigby: Just before I answer, could I just pick up on something. It is not necessarily that organisations do not have the commercial will or understanding to take the fight. They do not often have the capacity; that is the issue. They are very focused on delivery and are undercapitalised by nature. If they have to make a choice between putting in the effort on this or getting somebody else a bit closer to the job market, they will always choose getting somebody closer to the job market. As organisations get bigger, they start to separate those functions out much better, but if we are talking about very small specialist ones, that is often the choice that they have to make. Everybody that I spoke to was very aware of Merlin. We have done quite a lot of work to make sure that our members are aware of Merlin. They all almost without exception said they wish it had more teeth, and if they did not use that phrase, they used one very similar to it. Q236 Anne Marie Morris: What would teeth do? Michele Rigby: I am going to say, Make life fairer. I know that sounds quite wishy-washy, but I think it is quite important, in that what they are talking about is not fairness necessarily for them, but fairness in the delivery of services to people who are very far from the labour market, to make sure that people get the best deal they possibly can. Where they feel it is not happening or that they could be delivering more or they could be making more of a contribution to it and are finding that hard, they would like to be able to make that point to somebody. They see Merlin as being the only organisation they can make that point to, but they feel that there should be something that could, in a sense, champion I am trying not to say cause their contribution to getting people back to work and make it a bit clearer how they operate, what their restrictions and their limitations are, and what their potential and their possibilities are. Martin made the really important point that for our members, we believe that everybody has the right to be employed. Our members set out deliberately to help those that are furthest from the labour market get into jobs that suit them and that they can sustain. The fact that they feel sometimes they are not able to make that contribution under the Work Programme is frustrating, to say the least. From the interviews I did, it comes out that this is not good value for the taxpayer. We can make this happen. It is what is required to happen, and we can make it happen, but we feel we are not always able to take part in the process. Q237 Glenda Jackson: How does Merlin help that? Michele Rigby: Listening to Dave, it is hard to see how it can, but basically what they are saying is they would like Merlin to have a role in making their voices heard to the primes and increasing that level of understanding. Possibly it goes both ways, but obviously I have only been talking to our members. Again, reiterating what has been said, they feel there is no point making much of a fuss and making their point more clearly, because it will not be heard or nothing will happen. Certainly one member made it very clear that it is a question of either doing what we do well, or taking some of our energy away from that and trying to make the system better, but we do not think that will work, so we will just put our energy into doing what we do well. Q238 Glenda Jackson: Sorry to interrupt you here, but I still don t know what constitutes an accreditation under the Merlin whatever it is. I am not clear why Merlin was introduced in the first place. I do not know whether you can be taken out of Merlin whether you can lose that accreditation and if you can, what the punishments are. But to come back to your group, I don t think Merlin actually I don t know; I hope someone will explain it to me. They think that it should be part of a Merlin accreditation process, whereby, say, the primes I am just waffling here to try to find exactly what I mean should give a clear commitment that they would employ or use or communicate with your client group before they could have that accreditation. So it ceases to be a process but actually becomes: There is no money unless you do this. Michele Rigby: I think it is much more about clarity than forcing people Glenda Jackson: Clarity on what level and between whom? Michele Rigby: Between the primes, the end-to-ends and the spot contractors. It is at all of those levels. The lack of transparency is something that came out very clearly. Those that are in the position of providing spot purchases do not feel they get enough information about what might be coming down the pipeline, what their role is, what they might expect etc. Something that came out quite clearly, which is interesting, is that they do not necessarily understand what is not being done, so they could then say, If this it is not being done, we feel it should be and we will seek funding elsewhere, because the assumption is that everything that needs to happen will happen within the black box, and it does not. But what is not clear are the bits that will not happen within the black box, so that organisations with a local capacity can say, We are going to seek funding to provide that bit because nobody else does, and we think it is really important in terms of getting people back to work. So they understand very, very clearly that Merlin is overseeing what is happening, but they would like something that has more ability to say, This relationship is not working well probably, I would say, reading between the lines, it is a lack of understanding of what each side can deliver and where their restrictions are and to tease out that relationship so that it can be a better one. At the end of the day, the reason why it is important is because our members are good at getting people into jobs and that is what we want to happen. Q239 Sheila Gilmore: Dave, if I heard you right, you said you had carried out 18 assessments. I was wondering whether that was an assessment of a prime and all their contractors or just an assessment of a particular individual relationship. How many would you normally expect to do as this gears up, and is this

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Ev 54 Work and Pensions Committee: Evidence 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire going to be published so we can see what is actually happening? Dave Allan: Yes, we have already published the report of the first six months because that included the assessment of the Work Programme providers, and that has covered all of the things we found, the feedback we have had, and how we are looking at improvements like improving awareness of assessments taking place. Q240 Sheila Gilmore: How many assessments was that based on? Dave Allan: We did 18 for the Work Programme. They were the ones required to have it by June; we were required to assess them by June. Q241 Sheila Gilmore: Is that between an individual and a prime? Dave Allan: That has been a mixture of organisations: primes and subs, and private and public, were in that mix. Since the launch, we have made it more of a generic standard. We are actually getting more interest from the private sector as well, because it represents good practice in supply chains. You raised the question of fairness, and that has come up a couple of times. Fairness, in terms of the standard, is picked up under the commitment principle, the criteria under cooperation, how they work, how they communicate and so forth. That comes in to your question. If they do not meet one of those principles in the scoring of that, they will not meet the standard. If they do not meet the standard, they have six months in which they must produce an action plan, and they have to show that they can meet the standard within six months. The teeth with that is the implication is that if they don t meet the standard, they don t get a contract. They have to be reviewed within two years, so it is not just that you have got accreditation and you have it forever. You must maintain it. When the assessor comes back they will look at the areas that were suggested for improvement. It is not to say that they would have to do them but they would have to demonstrate that they have moved on. Equally, although the standard was only launched last year, there has been a lead-in time of about three years in the piloting of it, so the primes that were coming up for assessment have been really working at it for a long time, so behaviours have already changed. This is why some of the issues have come about. Primes and subs are saying, We have been looking at this, we have been adopting the principles and there is change happening. That is what the standard is all about. Q242 Glenda Jackson: Who awards the contract? Is it the Government or the prime? Dave Allan: The commissioners would award the contract; we just award the accreditation. The award of the contract is not our remit. Q243 Glenda Jackson: No, I understand that. I am trying to find out who would award the contracts within the context that we are talking about. Chair: The DWP presumably? Dave Allan: Yes, the DWP. Q244 Glenda Jackson: This is for all of you, on measuring the quality of the Work Programme. There have been three ways to measure this that have been suggested to the Committee: a systematic approach surveying participant satisfaction; increased monitoring of quality by DWP; and the reintroduction of an independent quality assessment regime. In your opinions, which would be the most effective? Martin Davies: If I had to choose from those three, it would be the participant survey, but I would say that you would have to take that quite guardedly because of the mandatory nature of some of the Work Programme. I don t see the value of doing the other two, as they would increase an already burdensome auditing regime on the sector. As a Work Choice provider, in the last three months we have been audited by DWP provider assurance, we have had an audit by their quality team and we have had an audit by DWP ESF 7 teams. All that is costly and, for me, the bigger goal is to get the outcome specification right in the first place so that providers are paid for actually delivering what the Government wants. It is not necessarily just jobs; it is jobs for specific people. Jonathan Cheshire: I would probably have all three. Q245 Glenda Jackson: You cannot have all three. Which is your favourite? Jonathan Cheshire: In that case, I am still going to compromise. I would have an independent quality assessment like, possibly, Matrix, which is also by Dave s organisation. We use it anyway. We want to have that quality standard for all kind of reasons Q246 Glenda Jackson: What would be the definition of quality in that context? Jonathan Cheshire: This is where my compromise comes in. Glenda Jackson: Yes, but Martin says his preference is that you know that it works and people are getting jobs. That is a form of quality. What is yours? Jonathan Cheshire: Mine would be an independent assessment talking to the customers as part of it. Matrix talks to the customers, and I do not think an independent assessor can make an assessment just on process. They need to talk to those who are receiving a service, so that would be my favourite, but I think there needs to be a strong element of customer feedback. However, like Martin says, this is a mandatory programme so there are an awful lot of people who have been told they have to be on this programme, who do not want to be there. They are not satisfied; they are extremely dissatisfied with the whole thing and may see that as the fault of the subcontractor or the Jobcentre or whatever. They are going to be dissatisfied for reasons other than the quality of the service. Dave Allan: Thanks for that lead in Jon. You might expect me to say Matrix, but I genuinely believe in the approach of Matrix, which is an outcome-based standard. What that does is talk to the people who have received the service. It is that mixture of whilst they have criteria to meet, like the Merlin standard, 7 European Social Fund

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Work and Pensions Committee: Evidence Ev 55 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire they have to demonstrate leadership, management, and the objectives that they have set. What we have done in making it more outcomes-based is that we have to say, How do you define the client outcomes? We speak to the client and ask, Did you understand what you could expect of the service? Where we have moved it to give the analogy to make it more outcomes-based, is that where a provider might have a contract to provide 18 CVs for people, what we are saying is, Well fine, you might have delivered the 18 CVs, but what is the impact of those CVs? How many people went on to get a job from that? Because that is the real impact of the service. Q247 Glenda Jackson: That is the defined achievable goal that you would be looking for whether people actually got a job? Dave Allan: Yes, absolutely. They have to show us the assessor that they have clear objectives for the service and that they are understood right through the organisation. The outcomes are defined for the client, and the client can say whether they feel those outcomes have been delivered. Michele Rigby: Our members say the participant surveys are key. They have all said that. Q248 Nigel Mills: Can I take you back to financial terms and risk, and how you all deal with that. I think we dealt with it a little bit earlier. Do you actually think as specialist subcontractors a system of payment by results or outcomes can ever really work for you? Jonathan Cheshire: I do not think we would fall within the definition of a specialist subcontractor, along the lines we have been talking about this morning. We deal with a lot of people with serious disadvantages, but we also deal with anybody that comes through the Work Programme. So the answer is we think we can make it work financially, but that is not our prime reason for doing it. The outcome for us is that at the end of whatever contact a client has had with us, their life is better, and in a lot of cases that will be a job and we hope it will be a job, because we happen to believe that employment is one of the most effective ways out of poverty and deprivation but there will be some people for whom a job is not the right immediate outcome. We want the latitude to be able to work with those people as well. If all we had was the Work Programme, I do not think we would be in the business; it narrows the focus too much. We can make it work because we have got other funding, so we can be a lot more flexible and provide more of a customer-tailored service. Martin Davies: Payment by results for us is a mechanism that we agree with, so the issue is not payment by results; it is actually what we have been asked to deliver. As a third-sector organisation we are set up to invest those surpluses into a social aim; we would not be in a position to risk those reserves for people who are not our customer group. We are very specific in the areas we can and need to work. If we could have viable contracts that would not risk that money, that would be fine. We would be more willing to risk that money if it was for our customer groups, but the way it is set up at the moment is that we would be risking that money for much more generic customers. Michele Rigby: Building on what Martin has said, our members do not have too much difficulty with the concept of payment by results. It is quite a compelling argument. They have difficulty as to what constitutes payment and what constitutes results. When they work with the most difficult clients those who are really far from the labour market and do so from a very under-capitalised position, the great result for everybody is getting somebody into a job that they can stay in. There are many points along that journey that make a big difference, and understanding that the journey does not necessarily happen in 12 months, but you can make very significant progress towards making somebody s life different having different attitudes, beliefs, and behaviour, for example that will eventually lead to them getting a job, is very significant. It is also a saving to the taxpayer in itself, even if they do not get a job in that time. Q249 Nigel Mills: The reason for using large prime contractors who have strong balance sheets was that the cashflow risk of being paid somewhere down the line, rather than regularly, was too much for many small organisations to bear. Do you think the prime contractors in their contracts with subcontractors have actually tried to mitigate that risk for you guys, or have they just effectively said, Well, we get paid, blah, blah, blah, so you get paid, blah, blah, blah? Michele Rigby: It is worse for some. I understand the administration is getting better, but to begin with, the administration meant that the payment-by-results payment came 18 months later. They had worked out their cashflow on the basis that it would be late, and bargained for that. So they left it for 12 months but they actually got paid 18 months at the very beginning of the contract. They say it has got better. But that is the kind of thing that really does drive the most specialist providers out of the business because they are under-capitalised. Q250 Nigel Mills: What is the appropriate level of risk the primes should pass on? Presumably, the kind of thing that might soften the risk but perhaps take some of the reward as well, so they might give you some more money up front but keep some of the success fee. That is not how they work, in your view. Michele Rigby: All my notes say mirror contracts. Q251 Nigel Mills: Do you think that is the right thing for them to do? Jonathan Cheshire: There are some interesting experiments going on with areas like social impact bonds at the moment, in other fields of social welfare work, where there is money to actually do the jobs and there is a bonus at the end of it if you get the outcome. I would have thought, certainly for smaller organisations, that some version of that would be a much healthier climate really. Q252 Nigel Mills: When I look at the Merlin Standard, and I look at criterion 2c, point 2, it says the funding arrangements are fair, proportionate and do not cause undue financial risk for supply chain

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Ev 56 Work and Pensions Committee: Evidence 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire partners. What does undue mean? How do you test undue in that situation? I am thinking the reason why we said you could not give them a prime contract is because you were too small to be able to take that cashflow risk. Yet you are ending up getting effectively the same cashflow risk dumped on you by somebody in the way taking a bit off the top. Is that not just passing on a risk that was thought to be undue in the first place? Do not most arrangements just fail because no attempt has been made to support the subcontractor s financial position? Jonathan Cheshire: We deal with four different primes on different contracts. We have only got one on the Work Programme but we run the Families contract and the Youth Contract and various things, so we are dealing with four different primes and they all have slightly different relationships. Most of them basically, in our case, on payment-by-results contracts pass the risk pretty much 100% to us. I do know of other primes that are helping their subcontractors rather more in other parts of the country. Q253 Nigel Mills: Martin, you refused to work on this, because you thought the risk was too great, presumably. Martin Davies: Our analysis showed quite slight variations in outcomes would put the organisation at financial risk. If that was guaranteed to be delivering to the customers that we are there to serve, that would be fine. We were not willing to take that risk. Q254 Nigel Mills: You are not all sitting there saying, Actually, they should be paying us up front, and taking the risk on payment by results themselves. You are not saying that is what should happen. But are you saying that there should be a bit of that around? Michele Rigby: There should be a more appropriate level of risk and reward. I would like to make a further point, which is that without that more appropriate balance, what has started to happen, and is at great risk of happening, is driving out innovation. It is one of the areas that the third sector in general prides itself on being innovative. If you are risking your final payment on innovative practices, you are less likely to give them a go and you are more likely to stick with the very narrow criteria, so that you can prove that you have got the result. So if that innovation has been driven out, the results become more and more mundane, quite honestly, and less effective, and we are not trying out new practices and we are not finding out what works better. That is a real risk. Q255 Nigel Mills: Dave, can you just talk me through how you test what undue risk is being passed on? Is it just as simple as, Well, you are passing on the same risk as you have got; that must be fine, or is there more to it than that? Dave Allan: I think that the assessors have to go in and look at the processes that would define how they operate under those criteria. So they would talk to them and say, How do you do this? What are the arrangements? It is really just getting that feeling of how it works and how they can feel that they satisfy those criteria. Q256 Nigel Mills: Okay, but if you found evidence that a subcontractor withdrew from the process because the risk was too great, would that not set some alarm bells ringing? Dave Allan: Because it is a sample, if that was one bit of feedback, they would have to look at the validation across the whole of the sample to see if that was happening right across the piece, or whether it was just an isolated incident. That is where they have to weigh up whether it would meet that part or not. Q257 Nigel Mills: I think sometimes when a prime contractor passes someone on, they keep a bit of the attachment fee, presumably for the work they have done. Do you think that is something that is fair or do you think that should not be happening? Jonathan Cheshire: It depends on how much, I guess. Can I just make one other comment about this? One of the other elements of the equation as to how much risk gets passed on and how much money gets passed on is how much freedom you have to do it your way. One of the things that I find particularly galling about the Work Programme is that there is a black box at the prime contractor level, but below that we are still being micro-managed. So we are taking all of the risk, but they are still telling us how to do the job. As far as we know, we are performing at least as well as their own direct delivery offices, but they are still telling us how to do the bloody job. If we are taking all the risk, I think we should just be left to do it; that is the principle. It seems very, very bureaucratic for a payment-by-results system. This is an interesting example about putting someone out on work experience, which we do quite a lot, as it is quite a useful way of easing someone into work. If the Jobcentre is placing someone directly into work experience, they have a one-page document that the employer signs to say they have all the health and safety in place and they have the right policies, etc. When we do it, we have to get the employer to sign 11 pages of detailed documentation. If you go into Marks & Spencer or John Lewis, who have got all this stuff in place, that is great. If you are going to the guy down the road who employs two people and his brother-in-law, and you are asking them to take someone on work experience for three weeks, we are quite good at building relations with those SMEs, they say, Yes, we will do that. You then say, Oh, by the way, would you mind filling this out, and that kills it dead. If we are taking all of the risk, I think we should be allowed to do the job the way we know how to do it. Martin Davies: On the question you asked about the retention of money, I think it really depends on the overall model of provision, but the primes are well used to having very sophisticated financial modelling processes, and therefore they can reduce their risk quite considerably by the volumes of subcontracts that they put out compared to the volumes that they deliver themselves, and then also combined with the retention money they hold back. In essence, you could have a subcontractor having a disproportionate amount of the risk because of that equation.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG03 Source: /MILES/PKU/INPUT/028832/028832_o003_db_WPC 13 02 13 CORRECTED.xml Work and Pensions Committee: Evidence Ev 57 13 February 2013 Dave Allan, Martin Davies, Michele Rigby and Jonathan Cheshire Q258 Teresa Pearce: Just to go back to Martin, you said that you declined to take up the Work Programme because it was too risky, but you do work through a consortium. How does that work? Martin Davies: We work through Disability Works UK, which is a consortium that was set up to work within the Work Programme. We were never going to be direct delivery ourselves; we were going to be a partner. Q259 Teresa Pearce: Did that lessen the risk, going through the consortium? Martin Davies: No, it increased the risk. It was very appealing at the tender stage, but, if you can imagine, every reduction in flow to specialist areas was compounded by the fact that we had members all trying to deliver. Q260 Teresa Pearce: So it is not the model going forward. Martin Davies: It has its challenges. Q261 Teresa Pearce: I will just go to the last question. We talked about attachment fees, and they are going to be withdrawn in April 2014. To Michele and Jonathan, what plans have your primes made to cope with that, and do you expect this to have an impact? Michele Rigby: I cannot answer for the primes; I can only answer for our members. They are all quite concerned about that. They do not think it is a good idea; they think it will have a significant negative impact on them. Q262 Teresa Pearce: Do they fear that it means that if there is no attachment fee, the primes will just hang on to work themselves, rather than flow it down? Michele Rigby: I don t have that level of detail, I am afraid. Teresa Pearce: But they are concerned? Michele Rigby: They are very concerned about it. Jonathan Cheshire: We have known about this for a very long time, so we have planned for it. It depends to a large extent on how much we can earn in outcome payments before we get to that stage so that we have got a bit of a cushion. I do not think the primes have particularly planned for it. In a sense, we have not, other than accepting that it is going to happen. The only effect it might have, across the system as a whole, is that it may very well increase the amount of parking that goes on. Q263 Teresa Pearce: Given that a lot of the organisations involved at different levels of the Work Programme are organisations without capital, without getting that attachment fee, how are they going to finance? Is there more risk that those middle organisations might collapse? Jonathan Cheshire: I think there probably is, given that the level of outcome payments has actually been lower than the original expectation nationally, so I think that yes, there is a risk. Martin Davies: There is potential that the business cases that some subcontractors have been using have not totally realised and recognised that reduction. Therefore, what seems to be a viable option now may not be a viable option as it goes forward. Q264 Chair: That could be the straw that breaks the camel s back in terms of the financial model for some. Martin Davies: It could be, but they should all be aware of it. Chair: But they thought they were going to get a lot more attachment fees up until then. Teresa Pearce: They are already on the edge. Chair: That activity has been lower; the referrals have been smaller. Teresa Pearce: What we have heard is that it is stifling innovation, people are not making the money they thought they might, and now there is this other thing as well. Q265 Nigel Mills: Maybe I am labouring this point. Presumably, if I worked for a prime contractor, I get paid a salary; I do not get paid a success or outcome fee, as far as I know. Jonathan Cheshire: I don t think on the Work Programme on some earlier contracts there have been individual bonuses, in the big primes. Q266 Nigel Mills: Effectively when I subcontract to you guys, I put you on a payment-by-results thing with no attachment fee going forward. Is there not a strong argument that when I am using a specialist small provider that I should effectively be, as a prime contractor, recreating an attachment fee to make it viable for you to do this? Is that something that you think they ought to be looking at doing? Jonathan Cheshire: Yes. Martin Davies: That is within their gift to do. Jonathan Cheshire: Yes, it is up to them under the system. Q267 Nigel Mills: Do you actually think that would be good practice for them to do, Mr Allan? Martin Davies: Maybe that would go back to the original design of the Work Programme. Nigel Mills: You would be disappointed if you did not see contractors doing this when you were looking at your Merlin audits. I think that was a yes. Chair: Thanks very much for coming along this morning. Thanks for your time in answering our questions. Your evidence will be extremely useful for us when we come to write our report.

cobber Pack: U PL: COE1 [SE] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Ev 58 Work and Pensions Committee: Evidence Wednesday 6 March 2013 Members present: Dame Anne Begg (Chair) Debbie Abrahams Mr Aidan Burley Jane Ellison Graham Evans Sheila Gilmore Glenda Jackson Stephen Lloyd Nigel Mills Anne Marie Morris Teresa Pearce Examination of Witnesses Witnesses: Kirsty McHugh, Chief Executive, Employment Related Services Association (ERSA), Sean Williams, Managing Director, G4S Employment Support Services, Andrew Conlan-Trant, Director of Labour Market Services, Rehab Group, and Richard Clifton, Business Development Director, Shaw Trust and CDG, gave evidence. Q268 Chair: Can I welcome everyone this morning to the fourth evidence session of our inquiry into the Work Programme? Can I welcome you here to give evidence? There are some familiar faces and some new faces as well. Can I start, perhaps, with you Richard? Could you introduce yourself for the record? Richard Clifton: My name is Richard Clifton. I am Director for Business Development at the recently merged charities of CDG and Shaw Trust. We are the prime contractor in London East for the Work Programme and also subcontractor in another six areas, as well as being a prime for Work Choice across England, Scotland and Wales. Sean Williams: My name is Sean Williams. I am the Managing Director of G4S Employment Support Services. In that role, I have responsibility for our three Work Programme contracts: Manchester, Cheshire and Warrington; Kent, Surrey and Sussex; and North Yorkshire and Humberside. Kirsty McHugh: I am Kirsty McHugh; I am Chief Executive of the Employment Related Services Association, ERSA, which is a trade body for the welfare-to-work industry. We have about 120 members, including just about all the prime contractors. You can see numerically more of our members are subcontractors or those outside Government-commissioned programmes. Andrew Conlan-Trant: Good morning. I am Andrew Conlan-Trant; I am a Director of Rehab Group. Rehab Group is a third sector charity organisation with over 60 years experience of working with hard-to-help people, guiding them towards independence and an improved quality of life. We are the lead partner in Rehab JobFit, which has Work Programme prime contracts in Wales and South West England. We were set up specifically for the Work Programme. Our delivery model is 100% through a supply chain. About two-thirds of that supply chain is third sector and public sector. We also do some delivery ourselves in Wales and South West England through Rehab s subsidiary organisation TGB Learning. Q269 Chair: Thank you very much, and you are all very welcome. I will address the first question to you, Kirsty. If job outcome performance builds as ERSA expects, what level of performance do you expect the Work Programme to achieve in years two and three of the contracts? Kirsty McHugh: The Committee will be familiar with the Work Programme outcome and sustainment figures, which were released by the Government in November of last year. You will also know that they are a partial snapshot of performance and they alone will not give you much of an idea about what is going to come next. The stuff that was released at the end of November relates to people who had been in work for six months by the end of July. In effect, it only really told you about people who had entered work by the end of January 2012. You can see there was a real time lag factor, which we need to address in terms of getting good, timely information into the public arena. ERSA has been collecting job-start figures, so not those people who have been in work for six months but those who have got into work. We know at the end of September of last year, 207,000 individual jobseekers had entered work; it does not tell you how long they have been there, but they had entered work. Now, if you go back through 2012, frankly, the startup phase for the Work Programme was tough, for a range of reasons, at the end of 2011. In February 2012 we had the industry getting about 11,000 people per month into work. By September, that had doubled to 22,000 people a month, so you can see the upward trajectory. That was partly because the economic situation was slightly better than it was before, partly because contracts had settled down, and partly because people were just getting better at what they were doing. We are going to be releasing new job-start figures towards the end of April, we hope, and we are working with the prime contractors around the collation of those. I cannot give you that figure yet, but it will probably be 50% higher than the one we released at the end of September. Do not hold me to that if it is not, but we are probably looking at about 300,000, who have gone into work. Q270 Chair: If that is your projection for year two, what about year three? Will it improve substantially? If you are saying it will be 50% better than it was last time, that is still not very good. Kirsty McHugh: Of course, it is about how many of those turn into the job outcome. One of the things

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Work and Pensions Committee: Evidence Ev 59 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton the industry is getting far better at is identifying the interventions needed to get them to the job outcome point and sustainment, and, of course, otherwise they don t get paid. There are all the incentives around making sure that does happen. Targets were missed in terms of minimum performance level for year one, and there are no surprises there, for a range of very well rehearsed reasons. Year two is looking far happier, and year three is as well, but the economic situation is one of the unknowns. If the economy does not grow at a sufficient rate, it is going to be difficult for anybody, whether they are a subcontractor or prime contractor, to get as many people into work as they would otherwise. Therefore, there is certainly an element of the unknown around that. Q271 Chair: You must have known what the economic situation was going to be when you were bidding for these contracts. That has been the situation since 2008. Kirsty McHugh: In terms of the prime contractors in my membership who were bidding, I do remember that at the time the invitation to tender was put out, the Office for Budget Responsibility was talking about 2.6% economic growth in 2012. We have recent figures showing 0.2% economic growth, which is quite different. Q272 Chair: The whole point of the Work Programme and the claim that the Government has made for it is that it would be better than anything else there has ever been. To be better than anything else that there has ever been, it needs to operate in the good times and the bad times. The minimum performance levels were not hit in year one. From what you are saying, it is looking as though they are unlikely to be hit in year two and year three. There is a mismatch there, surely. Kirsty McHugh: It is probably the best designed programme that we have had to date. It really builds on a lot of good work the Labour Government did in terms of the Flexible New Deal, etc. All those elements are good. Some geographies of the UK are tough and there is no point pretending otherwise. It is going to take a while for this to build. The Work Programme is very much a work in progress. There are a lot of very good indications, and the job-start figures are the most solid indication we have got as an industry of what the job outcome and sustainment figures are going to be. If you ask me, Chair, what it is going to look like in two years time, I think I would be quite foolish to give you some firm predictions in relation to that I would probably get it completely wrong. Q273 Chair: Perhaps I will ask the rest of the panel if they have got predictions in terms of whether the output in job outcomes is going to achieve more than the minimum. Sean, you are itching to speak. Sean Williams: I will come in on two points, if I may. If Work Programme is not measuring against the minimum performance levels, there is clearly either a problem with Work Programme or there is a problem with the minimum performance levels. I would suggest that the minimum performance levels are completely inadequate for the task that they have been set to do. They were set in completely different macroeconomic conditions and, even at the time, leading figures in the industry said that those minimum performance levels were just not realistic. Q274 Chair: Indeed, this Committee said exactly that. Kirsty McHugh: It did. Sean Williams: Absolutely. You made another point that the Work Programme was supposed to be the best programme. It is supposed to be the best programme, given the macroeconomic conditions and given the amount of funding it has got. I don t think there is anyone who works in this industry who does not think that Work Programme is performing better than any other programme would, given the amount of funding and given the macroeconomic conditions. Chair: You have just condemned it with faint praise there, surely. Sean Williams: I don t think so. Q275 Chair: In other words, the other programmes would not have done any worse than this. Is that what you just said? Sean Williams: No, the other programmes would have done much worse than Work Programme let me be clear on that. Work Programme is doing better than any other programmes, given the amount of funding and given the macroeconomic conditions. Let me give you some reason for hope on some of the measures. Remember, this is a two-year programme, so we are also measuring the number of people who have completed the marathon a year into the marathon and saying, No one s completed. We need to get to the end of the race. For young people who have been on the programme for 18 months, we are currently helping well over half of those young people into jobs. Q276 Stephen Lloyd: Just to be clear there, Sean, and to be precise with the words, do you mean over half have got jobs? Sean Williams: Job starts. Chair: That is not sustained job outcomes. Sean Williams: That is not sustained job outcomes. Stephen Lloyd: They are into a job start at the moment. Sean Williams: Absolutely right. Of course, the time lag effect is doubled. Of those young people who have been on the programme for 18 months, over half have got jobs. We would then have to wait another period of time until they can become sustained jobs. We would expect 80% of those jobseekers to have sustained jobs, and that would be over 40% of young people going through Work Programme, who of course have been with Jobcentre Plus for at least nine months unsuccessfully. These are very hard-to-help jobseekers who are coming on to that programme, and the G4S Work Programme will be helping from the statistics I have well over half of those young people into jobs. We would expect at least 40% so 80% of the 50% to be sustained in that employment if they are given sufficient time to reach a sustained employment outcome.

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Ev 60 Work and Pensions Committee: Evidence 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton If you look at the historical cohort data so, not including data for people who have been on Work Programme for one or two days, as it is not enormously surprising that it has not helped them into work Work Programme is performing much better than the minimum performance levels and various other coverage would have you believe. It is an enormously misleading picture. Richard Clifton: Our experiences mirror what Sean is saying. We are looking at a similar figure: half the people in the 18 to 24 group have already entered employment and, yes, that is then the time lag that we have to wait for before we get to an outcome. There is a similar picture in the JSA group. Of customers 25-plus, 40% have been on the programme from the start and have already moved. Q277 Chair: Are you both saying that, when the figures come out in May, the minimum performance outcomes will have been achieved for year two? Sean Williams: No, I am not saying that. I am saying that there is a fundamental problem with the minimum performance figures, and if the Work Programme metric does not meet the minimum performance level metric, I think that tells you more about the minimum performance level metric than it tells you about the Work Programme. If it is a very specific question, I think G4S s Work Programme will meet the minimum performance levels in some areas for some customer groups, and miss it for some customer groups in some areas. I think that it will be similar across the piece. Q278 Chair: That could lead to quite serious problems for you, because in 2011, in our previous inquiry into this, Inclusion told us that it would not be possible for prime contractors to be profitable if you were operating at around or less than the minimum performance levels. Those levels are really quite important to you; you have to hit them, otherwise you don t make a profit. Would you recognise that? Will you struggle to make money if you don t hit the minimum performance level? From what you are saying, you probably won t reach that level. Richard Clifton: I think we will hit close to or near to it in a lot of the categories, and in our modelling, from the start, when we put the contract in, we were, as a charity, very careful to make sure that we did not put the organisation at risk. Actually, all of our predictions are showing that we will be secure with the flight path of performance that we have got for people entering work and the numbers we expect to get into outcomes. From our point of view, we don t see it as a major risk at this point, but it is something we would have to continue to monitor. Sean Williams: I expect a lot of programmes to be profitable. Andrew Conlan-Trant: I would expect more programmes to be profitable. Q279 Chair: Kirsty, are any of your members quite worried about their financial viability? I appreciate you would not be able to name them. Obviously, we have got big organisations here, but there are ones that perhaps are operating closer to the line. Kirsty McHugh: Absolutely. We have subcontractors in membership as well as primes, and over half our members now are voluntary sector. I will be open about it. During 2012, a lot of them went through a very tough time. I certainly got a lot of telephone calls, a lot of emails and a lot of concern, because the cash dip, in terms of the payment by results programme, was deeper than many thought, because it is taking longer, generally, to get people back to work. They thought it was going to take six months to get x number of people into work. The reality of the economic situation means that it has been taking them nine months and, therefore, in terms of the PBR the payment by results element the cash need was deeper. We have turned the corner a little bit. Generally, what I am picking up is that the return on investment that everybody needs, regardless of whether you are a charity or a private sector organisation, is significantly lower than people thought when they signed the contracts. The overall money available to the Work Programme is significantly less than when people signed the contracts. That is the reality by which everybody, at all levels, is operating. Q280 Chair: Why? Kirsty McHugh: There is a range of reasons. It is around how many people they are getting into work over the period. It is the payment by results element. They work with an assumption of how much money they have got overall to work with. Q281 Chair: It was not just the minimum performance that was ambitious; it was how much money you were going to get for getting people into work that was overly ambitious? Sean Williams: We were expecting 2.6% growth. If we believe the minimum performance level targets, we should also believe the 2.6% growth, which was put in the same document. That 2.6% growth just did not materialise. When people were making their estimates of the number of people who would go into employment, it was done in a very different macroeconomic context. Work Programme is doing some really fantastic stuff, and one of the key things that Work Programme does is move the measure of sustainability. With old employment programmes, you got paid when somebody started on the programme or when someone started a job. It did not really align with the incentives of the jobseekers and the incentives of the taxpayer. Work Programme properly moves that payment point to, first of all, six months and then potentially up to 18 months/two years after somebody has started a job. For the first time, we are looking at transforming someone s life getting them off benefit for a long period of time and really moving them from a culture of unemployment to a culture of employment. No one had ever done that before. We made some estimates around how long it would take to get someone to six months of employment, and then we made some estimates, as an industry, about how many people were then continuing in those jobs. Some of those estimates have proved to be too optimistic. We should

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Work and Pensions Committee: Evidence Ev 61 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton not be ashamed of that; we are trying to do something new for the first time. Q282 Chair: We have had welfare to work and New Deals since the late 1900s. Not the 1900s Sean Williams: It just feels like that. Chair: I mean, since the late 1990s. That was a criticism of it. There was a plethora of different New Deals, and some of them were moving very long-term people into work. Sean Williams: The private-sector-led New Deal was paid 80% up front, so 80% when someone started on the programme, and 20% when someone started a job. There was no money whatsoever attached to a sustained job outcome. Q283 Chair: It still must have been able to track people who were in the sustained group; there was not a payment attached to them. Are you saying that nobody knew what happened to these people? Sean Williams: What gets paid, gets done. In the private-sector-led New Deal, people measured the number of people going into work and they did not measure the number of people staying in work. Q284 Sheila Gilmore: For a long time, we were told by the Minister maybe not by you that we could not rely on ad hoc figures or we had to wait for the performance outcomes that had been promised, which we are now told were probably rubbish, and everybody said that in the first place. Why should we believe these figures? We were told by the Minister it was unsafe to believe figures like this. What constitutes a job start? Kirsty McHugh: Our job-start figures are the best you are going to get. Realistically, what we want is more information put into the public arena more regularly. It is not good for the industry for there to be a vacuum of information around performance. Q285 Sheila Gilmore: We were told the reason for the vacuum was that the figures would be unreliable. Kirsty McHugh: That was a political statement, and I am not going to comment on that. From an industry point of view, all I hear from all my members is they would rather share more information about performance with local authorities, with constituency MPs and with each other than they are able to at this point in time. The fact that we had to wait a year before we got any information in terms of job outcomes and sustainment was not good for the public and it was not good for the industry either. ERSA collects the information from all of the prime contractors. Our information is as good as they give us, and we have to rely on that. We can collate that and put the job-start figure into the public arena because we think there is a public interest in that but then, also, we can play back to our members how they are doing against each other, because otherwise that is not visible to them, and that is not a good state of affairs either. It is really important that that vacuum is filled. Q286 Chair: What is the definition of a job-start? Kirsty McHugh: This is about individual customers and individual jobseekers entering work. Q287 Chair: It could be one day? Kirsty McHugh: It could be one day or it could be one, two or five years. Q288 Chair: What goes towards the payment? Kirsty McHugh: We do collect the job outcome and sustainment figures as well, but we are not allowed to put those into the public arena. That is stuff the Department wants to control, via ONS 1. We are allowed to publish only the job-start figures; I would like to publish more. Nigel Mills: It is intriguing that you are told what you can and cannot publish. Kirsty McHugh: Indeed. Q289 Nigel Mills: Can I just take you back to the financial health of many of the contractors in this situation? You all seem to say you would be profitable, including perhaps the weaker-performing of you so far. Do you expect any contractors basically to go bust and to have to give this contract up, or are you expecting now that that will not happen? Kirsty McHugh: I don t think we are going to have any prime contractors going bust. 2012 was tough for a lot of organisations for the cash dip reason, etc. We are not in that situation across the prime contractors now. In terms of the subcontractors, we have got a mixed picture of performance; we have a mixed picture of performance across the prime contractors as well, which is one of the interesting elements that is coming out of that. One of the things we do need to be aware of is the disappearance of the attachment fee, which goes if you remember down and then disappears entirely halfway through the contract, which is going to put quite a lot of pressure on subcontractors. They will be delivering without that upfront payment from here on in. I am very conscious that that is going to put quite a lot of pressure, financially, on subs. The Minister would say, Well, they knew that when they signed their contracts. However, as I said, because the return on investment is lower and further away for the industry across the piece, they are the organisations more than anyone else that I am concerned about at this point in time. Q290 Nigel Mills: When or if DWP decides to start tweaking referral levels to reward those who have been more successful, do you have any worry that that might tip some contractors over the edge? Kirsty McHugh: It is a mixed picture. Frankly, if the only contract you have got is Work Programme and it is payment by results, that is a less comfortable situation to be in than if you have got a diversity of contracts, as you can spread risk. If you are part of a larger organisation that has deeper pockets, that is probably a more comfortable position to be in than if you are not. That said, even if you are a very large organisation such as G4S, you will, like Sean, have to justify your performance all the time within that organisation. 1 Office for National Statistics

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Ev 62 Work and Pensions Committee: Evidence 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton I don t think we are looking at a big financial collapse or anything along those lines. But it is tougher than people would want, and it is the subcontractors, in particular, that we need to keep an eye on. Q291 Nigel Mills: Presumably you think that, if one contractor did have to give up their contract, there would be lots of other providers who would be quite willing to step in. Would G4S be keen to expand into other regions if a vacancy became available? Sean Williams: Yes, absolutely. We have seen a microcosm of this. We are a pure prime contractor, so we don t keep any referrals to ourselves; every jobseeker who comes to us we refer out to our network of subcontractors. We have been already moving referral flows between subcontractors. We have brought new supply chain partners into the supply chain. Indeed, we have had to remove a number of providers for underperformance. That active management of the market has made a massive difference to performance. We find that, when we move flows, in about six to seven weeks the performance goes up across the whole system. As you would expect, if we move an underperforming subcontractor and bring in a very high-performing subcontractor, again performance goes up. There are, therefore, some real lessons to be learned around active management of supply chains there at the DWP level. Q292 Nigel Mills: What is your measure for underperformance that means you sack a contractor? Sean Williams: It is reasonably easy. We would not make the mistake of setting a minimum performance level. What I can do is take my 26 core subcontractors and put them in a league table. We account for regional differences and various other bits and pieces. In the South East, for example, if I have got 10 subcontractors and we put them in a league table and the ones at 8, 9 and 10 are performing significantly worse than the top seven, that is a pretty clear indication. For the first time ever in welfare to work, we are comparing apples with apples. Q293 Nigel Mills: When did you first sack a subcontractor? How far into the contract were you? Sean Williams: We had a significant renegotiation with one of our subcontractors six months into the contract. Q294 Nigel Mills: We have just been hearing that it was not fair for DWP to publish data or assess prime contractors until 18 months into the contract. Yet, you, taking that down a level, managed to take a pretty robust decision at only six months. Sean Williams: The more actively you manage the market, the more quickly you drive performance improvement. Q295 Nigel Mills: Are you saying DWP perhaps ought to have been more actively, and earlier, managing the performance of prime contractors? Sean Williams: If the Department started to implement market share based on relative position in contract package areas (CPAs), we would see a performance improvement. The sooner and the more boldly that is done, the better the performance you will see in Work Programme. Q296 Nigel Mills: Can I just take you back to the expected level of outcomes? You appear to be suggesting that we might get to 40% particularly for younger people on the contract and the numbers we worked out suggested we might get to 30%, roughly, as that sustained outcome. That figure is roughly around the minimum performance level. If what you are saying is that this is the best value programme and we are going to get those 30% of people into a sustained job, is that successful for these programmes? Do you think that would be a real achievement that was worth having? Sean Williams: Yes. Our job as prime contractors within Work Programme is to spend the money we have got to help as many people into sustained employment as possible. Personally, and as an organisation, if we are supporting 40% of people into work and sustained jobs and not supporting 60%, we will always consider that 60% a failure. We want to help every single unemployed person we see into employment, so, of course, we always want to achieve 100% and get as close to that as we possibly can. However, given the funding that Work Programme has got and the macroeconomic conditions it finds itself in, I personally would think 40% would be an extremely good result. Kirsty McHugh: You have got to remember, of course, that there are no easy wins on the Work Programme. By definition, these are people who, by and large, have been unemployed for at least a year. In some cases, it is much longer. We have got some interesting demographic information coming through about the barriers to work that people are facing multiple barriers in many cases which is really going to help us in terms of designing future programmes. For me, the last thing I want to do is paint a picture that says, You shouldn t take someone from the Work Programme because they are hard to help. That is the worst message to send out to employers. We want employers really engaged and enthused about this. We have a disability employment forum, and we do know, through our work with them, that the health conditions we are seeing on the Work Programme are quite severe, in many cases. 40% of people coming through on Jobseeker s Allowance have some sort of healthrelated condition. The people coming through on Employment and Support Allowance (ESA), I was hearing yesterday, have got more challenges than those who were previously on WORKSTEP, which some of you will know as a previous disability employment programme. That information is really helpful to have, because it means we can design services now, as an industry, and it will also help with future commissioning. Q297 Nigel Mills: What do we do with the 60% to 70% of people who won t find a job? What is next for them? Kirsty McHugh: Absolutely. Sean Williams: Sorry. It won t be 60% to 70% of people who won t find a job; 40% to 50% of people

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Work and Pensions Committee: Evidence Ev 63 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton won t find a job, and 60% to 70% won t get to the sustainment point of six months. There is quite a big difference there. Q298 Chair: They may have got jobs in previous schemes. Isn t the danger that that 60% to 70% of people are the same group who have already been through New Deals and various other things? They have been in the revolving door for the last 10 years, and they will have got some jobs, because other welfare-to-work schemes did get them into jobs, but not the sustained jobs. What happens to them? Richard Clifton: What we have got to remember on this is that, because it is an individualised programme, we are progressing people nearer to the employment market even those that do not get to that sustainable job market. Q299 Chair: The Government does not like that, because it cannot measure that and cannot pay for that. Richard Clifton: As a charity, we are investing a lot in everybody that we serve, and I am sure that is the same for the majority of providers out there. We do not see that we are just chasing those outcomes; we are working with people on an individual basis to move them forward. We can give an example of one agoraphobic customer we had through, who our advisers could not get out of the house. We had an outreach adviser who had to work with them and take them through steps. First, we had to get them to walk as far as posting a letter at the end of their street. Six or eight months later, they can now get into our centre. This is not a programme that is leaving people behind, and we cannot just see this as being a programme that is solely about job outcomes. It is about changing people s lives and allowing them to move forwards. Even if we do not get paid outcomes for every single person, as a charity the reason we are involved in this is to make sure we change people s lives. Q300 Nigel Mills: Mr Williams said, What gets paid, gets done. Presumably, that does not get paid but is still being done. Perhaps you are being more generous than Mr Williams organisation, by that logic. Richard Clifton: We will have different views, but unless you work with everybody on that, you will not get any of the payment. There cannot be this idea that we can pick off any particular group of people and that will be where the outcomes come from; that is an absolute myth. We have to work with everybody who works through and move everybody as far as we possibly can; that is how this programme will work. Andrew Conlan-Trant: I would support what Richard has just said there. In a third sector, charity-type organisation, certainly you have to work with the contracts that you have; there is no doubt about that. You have to also work within the context of the people who come to you. It certainly would not be fair to say that, if somebody comes to us with a multiplicity of problems, as many do and we have good capacity to work with that we are not going to work with those issues. I suppose it does show up the potential issue with some of the harder-to-help clients: it could take up to two years before a customer is ready for employment. What have you got to work with during that period of time? You have an attachment fee to work with from a commercial point of view. It is very hard to do some of those things, but we still continue to and we still strive to do it with the cohort of people who come to us. Q301 Sheila Gilmore: What are you going to do when the attachment fee goes? Andrew Conlan-Trant: That is going to be very difficult. There is no question about that at all. Q302 Jane Ellison: It sounds to me like you are explicitly saying that you are not creaming and parking, to use this famous phrase. That is quite useful to have, because previous witnesses we have had have hinted in that direction. That seems to be explicitly what you are all saying you are not doing. Sean Williams: Creaming and parking are two separate things. On the creaming accusation, it just fundamentally misunderstands the individuals who are sent to Work Programme. Jobcentre Plus is an effective organisation. It has seen individuals for at least nine months in the case of young people, and 12 months in the case of everybody else. It has had a range of interventions with those individuals through its personal advisers and through its support contracts, but it has been unsuccessful in finding those individuals work. By definition, the individuals coming on to Work Programme are long-term unemployed and difficult to help. There is no cream to cream. These are all difficult individuals to help. Parking is quite an interesting one, and the data here are telling a different story to some of the outside observers, who are maybe not involved in the programme so don t really know what is happening in it. We did a piece of work on all of our subcontractors a year into Work Programme, looking at cohorts then who had been on the programme for a year. I will be honest; what we expected to see was that, once people had been on the programme for a year/14 months, the off-flows so the people going into jobs would dramatically decrease. We wanted that data because we wanted it to then be able to manage our subcontractors and say, You need to do more with the post-one-year Work Programme customers. That is not what we found. From talking to other managing directors of prime contractors, it is not what we found at all. What we found out was that, even for the June cohort the people who had been on the programme the longest we are still placing people from that cohort into employment. There is data suggesting that any suggestion of whole cohort parking is not happening. The question is then: is Work Programme going to help someone who is homeless or someone who has a severe mental health condition or someone with severe substance misuse issues? If the question is whether Work Programme is going to help that individual, the answer is, very honestly, No, it s not. However, there are things that we can do in delivering the Work Programme that progress that individual and move them further along. We have, if not a financial

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Ev 64 Work and Pensions Committee: Evidence 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton responsibility what gets paid, gets done does not mean that what gets paid is only what gets done a moral responsibility. If you look at the organisations within our supply chain, the sorts of individuals and organisations working within welfare to work, by and large they want to move all of those individuals. Kirsty McHugh: I would like to make a couple of points from a whole industry point of view. The Employment and Support Allowance performance figures are not good enough. The industry knows that, and everybody needs to get better at that. There is a range of reasons, such as referrals having been late, etc. Even with that aside, those figures are not good enough. It is going to take quite a while to get a lot of people on Employment and Support Allowance into work. There really are not any easy wins. We are not going to see big spikes in performance early on that will be towards the tail end of the two years in most cases. There needs to be a cross-industry effort in relation to Employment and Support Allowance jobseekers. There probably needs to be more visibility of whether people with particular issues I was talking to the RNIB yesterday, for instance are able to access the support they need through the Work Programme. One of the areas we are concerned about is public sector retrenchment and local authority funding cuts. Work Programme was predicated on the combination of funding streams around an individual. If some of those other funding streams local authority cash, for instance have gone, Work Programme money cannot replace that because there is not the cash to do that. That is the challenge in some cases as well. The length of the contracts does mean, of course, that the contractors are in place to be able to do the best they can in that environment. Regardless of all the efforts of all the organisations, not everybody is going to get a job through the Work Programme; it is not going to happen. Therefore, one question you may want to raise with the Department is, What happens next? We were expecting the commissioning of a programme the commissioning of something but that has not happened yet, so you may just want to probe that. What about people going through the Work Programme, having support to progress towards the labour market as Richard has just been saying making strides and not getting there? The Work Programme finishes, and then what happens? They get sent back to Jobcentre Plus and the whole cycle could start again. We have to think about the transitions here as well. Chair: Wouldn t they then be the cream? Q303 Glenda Jackson: I am really taken aback a bit here. You have been very clear that there is not sufficient information, as far as you all are concerned, either for us as the public or within the industry. You referred to the minimum requirements, which you think are totally ineffective. I hope I am not paraphrasing too extremely. We were told that you were empowered by something called the black box, so why aren t you changing it? Why aren t you removing those things you regard as blocks, because we have been told you have the power so to do? Sean Williams: The black box is fantastic in the service that we can give the individual who comes in; we then have the contractual freedom to do whatever it takes for that individual to help them into work. We don t have to put them on a two-week motivation programme or put them through things that might not be appropriate for that individual. If they are, we do them; if they aren t, we don t. Unfortunately, the black box does not extend to being able to change the minimum performance levels or the funding regime; those don t fall within the purview of the black box. If the question is, Are we constantly evolving our delivery models? Are my subcontractors constantly evolving what they do to get better at it? then the answer to that is an absolute, Yes, they are, and that is why we see cohort performance on the programme go up and up. Q304 Glenda Jackson: In the process of learning about the people you are supposed to help, why didn t you know about this before? The Government was very clear that this whole programme, essentially, was to help those who, historically, have always been the hardest to reach. You knew this when you signed up for the contract, so I am a bit bemused that you are suddenly realising who it is you are having to help. Sean Williams: Every individual is different. Of the tens of thousands of jobseekers on our Work Programme, they each have an individual set of needs. We need to find that out individually as we progress. We cannot do that in theory, prior to the programme starting. It is not a failure or a weakness of the programme or the organisations delivering it that we are learning and getting better at doing this, because nobody had done sustained employment in this way ever before. It is a brand new attempt to tackle this very entrenched social issue. I genuinely do not think it is a weakness that we did not get this 100% right to begin with and that we are learning and getting better and better at it. That is not a fair criticism. Q305 Glenda Jackson: You must have had a great deal of information, before this programme came, from those particular groups who have actively been campaigning for and on behalf of these people, for decades. Kirsty mentioned the RNIB; the RNIB and Mind are just two out of the dozens that are out there, and they certainly have the information at their fingertips. I am pretty certain they gave it to you, didn t they? Sean Williams: I slightly challenge that. I don t think they do I don t think anybody knows how to successfully help people. I don t think anyone did know how to help people into six months, a year or 18 months of employment. No one had tried to do that before. Q306 Glenda Jackson: That is a time trail. That is not what I am trying to say here. I absolutely take on board that you are actively dealing with individuals. But the variables within those individuals and the evidence of how difficult it was going to be was most certainly out there, and it was certainly part of what the Government was selling us as the reason for introducing this programme. I am still bemused by

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Work and Pensions Committee: Evidence Ev 65 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton what seems to me to be your lack of information, even though you signed contracts to help these people. Richard Clifton: I would look at it from the fact that we are delivering the majority of the delivery model that we put in place. That is based very much on the evidence that we had. We put a lot of innovation into it; we would not have been able to, if we had not had the black box. If we look at what we launched as CDG volunteers, which allows us to complement what we are doing as far as the support that our paid staff give, additionally to that, we are now bringing in volunteers from all walks of life to coach, mentor and support people and give additional help that was never there and never possible to give in the past. We have brought in loads of different innovations using technology and using different ways of working. That was all based on evidence that you are absolutely right was out there and was part of the research we did for the bid. What we are saying is that, by doing that and putting those interventions in, we are learning that there are even better ways of helping people, and we continue to improve the programme and we will continue to do that. The only reason we exist as an organisation is to move long-term unemployed people into stable employment. We have got 30 years experience of doing that. We know, internally, what those barriers are. You know what the barrier is; you try a way of addressing that; but as soon as you have done that, you will say, Well, actually, we can do that even better, and that is where we are now continually improving the model. That is the freedom that the black box gives us. Q307 Glenda Jackson: Is the improvement of that model dependent on freebies? You spoke of volunteers; presumably these people are not being paid, so there is no bill as far as the country is concerned. Richard Clifton: Absolutely not. This is about communities wanting to support themselves. These are people giving their time freely. It is not replacing what we are doing. We are still investing the same as, if not more than, a lot of the other prime contractors in our main delivery. This is additional to that. Yes, the Work Programme was set up to work with complementary funding streams. We are using things that are already funded by the Skills Funding Agency, and that is working alongside what we are delivering as well. The key to what we do, and I suppose this is where we are a bit different from G4S, is that, acting as a charity, the surplus we make we reinvest. We have already invested over 1 million into the volunteer scheme, because people say, Yes, it s free. Well, actually, we still train, support and mentor the people donating their time to make sure they can deliver the best service possible. It is not free, by any stretch of the imagination. Q308 Glenda Jackson: No. What I am trying to drill down to here is: is the improvement of your programmes financially dependent on what has been accorded to you from this programme? From what I am hearing from you, the only reason you can improve your programmes and it is marvellous that they are being improved is because you are outside that financial constraint in some way. This is either because people give their time and effort for free or you are taking money in from other income streams that are not part of the financial structure of the Work Programme. That is all I am trying to find out. Richard Clifton: That was the original design of the Work Programme. The Work Programme was there to put a structure in place that pulled together all of those other resources that there were and made the most effort for that individual for their journey towards employment. That was the original design of the programme; that is what everybody s bids were built around. Glenda Jackson: We have had evidence from others that says, for example, small subcontractors who are way down the food chain of subcontractors have gone out of business because the work that they had been doing for two decades, in one piece of evidence, had dried up because money from local authority funding had disappeared. I am still trying to work out what the financial benefit is: if you had to pay those people, how much would it cost? Do not misunderstand me; I am not critical of what you are doing it is entirely valid and valuable. I am trying to find out what the actual financial costs would be if they had to be paid for. Chair: Glenda s asked the question. We do have questions around that, so that will give you plenty of time to think of answer. Glenda Jackson: I can think of some more. Chair: We will be coming on to that, but we really need to move on, at the moment, to JCP and the handovers. Q309 Stephen Lloyd: Talking about barriers, one of the things that has come up over the past nine or 10 months in this Select Committee is some possible barriers around the interconnectivity between JCP and primes and subs. I have got some specific questions on that I would be grateful for a bit of information on. The initial DWP evaluation found that the warm handovers from JCP to Work Programme providers, which should involve a three-way meeting between the participant, a JCP adviser and the Work Programme adviser, rarely happen in practice. Why, in your experience, are warm handovers not happening? Sean Williams: Warm handovers did happen in the majority of cases. Q310 Stephen Lloyd: Is this the majority of cases in your experience? Sean Williams: Sorry, I am talking for the G4S Work Programme. It does vary between contract package areas. It does vary from district to district, and it does vary from Jobcentre to Jobcentre. It tends to be about local relationships and the relationship between the local Jobcentres and the local subcontractors. Warm handovers absolutely are happening. They are not happening in 100% of cases, but they are in a significant proportion of cases. Q311 Stephen Lloyd: To give a ballpark figure, because you cover three quite large areas it is a

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Ev 66 Work and Pensions Committee: Evidence 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton length-of-string question in what percentage terms in your three areas would you say warm handovers are happening? Sean Williams: It would be happening in over half of all referrals coming through. Andrew Conlan-Trant: We invested a lot in the relationship with Jobcentre Plus. We felt, from the very beginning, both at a senior level but, more importantly, at a local level, that getting that relationship right was going to be very important in terms of the handover, particularly then for the harderto-help customers, such as ESA customers. I can give examples where, with some supply chain partners, all of those handovers are warm handovers. For instance, we have a supply chain partner in Cardiff, and we have an arrangement with the local Jobcentre Plus there, whereby one day a week the supply chain partner staff will work in the Jobcentre. They will meet the ESA people there, do the warm handover and take them from there into the Work Programme. Another example is that, for people who fail to attend the Work Programme provider, we would go back into the Jobcentre premises with the Jobcentre management and work with the people who failed to attend in there. We have a good, strong process of warm handover built up at this stage, and the percentage of people for whom that happens is growing. I certainly can say that is happening for all ESA customers, and for a lot of the JSA customers that is happening as well. Richard Clifton: I would say, in London we find it more of a challenge. We have had to change our approach. In the early days there were more warm handovers, and because of changes to systems it got more problematic. We have now worked with Jobcentre Plus to change the way we work with them and pilot different approaches. For instance, we have now started to work on collocation basis in our Lewisham office, where we now have Jobcentre Plus doing the signing within our office, so we can start to break down those barriers and get more warm handovers happening that way. That is about to be piloted in another office. So because of the volume of customers we were getting through, as well as the logistics within some of the Jobcentre Plus offices in London, it was not as easy to do. We have looked at different ways we can approach it. We also have outreach advisers. Where we get notifications through on the PRaP 2 system to say, Actually, we d like to talk to you about this customer, we will then have a separate conversation with some of our harder-to-help customers, and we have outreach advisers who can even go and meet them in their own home if that is more appropriate. There are different approaches we have taken to accommodate it. Q312 Stephen Lloyd: That is interesting, because I appreciate that, other than Richard, who has explained there are some specific challenges in London, the other two primes are very bullish on the warm handovers. What is the broader experience within the trade association? It is quite clear from what the DWP evaluation pointed out that they are not happening 2 Provider Referrals and Payments anywhere near to the extent they should be. Also, the DWP did not seem to come up with any solution for how that should improve. What you are saying to me is that it does seem to be improving anyway. Is that right or wrong across the piece? Kirsty McHugh: It is variable across the country. It is very much around individual Jobcentre Plus offices and their relationships with prime contractors. It is also about people. Sometimes it is good and sometimes it is less good. Probably all providers are trying to invest in this area, because the quality of the handover has a significant impact on the way somebody feels when they go through a Work Programme contractor s office. There are particular concerns around people leaving prison. We have an Offender Related Services Forum, which has been looking at the handovers there. Sharing of data is a concern, as it is not good enough. We are trying to do some stuff nationally to improve that. Also, in the Work Capability Assessment (WCA), which I know the Committee had looked at, the sharing of information and handovers there, again, is an area that we need to improve. The Department s view is, It s over to you to sort out. It is not going to do anything itself. Q313 Stephen Lloyd: I am going to come to WCA in a minute. Before I do that, do you think the warm handovers, because of the challenges they can face, are a realistic aspiration for the programme, considering the caseloads? Sean Williams: We see a big difference. In the North West it takes us, on average, 13 days to attach a customer, where we have traditionally done warm handovers; in the South East, it is 19 days. Now, that may not sound like a big difference, but it is a big difference in terms of engaging that jobseeker. Obviously, it plays into caseload sizes and resources. There are different ways of doing warm handovers or warmer handovers for example, three-way telephone contact so you can immediately talk to that jobseeker. Undoubtedly, it does play into caseload sizes and the amount of resources on the ground. Q314 Stephen Lloyd: One of the other things that has come up in front of the Select Committee again over the last few months is that, in some instances, there is some resistance in some JCPs towards the Work Programme providers. Now, I don t want to go into the details of why that might be, because it is probably pretty obvious. Are you finding, as the programme develops, that that resistance is decreasing, or is it the same or is it worse or whatever? Sean Williams: It is massively decreasing. Andrew Conlan-Trant: Certainly, it is hugely decreasing. Like any programme, at the very start of this there was probably a learning curve for everybody involved here. Even if you take the likes of Wales, where we are one of the primes, I myself, along with the other prime provider, sit on what is called the Joint Employment Delivery Board for Wales. That has membership from Welsh Government, from JCPs and DWP. That, as an entity, enables us to talk more about the issues, for us to outline to the head of JCP who

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Work and Pensions Committee: Evidence Ev 67 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton attends that meeting what the issues are and, vice versa, for him to say that to us. That has helped and our experience is that has flowed through to the individual Jobcentre. Q315 Stephen Lloyd: And you others, is that broadly true would you say that it is getting better? Richard, you have obviously got some specific issues, because I know London is slightly more challenging. Richard Clifton: Relationship-wise, we have always had a really good relationship in our area. The advantage from our point of view is that CDG has been operating with the same Jobcentres through New Deal for many years, so we built up lots of local relationships, which has helped us to cultivate that and utilise that moving forward. It is the same with the supply chain with whom we work. Coming back to your question on volumes, in London that is a significant issue, because the CPA in London East, other than the whole of Scotland, is the largest CPA as far as referrals are concerned. We do have to be honest that maybe we have to target those warm handovers on the ones they are going to benefit the most. Kirsty highlighted the prisoner group, which is something we are focusing very closely on at the moment. Working with the other six primes across London, we have each agreed to work with different prisons that are referring in so that we can start to build up. Some of the work we are doing is with Wandsworth Prison to try to engage pre-release and work with the adviser at Jobcentre Plus the adviser going in there. We are doing lots of different things and we have to take different approaches with different customer groups, to be honest. Q316 Stephen Lloyd: Good, that is fine. If I may have one follow-up before Glenda comes in, it has been relayed back to the Select Committee again, by a range of different groups and organisations that having a good warm handover is a significant aspect of getting a positive outcome. Would you agree or disagree? This will have to be a yes or no, because we have so many questions to go through. Richard Clifton: Yes. Sean Williams: Yes. Kirsty McHugh: Yes. Andrew Conlan-Trant: Yes. Q317 Glenda Jackson: The previous Minister in the Department assured Parliament that the process, as far as prisoners were concerned, began before they left prison. Are you saying to me that that system is not in place? Richard Clifton: The system is in place and work is beginning. We are finding that we are not necessarily getting all of the information that we want. A prime example would be that, when somebody is in prison, they do not have to use their national insurance number, so they cannot remember their national insurance number. When somebody from Jobcentre Plus goes into a prison to sign them up for that beforehand, they do not know what their national insurance number is. From the prison regime point of view, there may be only two or three weeks before that person is going to be released, and Jobcentre Plus may only be going in and able to access that prisoner again at a later date. They can make an appointment but then they have been released. In some respects, we are now working with the prison to say, At the point a prisoner comes into the prison, can you record their national insurance number? It is simple things like that that mean when we get to release, they have got that information. That is the work we are trying to do as prime contractors to help Jobcentre Plus and make it as smooth as possible. Q318 Glenda Jackson: Is the prison service accommodating those requests? Richard Clifton: Absolutely. We are working very closely with Wandsworth Prison, as I said. Glenda Jackson: It is not the only prison in the land. Richard Clifton: No, but it is one of the largest in the country, so if we can crack it there, we can spread that across. As prime contractors in London, all six of us have divided up all of the prisons, and we are all working with different prisons. I am just using that one as an example. Q319 Stephen Lloyd: That is a really important piece of information, and the key thing there is that it is clearly being fed back to the Ministry of Justice (MoJ), because those small things make a huge difference. We are moving on to another crucial area, which is the WCA of great fame the Work Capability Assessment. Let us start with Kirsty, because you are a trade association. In your judgment, have you observed any improvements in the Work Capability Assessment s accuracy in assessing claimants fitness for work? Kirsty McHugh: I am still getting a lot of concern through from my members about the WCA process, and I am sure you are hearing them here as a Committee as well. It does not look like the Professor Harrington recommendations have been implemented anywhere near quickly enough, and I note that the Minister has just announced that we have somebody else, Paul Litchfield, BT s Chief Medical Officer, coming in to look at the WCA as well, which is a good thing. The implementation of the changes that were recommended has not been as fast as it should have been. We are still finding that, to put it bluntly, people are being referred to the wrong programme in terms of Work Programme and Work Choice. Some people are better off on Work Choice; sometimes they are better off on Work Programme, so there is a concern in relation to that, which we have raised with the Department. There is also an ongoing concern about the accuracy of assessments, with people being put into the wrong group. Q320 Stephen Lloyd: When you say ongoing concern, is this, again, still being fed back to you by your members? Kirsty McHugh: Yes, absolutely. I was with a number of our disability charities that we have in our membership we have many and often they are subcontractors to the Work Programme. They are doing a lot of work in helping people to appeal their

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Ev 68 Work and Pensions Committee: Evidence 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton WCA decision, because, actually, they need to be in the Support Group. Now, there is a concern there, for me as a trade body, saying that, because you could look at that and say, Okay, well they re parking people. They re too difficult. Let s get rid of them. Actually, the best thing to do in some cases, for them as individuals, is to help them get the support they need if the WCA has not been right the first time. Obviously, a lot of people who come through the Work Capability Assessment are able to work, with the right support. We are absolutely not against that. The whole programme was designed around helping those people into work, but we are not there yet with the WCA it does need review. Q321 Stephen Lloyd: We are getting short of time, so I am trying to get very specific answers. I put the same question to each of the other three. Have you observed any improvements in the WCA since Harrington over the last seven or eight months? Andrew Conlan-Trant: We would say that there has been some improvement, but there are still some significant cases coming through that, quite frankly, probably should not come through. If you look at somebody who has some severe mental health issues, it is very hard to believe that they will be ready for work or able to enter work within a two-year period. As a third sector organisation ourselves, we run a number of services for people with severe mental health issues or intellectual disability there is a particular one I am thinking of and we would run a programme for up to two years for somebody before they will progress. At that stage, progression is not necessarily to employment; it could be on to further education. It does take two years before they are ready for that, so we need to be very careful about the people coming off the WCA and into the Work Programme. Are they really likely to get into work within a two-year period? That is an important question to answer. Q322 Stephen Lloyd: Sean, are you seeing any improvements yet in the WCA? Sean Williams: We have seen some improvement, but it is still the case that we are seeing people referred who really should not be referred. Q323 Stephen Lloyd: On a scale of one to 10, are you seeing a two or a nine in terms of improvement, with nine being high? Sean Williams: It would be a four or five. For example, we had a client who was terminally ill with cancer referred to us whose life expectancy was shorter than the work-ready prognosis. Andrew Conlan-Trant: So did we. Richard Clifton: We have not seen that much significant improvement, and likewise we had recently a customer referred to us who had to go onto dialysis three times a week. They were more concerned about that, obviously, and maintaining their benefit, than our helping them into work. It was not appropriate at that point that they should be in Work Programme. That is where we need to get it right, in that we refer people to the right support at the right time. Work Choice is a good option for a lot of the people who are coming through that Work Programme is not right for at that time. Work Programme can help a lot of these people, but we have to get the right programme at the right time for the right people. Q324 Stephen Lloyd: So for the four of you here, the three primes and the trade association, it would not be unfair for me to say that you are really not seeing improvements to the WCA to the level you would hope to? Is that a fair statement? Richard Clifton: That would be a fair statement. Sean Williams: That would be a fair statement. Kirsty McHugh: That is a fair statement. Andrew Conlan-Trant: That would be a fair statement. Q325 Stephen Lloyd: I have got an option of possibly improving it, so I would be interested to ask your views. This has come from Scope. Do you think it would be helpful if all participants were assessed for employability prior to being referred to the Work Programme? Sean Williams: Yes, but employability is not a medical assessment in many cases. Yes, if it is done by people who understand employability. Stephen Lloyd: That would not necessarily be Atos. The whole thing with the WCA is it is supposed to look at an individual s capabilities. We all know that, because their background is medical, they are not going to be experienced in employability, I would have thought. Sean Williams: Absolutely. Employability is a particular specialism, but it should absolutely be included in the test. I completely agree. Q326 Stephen Lloyd: I don t think you have anything else to add to that. Would you all broadly agree with that? Andrew Conlan-Trant: I would agree with that, provided the assessment is holistic. Q327 Glenda Jackson: The decision we are being told, post the Atos assessment, is being made by Jobcentre Plus. Is it the fault of Atos? We all, from the constituency level, know that it has not improved. Is the decision as to where the individual goes still essentially the responsibility of Jobcentre Plus, because we have been told by Government that part of Jobcentre Plus s responsibility is to be flexible and sensitive? Sean Williams: It is important that Jobcentre Plus are encouraged to refer everyone who ought to be referred on to Work Programme. We can clearly see in some of these individual cases that, wherever that decision was taken, it would have been better if it was not taken. Q328 Sheila Gilmore: One of the big issues that have come up so far is the question of the differential pricing structure. The main criticism has been of the pricing structure that we have, which is based primarily on benefit type. Now, I have looked at most of your written statements, and I think all of you make that criticism in your written statements. Part of the

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Work and Pensions Committee: Evidence Ev 69 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton question is why this is coming up now, and what can be done in the short to medium term to change this? Sean Williams: The Work Programme is an enormously complicated programme to put in place. Traditionally, these programmes have been done based on benefit type. There is only so much you can change at once. Benefit type is a very blunt proxy, which I think everyone would agree with. Length of unemployment is a better proxy. Obviously, the best way of doing it is to try to get a really accurate assessment of need, for example like the jobseeker classification instrument that they have in Australia, which is better. Q329 Sheila Gilmore: Who do you think should do that? We have had some evidence before from people about that particular instrument, and some people think it is very good, whereas some people think perhaps it is not the ideal. There is also maybe a question about who should carry out that assessment. How many organisations do you want involved in this? Should the providers do the assessment? Sean Williams: There is an obvious challenge with the providers doing it. We might decide everyone was very hard to help. The assessment can take into account some data, but if you spoke to frontline Jobcentre Plus advisers, they would be able to give you an enormously accurate picture of how difficult someone is to help into employment. This is because they have been working with that individual and understand that individual, and the judgment of a personal adviser at a Jobcentre, coupled with some sort of tool, would be an extremely strong method of categorising jobseekers in terms of difficulty to help. Again, that tool is not particularly difficult. It asks you about the security of your housing; how long you have been out of work; health conditions and other various barriers we know there are to employment. Kirsty McHugh: This is not something that has just come up now; we have all known from the outset that benefit type was a very rough proxy. For instance, the majority of people who are coming out of prison are on JSA, but the chances are they have got an awful lot of barriers, and we have known that. A political decision was taken, and I understand why, earlier on in terms of this process. Obviously, Universal Credit is bearing down on us. We have been doing quite a lot of work in terms of the potential interaction of Universal Credit and employment programmes, and how that is going to operate. The benefit types, of course, will disappear, so there is an opportunity, in terms of Universal Credit, to move towards something that is a fairer assessment of people s needs. Q330 Sheila Gilmore: Does it disappear or do you just have different elements of Universal Credit? I have seen diagrams that have been used by the Department that, effectively, have different types of Universal Credit recipients, usually in terms of conditionality. Actually, there is still going to be a framework, but will it still be just as bad as the present one? Kirsty McHugh: It will be a political decision. The Work Programme contracts come to an end in 2015 and, obviously, there are two years to work with the customer, which takes it up to 2017. You look at the timeline in terms of the implementation of Universal Credit and there is the opportunity to move to a better assessment process, in terms of the design of future employment programmes, around that period. We need to start doing that thinking now. Q331 Chair: That is a long way away. It must be really difficult for you, because you know that there is a group of people who have quite a high price on their head, but you cannot get them because they are not being tagged probably. Kirsty McHugh: Indeed, yes. Q332 Sheila Gilmore: Do you think it has to wait for this whole process to be gone through? Andrew Conlan-Trant: Certainly at the moment it is a proxy that is only working in a mediocre-type way, because it does not make any reference to the needs of the individual at all, or it is somebody s view on a need that puts them into a particular benefit category. If you are extreme about it, you can say that some people who are harder to help are almost being discriminated against by virtue of the benefit tag that is put upon them. It is something that should not wait until the end of the programme; it is something that should be addressed now. Q333 Sheila Gilmore: Just to follow on from what Stephen said, in some ways we have got a double problem here. One is that the system that allocates people to benefit groups may be flawed. Equally, when you have done that, it is not necessarily a very good guide to people s distance from employment. You are struggling with two issues. Richard Clifton: I think that we ourselves as providers have to do all of the assessments, and we start that with a triage assessment, with the first contact we have with the customer, and that continues through the programme, because that assessment is very much ongoing. I don t think we ever take from a payment group in which somebody comes to us what those barriers are likely to be; there is no way of doing that, because we have just as many people with health problems and disabilities coming through on a JSA payment group. If we look at the ex-prisoner group, in fact within London we probably have more exoffenders within our JSA 18 to 24 and 25-plus than we do ever within that group. So I do not think we can ever look at the benefit groups we have at the moment being any sort of indicator for the service we deliver. It is an indicator for the funding that is available for that customer. As a charity, actually, that does not make any difference to the service we deliver. I can see that it might skew it for other people being able to deliver the service. Sean Williams: That is a really critical point. People think that the differential payments make a difference to operational delivery on the ground, i.e. so someone is worth the mythical 14,000 we often hear misquoted or someone is worth 3,000. That does not make any difference to the service we deliver to those jobseekers. It does not make any operational difference to how we deliver at all. Our frontline

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Ev 70 Work and Pensions Committee: Evidence 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton adviser probably would not know the amount of money attached to that individual s head. We are just interested in doing the right thing for that jobseeker. The differential payments are not working, I don t think, certainly not within my organisation. Q334 Sheila Gilmore: The differential payments were intended to work, so it is one thing that they are not working. I think in some of your submissions, some of you suggested that some change to the timing of when money came in might be helpful. In other words, bring some of the payment, not necessarily all of it and not going back to what some of you described as the bad old days forward at an earlier date. Richard Clifton: Absolutely. For future programmes moving forward, I am quite open to looking at it in the very short term, but it also has to be linked to getting the assessment right. You could not do that bit. We would absolutely advocate for some groups a distance-travelled model for some of the people I described. For somebody who is agoraphobic, who we have to spend a lot of one-to-one support on, there are milestones that we could look at that would be more appropriate for that group. I would say, though, that first we have to get the assessment right. You could not just do it on benefit type at the moment, because we would not be targeting the right people. The first bit is to get the assessment part correct. I think there is a challenge there with the roll-out of Universal Credit, although it is an opportunity, because you could roll this together and say the assessment is linked to the Universal Credit roll-out. There is going to be quite a lot of challenge in rolling out such a large change to benefit. I think we have got to be realistic about the time it would take to change that approach. Q335 Glenda Jackson: The Wheatsheaf Trust told us that it was not so much the level of payment on offer as the amount of time available that was acting as a disincentive for providers working with those furthest from the labour market. Would you agree or disagree? Andrew Conlan-Trant: It is like what I was saying earlier on with some of the harder-to-help customers. They are not ready. They will not be brought to a point where they are ready for an outcome for potentially two years. How those two years are paid for is an important question to answer. I think the point that you make is valid in that context. Q336 Glenda Jackson: Would you extend that time period? We have already heard what happens to someone at the end of two years. Is it the kind of rolling, revolving door syndrome all over again? Richard Clifton: I think this is where we get to the appropriate referral to the appropriate programme. I do not think we should be changing the design of the Work Programme, as I do not think we have had it for long enough. It has been two years, bearing in mind that our average length on programmes is something like 6.5 weeks if we look under the old New Deals. We have extended that to two years. We have got considerably longer to work with the majority of customers. However, that works if we get the appropriate referrals. If we look at the changes that were made to the workready prognosis of somebody being able to go into work after assessment, originally we were looking at people with a six-month prognosis. We moved to 12 months. We have already looked at people who are unlikely to move into employment before that 12- month period. We still have two years so that may still work. If that was extended and we started looking at people with a prognosis of 18 months or more, then we could have difficulty. But that is more about referring the right people to the right programme, which comes back to getting the assessment right. It is all linked together. This is the first time we have had a programme of this length. It is the first time we have had the freedom to support people as we have. As all providers have brought in a lot of innovation to the delivery of this on the ground, it is too early to tell on timescale whether that is right or wrong. Q337 Debbie Abrahams: You say that this is the first time. There have been a lot of first times: the first time we have done this; the first time we have done any modelling of estimates for how many people go into different parts of the Work Programme; the first time in terms of the approach that has been taken. What about internationally, and can I also ask what relationship you have with the academic sector? I know that almost 10 years ago, a lot of concerns were being raised in terms of its appropriateness, and people were asked to learn from international evidence, where welfare to work has been running a lot longer. It is the first time here, but what are we drawing on from the academic sector and from international evidence? Sean Williams: I worked in Australia for two years. I ran one of the largest sites in the Job Network in Australia. Australia is often held up as the forefather, I guess, of quite a lot of these welfare reforms. In Australia, the sustainability payment was paid at six months. There was some evidence from Australia, albeit in very different economic circumstances and a very different benefits regime, so you are never comparing apples with apples in the international comparisons. But we did have good evidence of the six-month point. No one has done in the United States, in Australia, in Canada, in any other OECD countries, or anywhere in the world sustainability up to 18 months/two years. So nobody has done very long-term sustainability before. We do have good links with the academic sector. Again, the challenge with welfare to work, pre-work Programme, has been that we were never comparing apples with apples and we never had good data. It is one of the things with the organisations you bring in to give evidence. Everyone tells you they are very good at helping long-term unemployed people into work. There is actually a handful of organisations in the UK who really are good at helping long-term unemployed people into work. Q338 Debbie Abrahams: We knew 10 years ago that what was being provided did not work, and you have

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:28] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Work and Pensions Committee: Evidence Ev 71 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton not mentioned the Scandinavian countries, which, I think, have less of a problem than we do. Sean Williams: Absolutely. The Scandinavian countries have a completely different social model so it is difficult to take lessons that we learn from Scandinavia in welfare to work to the UK. Q339 Debbie Abrahams: Absolutely the commodification there. Perhaps that is something we should be drawing out. Kirsty McHugh: I am chairing an event for the Swedish Chamber of Commerce for the United Kingdom this afternoon. Their youth unemployment is 25%, which is higher than it is here. It is very different overall. Just to echo what Sean said, we have some very good relationships with academics. In fact, we are hosting an event next month with the University of Melbourne on the cross-national studies they have done on four or five countries around the world looking at what is working best. That sort of feedback loop is working. It is with Professor Mark Considine. You can come. Chair: We have a section on equity of service for harder-to-help claimants. I think we have touched a lot on this, so hopefully my colleagues will be able to pick out the bits that we have not covered. Q340 Sheila Gilmore: It was interesting; I think it was Richard who said, There is a lot of innovation going on. Other witnesses we have had, for example, Inclusion, told us that they felt the Work Programme was delivering the same sort of stuff as had previously been delivered. You are suggesting there have been innovations. One of the problems for us is this black box is not just about freedom; it seems to be about being very opaque. What are these innovations, if they are happening, that make this different? Richard Clifton: We have already highlighted the use we are making of volunteers and the investment we have put into that. We also have invested heavily into EQUIP, which is an online package that supports people through all areas of employment through into once they have moved in. We have something called Customer Zone, which people can utilise once they have gone into work, so they can utilise technology to do that. We brought in specialist outreach advisers that we fund separately. Q341 Sheila Gilmore: You say they are funded separately. Richard Clifton: We fund them internally. Sheila Gilmore: So it adds to the cost? Richard Clifton: Yes. We want to re-invest into what we are doing. We also have just piloted with another organisation a stepping stone to employment project, where we have brought together funding pots so we can employ young people who are 18 to 24 on a sixmonth contract in a real workplace. We continue with our advisers working alongside them to progress them on. We have also brought in training and support within that. There are numerous other examples that we could show you that are working on the ground. We have designed our centres in a totally different way, and people can access the services whenever they want. We have a customer support centre that is now open weekends and evenings, so people can access advice and support at any time that they want. As the merged charity now, we have the advantage that we have other social enterprises that we can use to offer work experience and employment to move people forward. Having worked in this sector for over 20 years now, starting on the front line supporting people, I have seen it totally change over that period. Instead of having a manual that is that thick telling me exactly how I am going to support every customer that walks through my door, we have the freedom to be able to do what is right for that person at the right time, moving them forward, to give them the support to have sustainable employment. That is probably the biggest innovation that is in the programme. Q342 Sheila Gilmore: A lot of us are getting reports from constituents and I don t have any constituents who joined your programme which suggests two things to me and to my colleagues. It is not just one anecdote I am talking about here. One is that it may be a two-year programme but the amount of input over that two years seems to be quite light touch and infrequent. People are not getting that great a service. That is one example, but it is quite typical of the kind of example I am getting. Somebody who has been on the programme for 14 months a young person of 21 has had six meetings with an employment adviser. Three different employment advisers were in that six, so they felt as though they were going back to the beginning again. When he ultimately sourced a much more intensive course, I have to say, with Barnardo s in construction skills, which is what he wanted to do, and was told by Barnardo s that they could take him, he was told by his Work Programme provider that he could not do it because he was contracted to the Work Programme and could not do a Barnardo s course. Six meetings with an adviser in 14 months does not sound to me like a very personalised programme at all, or innovative, or very different from before. Sean Williams: Sheila, that is appalling. I think on a programme that is seeing a million jobseekers, there will always be stories that are not good. I have also brought with me I cannot read out all of them a massive amount of good news stories. Let me give you some data. We just recently did a survey of 1,000 of our jobseekers so a statistically significant survey. 63% of our Work Programme customers believe they are well supported by the Work Programme. Now, that means 37% are not. We are working very hard on that, but it is 63%. This is the actual hard data rather than looking at individual examples. On the G4S Work Programme, 63% of our customers believe that they are well supported. By the way, it is more for our Employment and Support Allowance customers, where 64% believe they are well supported. Andrew Conlan-Trant: There are a few things in what you said there just to pick up on, and I would echo what Sean has said: that type of example is appalling. But each of us individually will have minimum service standards that we have committed to. In our case, for instance, we commit that we will meet with somebody, we will have contact with somebody, every

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Ev 72 Work and Pensions Committee: Evidence 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton two weeks. Irrespective of what their status is in terms of finding or not finding employment, in or out of work, there is contact with that person every two weeks. That is a commitment that has been made and that we are measured against. To pick up on something else Richard made reference to, and that was passing people through to skills and other programmes. In Wales there is a very specific issue where there is a problem with accessing skills or other activities or other interventions that are funded through ESF 3 funding. That problem does not exist in England or in Scotland, as I understand it. So if we have somebody on the Work Programme, which is defined as this black-box type of a solution, and it is suggested that they should be referred to a piece of ESF-funded skills activity, they are not allowed to do that because of a decision that the Welsh Government has made. That is having a significant impact, compounding other factors. Q343 Sheila Gilmore: With this young man with the Barnardo s issue, I have still not had an answer from either the work provider or the Jobcentre, because I have gone to both of them to see if we can get this sorted out. First of all he was told, Well, you have contracted to us so you cannot go off to Barnardo s. Then he was told, Well, maybe you could if the Jobcentre allow it, but then Jobcentre seem to have said, You cannot go to two Government-funded entities. Because you are with the Work Programme, we cannot let you go on the Barnardo s programme. Andrew Conlan-Trant: The key thing from a Government point of view is that funding is not being paid twice for the same activity. In an example like that, it does not sound like that is the case, and that should not be the case and would not normally be the case. Q344 Chair: With payment by results, you are not getting paid anyway in the Work Programme until you get the result. In this case, it would be worth their while getting them through another project. Andrew Conlan-Trant: Exactly, which is why there is a problem in Wales with ESF-funded programmes not being available. Q345 Jane Ellison: Just building on something Sheila said earlier, it is the case that we do hear about the exceptions; people who feel they have had a bad experience, or whatever, naturally contact us. It just made me think when you were answering Sheila s question. In your experience, are Members of Parliament doing enough to understand what is going on in the schemes? Are you getting approaches from people to spend time with providers, to sit down and really understand the journey so that at least they do get that more balanced picture? I will hold my hand up here. I probably have not done that and put that time in. Is that something you would welcome? Sean Williams: Absolutely. Kirsty McHugh: Absolutely. I think there is also a question about whether we as an industry are doing enough to help you understand and make the connections. To a great extent, that is my job. 3 European Social Fund Q346 Jane Ellison: I am not sure I have had that many invitations. Kirsty McHugh: What you will be getting is an MP toolkit: basic information, FAQ-type stuff, sources of information, performance statistics, and where to go to find information about operators in your own constituency, so you can make those links. I think a lot of organisations, both primes and subs, have reached out to their MPs. I think probably, if you have not had an invitation in your area, shame on my members. They should have reached out to you. Q347 Jane Ellison: I could not say for definite, but I just wondered if you had a general sense that more contact would be useful, and I think your toolkit will be much appreciated. Sean Williams: It is the unfortunately named black box. I agree with Sheila that it kind of gives the impression that something secret is going on under the hood. Nothing could be further from the truth. It is a contractual protection that means that we can do whatever it takes for that individual to help them into work and we will not have additional bureaucracy thrown into that, which would not help jobseekers. If people came to visit to see what happens on the ground, and talked to jobseekers and the subcontractors who are delivering, I think they would get an enormously different sense of what is happening in the Work Programme. Q348 Jane Ellison: Just to follow-up on that, presumably, building on those contacts, if MPs have come across very useful groups who have the potential to fit into the process somewhere, presumably you are open to MPs bringing that contact. That is another ongoing issue that many of us have. We feel that good local groups cannot find a way in. Are you open to those approaches as well? Sean Williams: Absolutely. We have singularly failed to explain what is going on in Work Programme. Black box has given the impression that something strange is going on. Because of the minimum performance levels, we have singularly failed to talk about the really good statistics of the Work Programme. It is at least much more mixed than what you would read about it. We have failed as an industry to get that message across at all. We certainly recognise that, but we feel that the impression that is being given of Work Programme at the moment is deeply misleading. Q349 Glenda Jackson: Just briefly, again this is mostly constituency-based. I would have thought there is a major difference in delivering these services, say, in big metropolitan areas, like London or any of our other metropolitan areas, and urban situations. It is on the level of what we are told and you have been telling us is a targeted, personalised service. It is not happening out there. It is not happening in the main because people who have regularly gone to Jobcentre Plus all their lives do not have one person who sees them each time they go in. That can be variable. It can be whoever happens to be there, so that structure is not there. Also again this is anecdotal when the Work Programme person steps

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Work and Pensions Committee: Evidence Ev 73 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton in again, to repeat what Sheila has said they are not seeing anything different from what they have had to go through before. It seems impractical and in many instances it does not really meet their need, so there is still this big gap between what we are being told is happening and what individuals on the ground are receiving. Sean Williams: Glenda, let me tell you about Karen, who got a job as a caterer through our subcontractors, the Shaw Trust. Without my adviser Becky, and the support from the Shaw Trust on the Work Programme, I would not have been able to get this job. I am so thankful for their help and guidance. Sonia, who we got into work in Hull: If it was not for the great help and care of the wonderful staff at Eye to Eye, I would not be in work now. I would be sat at home worrying about how to pay the bills. Thanks to everyone. I can read out pages and pages like this, Glenda. These are people who have been on the Work Programme who have received a personalised service. Q350 Glenda Jackson: I was not being clear about what I was honing down on. We are talking about people who are very used to the old structures of having to claim benefit, going into Jobcentre Plus, of being told, Come back, or Sign your paper and the money will come in. That is their experience, and it does not seem to me certainly looking at my constituency, where there is this plethora of that happening that there has been a fundamental change between the three parts who are supposed to be delivering this service, namely Atos to start with, then Jobcentre Plus and you. It is on that level that I am simply saying there is not enough attempt to break down the customer s perception of what is being offered, when not infrequently they are being put on to the wrong programme. It is not cynicism. Nine times out of 10, it is fear. Kirsty McHugh: Yes. Q351 Teresa Pearce: Just going back to Sean Williams, you mentioned this statistic earlier of 63% of people who are satisfied with being on the Work Programme. I doubt you have it in front of you, but could you let us know what percentage of the people you have on the Work Programme fill the feedback in. Clearly, it won t be 100%. We have had evidence that there are a lot of people who are very far away from the workplace who do not understand that they are on the Work Programme. So, we have got these people who clearly are helped and clearly do find it a good experience at one end, and right at the other end you have people who don t even realise they are on it. I would be interested to know how many people fill the form in. Sean Williams: Theresa, we can do that for you. I will check for you, but I believe it was 1,000 jobseekers. Teresa Pearce: Out of? Sean Williams: There are 80,000 jobseekers on the programme. We use a variety of feedback methodologies, and some people were very direct with us in their dissatisfaction with the programme in their feedback. We can give you the numbers. Q352 Chair: Can you give us a note of what you are doing to address that? You are talking about a third who are not satisfied. I know you want to talk about the positive stories, but really our job is to look at what is not working. Sean Williams: Clearly there are a third of people who are not happy and we need to do better with. Absolutely. I will come back to you on that. Q353 Sheila Gilmore: I also wonder if some people are not unhappy at it being light touch, and so there is a slightly bizarre outcome of that. There are some people who thought that it might be awful, because the first letter they get majors on all the sanctions and how awful it is going to be. All that warm handover stuff has to be placed in the context of getting a letter saying, You have got to go here. By the way, if you don t, this, this, and this. It is not very warm. Some people might think, If I am not called in very often, I am happy. Sean Williams: Sheila, I absolutely take on board that some people might be happy not to be, and some people might be very unhappy with our service because we are calling them in so much. There is a flipside to that as well. Q354 Debbie Abrahams: Following on from what Jane said, I contacted the prime that delivers services in my constituency in Oldham. I arranged an appointment and they did not show up. I contacted them again to arrange to see them, and they were going to get back to me, but they still have not come back to me. Kirsty McHugh: Debbie, come and talk to me and I will tell them off. That is embarrassing. Q355 Debbie Abrahams: I won t embarrass them in front of everyone. Kirsty McHugh: No, no. Embarrass them to me, and I am going to embarrass them absolutely in a big way. Q356 Chair: I know triple appointments happen in one that is delivering in my area, in that each adviser has a three-appointment slot all through the day, and the third one is the one they usually don t expect to turn up. Is that common? Sean Williams: I think I would need to speak to my subcontractors about that. It seems not an unreasonable way of doing things where you know some jobseekers have very low attendance rates. Andrew Conlan-Trant: I would not know specifically. Kirsty McHugh: We can check though. Chair: I was just wondering if it was common or not. Q357 Teresa Pearce: Kirsty, it has been acknowledged that primes minimum service standards vary in detail. Does that mean, depending where you are, it is a postcode lottery? Kirsty McHugh: There is huge commonality in relation to the standards. What differs is how much detail they go into. If you look at some of the prime contractors commitments, there are pages and pages and pages. For others, it is really quite top line. I think there is something about visibility of this across the industry that we could do something better with as a

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Ev 74 Work and Pensions Committee: Evidence 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton trade body. We are in discussion about how that could be a good thing. At the same time, what we don t want to do is undermine the black box. What we heard from the three prime contractors here and you would hear it from the subcontractors is they really value the black box. I don t want to put in place rigid structures that end up going back to an old tick-box-type approach. I think there is something about the visibility of what is expected that is not there at the moment. Q358 Teresa Pearce: So what you are saying is that you don t want to have a whole range of service standards, where everyone has to do things. It is people s experience that they can be flexible. Would you support a minimum service standard a minimum that people should do? Kirsty McHugh: The problem with this is that the devil is often in the detail. You think, Yes, that is a really good idea. Then you start drafting it, and it stops individual frontline advisers from doing what they need to do. We know for some people it is group work that is going to help motivate them and get them enthused and confident enough to be able to approach the workplace. With others it is one to one. If we put in minimum service standards that say you will see an adviser x amount of times, that may not be what they need. Q359 Teresa Pearce: What you are describing is a really personalised service. What we are hearing is that does not always happen at all, because that is about relationship, isn t it? If someone does not see someone regularly or the same person, they are not going to build up that trust and relationship. Kirsty McHugh: The sort of organisation that is not providing a good enough standard is not going to get the performance results. If you are in Sean or anybody else s supply chain, you are not going to survive. Your cash flow is going to be looking quite difficult. There is also something about the skills of frontline advisers. I will be open. This is an industry that has not invested in the skills of its frontline advisers as much as some. The reason for that was sort-term contracts: lots of short-term contracts, lots of flows of staff between providers, big TUPE issues, high turnover. Having a longer contract means that there is the stability to invest. We now have fit-for-purpose qualifications developed by the sector for the sector. We have set up an Institute of Employability Professionals. We have career route ways all the sorts of things that an industry needs. The previous regime of the high turnover was not helping that. To some extent, it is an industry growing up in that way. Q360 Teresa Pearce: If we don t have set service standards, even minimum service standards, what things need to be there to make sure everybody gets an adequate service? If it is not service standards, we need to know what it looks like. We need to know what to expect. If you do not have set service standards, how can you say that to someone when they come along to you? The first letter does set out the sanctions. It has to by law. People have to know it is not a game. There are consequences, but it does not help with trust. Kirsty McHugh: It does not help the motivational element, does it? Teresa Pearce: How do you put into a mission statement what it is people should expect? They won t know that they haven t got it if they don t know what it is they are going to get. Sean Williams: I think minimum standards are the enemy of an individual service, because they force you to do inappropriate things for individuals. If you say, Everyone will go on a two-week motivation programme, that might be completely inappropriate for some individuals. It might be right for one; it might be completely inappropriate for the other. The question then, which is exactly the right question, is, Well, if you don t have a tick-box exercise if there aren t 20 rules that the bureaucracy can tick and say, Great, the person came in every two weeks, they got a CV and they went on the motivation course and minimum standards, how do you ensure that everyone one is receiving what we at G4S call an appropriate service? It is a situational approach, and the way we do that is through spot audits, where our auditors go in. They talk to the jobseeker and the adviser. They look at the action plan for that individual jobseeker. They make sure that the action plan meets the needs assessment that forms part of it for that individual. They look at what we call our situational contact plan and make sure that the contact activities how often that person is being seen and what they are doing fit again into the needs analysis and the appropriateness of the needs. Then they check that that plan is being implemented. We audit it by looking at the narrative journey rather than a tickbox exercise. I think you can audit it; it is more complicated and more difficult to audit than a bureaucratic tick-box minimum standards, but it is much more effective. To move away from what we still call black box essentially contractual protection and try to impose bureaucracy You will do this for every jobseeker is the enemy of helping individuals into work. Q361 Teresa Pearce: What you are describing is what can be checked is what you have done. What I am saying is, How can an individual who comes to you know what they are entitled to and what they should expect? They are the people who are seeing you and they are the people who should be saying, Actually, I am not getting what I am meant to get here. If there is a black box that no one can see, and the person coming along does not even know what they are meant to get, there needs to be some sort of statement of: This is what we will do for you. Sean Williams: They can expect appropriate support and a personal adviser a named point of contact that continues. I completely agree with that. They can expect their action plan to be implemented. I think they can expect to have a contact plan for how many times they should come in, what is expected of them, and what is expected of the organisation that is supporting them. All of those things, I think, are

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Work and Pensions Committee: Evidence Ev 75 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton minimum standards, which are situational rather than tick boxes: You must come in this often. Q362 Teresa Pearce: Targets are not what we are looking at. We are looking at a service. Somebody needs to know what service to expect, and whether they have got it or not. Kirsty McHugh: Yes. It is a visibility issue. Q363 Debbie Abrahams: I would have to take issue with what Sean is saying. I cannot remember the exact phrase, but I think it was: The enemy of a personal approach is service standards. I think we need to distinguish; a personalised approach does not mean it should not be evidence-based. I think that is what we are trying to get at here. We have talked about lots of evidence from the academic sector, and if there is not, then surely we should be looking to build that. But personalisation look at the health sector should not mean that you compromise on an evidence-based approach and what works. That is what we are trying to get to. What is the evidence and what evidencebased approaches should be in all contracts? Sean Williams: I completely agree with that. For example, you would find, if you did a piece of academic research, that having a good CV would correlate strongly with going into sustained employment. You might well say, Let us have as a minimum standard that someone has a CV. For someone going into the types of jobs that don t use CVs, making that individual a CV rather than coldcalling eight employers who you know will go straight to interview might, for example, not be in that individual s best interests to get that job. That is all I suggest. But I 100% agree with an evidence-based approach absolutely. Q364 Chair: Do you publish what your auditors find or is that for your own internal use? You say you have spot auditors going in. Do you publish the results of that? Sean Williams: We share that internally with our supply chain. Q365 Chair: It is the supply chain you share it with? Sean Williams: Absolutely. Q366 Chair: If you find that there is something untoward happening, would that lead to immediate sacking? Sean Williams: It would depend on how untoward it was, but if it was very untoward, yes it would. In most cases, as you would expect, there is an enormously strong correlation between those people who give the best individualised service to all jobseekers and those people who are at the top of our league tables for performance. The two go hand in glove. Q367 Graham Evans: Is it possible or appropriate for prime contractors to deliver a service in-house to all types of participant? Kirsty McHugh: Yes, depending on their prime contractor. There are prime contractors out there who have got a long history of expertise in relation to a wide range of customer groups. It would be mad to think they would be prevented from either acting as the prime contractor or doing some delivery. However, all the prime contractors have diverse supply chains. They have to have diverse supply chains, first of all, because of the volume of business, as they cannot handle it all themselves. More importantly, there are huge amounts of expertise among the subcontractors. I don t think, looking across my membership or, indeed, looking at the performance figures, that one size fits all. Q368 Graham Evans: How can primes develop the expertise to deliver the specialist interventions that are needed for people furthest away from the jobs market? Richard Clifton: As far as what we put into the bid and where we got to, we ended up increasing the number of specialist providers, and that continues to increase over time. I think, from our point of view, we are looking at continuing to develop the range of support depending on the customer groups who are coming through. One thing about doing our assessment and our triage up front is we are identifying trends in the customer groups that are coming through and identifying where we have gaps in our supply chain. We can then go and work with organisations to bring in the expertise that we either don t have in-house or don t already have in our supply chain, and therefore we bring in additional support to do that. We particularly chose our supply chain based on the areas in which they work and the customer groups they are going to work with to make sure that they can deal with and support the customers that are there. We are forever replenishing that and making sure we have the right people to support the customers that are coming through. Q369 Graham Evans: Many of the Tier 2 subcontractors have commented that they have received far fewer referrals than they had expected or no referrals at all. Why is it? Andrew Conlan-Trant: Our experience of that is quite different. For a start, in constructing the Tier 1 supply chain, we have some providers in there who would almost be specialist in nature but still take the full range of people who come to them. We have supply chain partners like the Salvation Army, Tomorrow s People, CEiS and NACRO. These are people who have a specialism in particular areas. They are spanning the whole of the referrals coming in. In addition to that, you have the Tier 2 providers. I got some data on this before coming here. I know that, for instance, of 23 that we have available to us within a CPA, 18 of those have been working fairly constantly with the Tier 1 providers. There is good usage there, and they are utilised because of their capacity and because of the skills that they have. But then outside of that, there are another 79 organisations, most of whom would be outside the supply chain, that would be accessed as well because of a specialism or a capacity that they have. Our utilisation of specialists is pretty high. Sean Williams: I think many are being used and many are not being used. There is a uncomfortable truth to this. I will be very unpopular for saying it, but I will

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Ev 76 Work and Pensions Committee: Evidence 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton say it anyway: many Tier 2 providers are not being used because the services that they provide make no difference whatsoever to an individual s employability prospects. Q370 Graham Evans: Is it possible to get that point across more succinctly? Tier 2 charities, for example, small organisations that don t have the wherewithal, feel that they are used by Tier 1 organisations to get the contract, having gone through a lengthy, costly exercise. Chair: As bid candy. Graham Evans: Yes, bid candy. They have not got the wherewithal. It is very time-consuming, very costly, and they have the expectation that they will receive some referrals. But, if it is the case that you have just given there that they don t add any value why use them in the first place? Sean Williams: I am talking about our own personal experience, which is I think an exemplar of how you should do this. Before you go into contracting, be 100% clear with organisations about what they can expect to receive in referrals. For example, for the majority of our Tier 2 providers, we were very clear that they could expect to receive no referrals. That was in black and white. Then before the bid, they signed to say that they understood that they could expect to receive no referrals and they had modelled and it was financially viable for them to contract on that basis. We then put those letters in our bid to the Department for Work and Pensions. I think you have to be 100% transparent on this, and I would encourage the procuring body, DWP, to prevent bid candy, which is quite easy. You make them publish their bids and you hold them accountable to what they have said in their bid. Kirsty McHugh: Just to talk about the bid candy point, that is obviously something that has been raised for the last 18 months or so. I think some of the concern came from organisations that did not end up with contracts at all but did enter into conversations with prime contractors during what was a very rapid procurement process. It was so rapid that it did not allow sufficient depth of conversation between prime contractors and all of their supply chain. Even though the Work Programme went live in June 2011, contracts were still being signed up until December of that year there was a six-month implementation phase. Some organisations were disappointed because the conversations did not turn into contracts. There has also been an issue around the volume of referrals for Tier 2 organisations, which I think is the same across the piece regardless of the model of the prime contractor. Partly that has been about the profile of the jobseekers being referred to the Work Programme. Again, the issue around Employment and Support Allowance customers not coming through has had until recently a disproportionate impact on voluntary sector subcontractors. They were not going to the prime contractor for them to refer to anybody. They were just not there at all. I think prime contractors could have improved in some cases in communicating what was going on in referrals down their supply chain. I don t think that happened. That led to a lot of suspicion: You are keeping these customers to yourselves. Actually, no; they were not there to begin with. Q371 Graham Evans: You don t think that the fewer referrals to Tier 2 specialist service providers is a consequence of the payment-by-results funding model. Kirsty McHugh: I am not going to rule that out entirely. There are consequences to the model. However, I think it is primarily around the volume and mix of customers. Sean Williams: Where there are really effective Tier 2 organisations, on a payment-by-results model, you have an extremely strong incentive to refer individuals to those organisations. If I have got a Tier 2 provider who is extremely good, and we do have a number of Tier 2 providers who are extremely good for example, the Deaf Education Advocacy Fellowship in Manchester is a fantastic organisation, and they are helping big D and little D deaf people into employment I would be mad not to send them referrals because they are brilliant at doing their job, and I get paid by results. If I send them to them and they get them a job, I get paid. Q372 Chair: That is not happening a lot. Is that because, as you said rather bluntly, quite a lot of these organisations are just not very good? Sean Williams: Some of these organisations are extremely good organisations. They are extremely good specialists at helping and supporting individuals and their families. There is a difference in being extremely good at helping in a range of important areas in society and being really good at making someone more employable. As a Work Programme prime contractor, it is the latter we are interested in. I think the Work Programme has sometimes been a little bit of a fall guy here for cuts in funding elsewhere. I do take a personal view, but I also take a professional view on the funding for these charities. They might be doing extremely good work, but that is not the same thing as increasing someone s employability. Kirsty McHugh: Some, of course, are very good at both. Sean Williams: Some are. Q373 Chair: A lot of these organisations may have spawned into employability, but what you are saying is that that is not the focus. Sean Williams: A lot of organisations follow the cash. That may not have been their specialism what they were really good at. Kirsty McHugh: They were over-promised by Government as well. Q374 Jane Ellison: I have a quick question on that. I do understand the distinction you make, and I have seen groups in my own patch and I am sure others have had this where people are very good, but their background is they are coming from a charity and support and welfare in the more general sense. Sometimes the people involved have got negligible or no private-sector experience, for example, and therefore their actual insight into what a private-sector employer might be looking for and what it takes to

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Work and Pensions Committee: Evidence Ev 77 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton get someone over the doorstep is limited not by lack of will but simply by the general background of people in that sector. Is that your experience? Sean Williams: I completely agree with Kirsty that there are some very good organisations delivering this, but absolutely, I completely agree. Being very good at helping individuals into work is a specialist skill. It is not the same specialism as being very good at dealing with someone with a severe learning disability, for example. Q375 Sheila Gilmore: Surely, it does bring it back to the initial contracting basis. It was too rushed and that is a lesson to be learned but if people are not very good at it, they should not be in your supply chain in the first place, rather than being in a supply chain and saying, Actually, you weren t very good. Sean Williams: I will come back to the data point, Sheila. The data available were terrible in this marketplace prior to the Work Programme. Whenever you spoke to these organisations, they all told you they were very good at it. There was, unfortunately, a little bit where we just had to try, and see what worked and see what did not work. Richard Clifton: From our point of view, we went on to try to offer contracts to everybody we put in our bid. Not all of those ended up taking a contract because, as charities, once they drilled down into the commercials, even though they had agreed to take part at the point of bidding, they realised that it was too much of a risk for them. As a charity, we have ended up with a supply chain that is 62% voluntary sector. We have tried to do capacity building for them. We have managers who are going out and helping them to understand the commercial side of it, because they bring so many more benefits to it. We have done all we can to build capacity. We are also working with ACEVO, which is the Association of Chief Executives of Voluntary Organisations, to put together support on the capacity building for voluntary organisations so they can really realise the commercial constraints that they are entering into in order to work in this area. I think we do have to be honest that, for some organisations, it is not right for them to be in the Work Programme supply chain. I think they have to realise that, but that does not mean they do not have a part to play in helping that person in their life. We just need to make sure it is the right funding route for doing that type of work. Q376 Graham Evans: If they are on the supply chain, and their expectations are that they are going to receive referrals, and yet they get no referrals, clearly something has gone badly wrong there. What you are saying is they should not be on the supply chain, but they do not know that they are not on the supply chain and they are expecting referrals. Richard Clifton: From our point of view, everybody will know if they are on our supply chain because we will have a contract in place with them to deliver that service, and we will have been very honest and up front with them from the point we put the bid in all the way through. I cannot comment on other providers and how their procurement worked. We have always been very open and honest about people who are on our supply chain or not. Q377 Chair: In any cases, did you find that, compared with the actual subcontractors you had in your supply chain for your bid, you ended up using a completely different lot of contractors in reality now that it is up and working? Richard Clifton: I think at this point, from our Tier 1 providers, we have ended up with 13 out of 15 that we put into the bid. For Tier 2, we ended up with 12 that we had in the bid, of which six got to the contract stage. We are quite open about that, and we are now up to 23. We have added more to it to meet the needs of the customer, so we have very much kept to what we said in the bid. Q378 Chair: Why is information about subcontractor referrals not in the public domain? Richard Clifton: Because, in actual fact, the Department will not necessarily have those figures, and it would have to get them from each individual provider. Q379 Chair: Is there a gagging clause on this from the Department? Richard Clifton: For referrals, not as far as I am aware. There are some commercial aspects to this that I think different providers will take. Q380 Chair: Do you have a gagging clause on your subcontractors, saying they are not allowed to complain about lack of referrals? Sean Williams: Absolutely not. Kirsty McHugh: Not that I am aware. There are a lot of lessons for future commissioning whether it is probations or stuff going on at the Ministry of Justice and future employment programmes that we need to learn from the Work Programme. We have detailed those, actually, for the MoJ. I had some subcontractors in membership, or potential subcontractors, who put in 100 different expressionof-interest forms. They were small, private sector ones in some cases as well. We developed a standardised expression-of-interest form that could be used across everybody to take some of the pain out of that. The Ministry of Justice is also talking about capacity building around supporting the whole contracting element during that whole process. The Department for Work and Pensions could do that in future as well. There are some things that we could do collectively as an industry with the Government that could help future commissioning, and take the pain and cost out of it for smaller organisations. Q381 Chair: As primes you are meant to bear the financial risk, as part of your job as the prime contractor. Do any of you pass that financial risk down to subcontractors at all? Sean Williams: As a prime, our job is to help as many people into sustained employment as we can. We bear a considerable amount of financial risk. The Department rightly believes in payment by results and outcomes-based contracting as the best way of getting results and driving performance, and strangely enough

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Ev 78 Work and Pensions Committee: Evidence 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton prime contractors believe the same thing. It is different for some very small subcontractors and Tier 2s who need upfront funding, but on the whole, for our biggest subcontractors, we need to have a heavy outcome-payment element and they need to share some of that risk as well. Andrew Conlan-Trant: It is right that supply chains should take risk. In parallel with that, as has been mentioned earlier, the supply chain needs help in building capacity and, to the greatest extent possible, we should ensure that a supply chain delivery organisation has a stable operating environment. We have provided a standard IT system, standard processes to the extent that that is possible, and so forth, so that they can take on the risk and get the benefits from that as well. Sean Williams: We should be realistic here. On a 100%-outcome-funded contract at the prime level, it is not realistic to expect prime contractors to act as banks. Prime contractors are not banks; they are very good management organisations. The funding at the top level will inevitably reflect, to a greater or lesser degree, the funding for subcontractors. There are some important lessons there, for example, in the justice space at the moment. If you want to have upfront funding for subcontractors, you have to have upfront funding for primes. It is simply not realistic to expect primes to sit in the middle of that and carry 100% of the risk. Q382 Chair: If you are over-performing compared with your subcontractors in other words, you are getting a lot more of the profit, which I suspect is the case surely, as a consequence of that, you should be bearing more of the risk. Sean Williams: I think that is the other good reason to make sure it is a fair apportionment and that, when we are over-performing, subcontractors share in that reward. Q383 Nigel Mills: I can see why you would not take 100% of the risk yourself and just pay people on a fixed-payment basis. Presumably, you do not just have to mirror your contract and pass that down. You can take some of the risk yourself. Where do you think the right balance is between how much risk you try to pass on and how much you absorb? Sean Williams: It depends on the subcontractor. Kirsty McHugh: Some subcontractors are local authorities or very large multi-million pound charities, and they can bear that risk. The sort of small Tier 2s we have just been talking about cannot. There have to be different arrangements for different organisations. Now, I would be wary. I sometimes hear people saying, Prime contractors cannot share any risk with their supply chain. If you went down that route, you would stop all but the biggest organisations being prime contractors. Sean Williams: They wouldn t do it either. Kirsty McHugh: They wouldn t do it either. You would certainly stop charities acting as a prime contractor, and everything I hear is: Actually, you want some prime contractors to be charities. There needs to be that fair element of risk-sharing, but it does need to be fair. Q384 Nigel Mills: There is clearly a difference. If you are the prime contractor and you choose to deliver some of the programme yourself, presumably you are paying staff out and taking the whole financial risk, whereas if you choose to subcontract, you are pushing some of that away from yourself down the chain. Richard Clifton: Our model is exactly that. We both deliver and have a supply chain. I think, very much, we have negotiated on an individual basis the terms that are appropriate for the organisations and the services they are delivering. We have done more upfront fees for some people at Tier 1 than we have for other providers, but they have to acknowledge that, if they have that, they are getting less reward if they over-perform on their performance. They reduce their risk but they also reduce their potential reward. We have been very fair and open about that. For all of our Tier 2s, we work more on a fee-for-service basis and not necessarily on payment by results. Q385 Nigel Mills: Do you remunerate any of your staff on the basis of payment by results or are they on fixed salaries? Richard Clifton: We have all our staff on fixed salaries, although we do have incentives built into the programme. That is more about actual recognition and reward rather than a payment-by-results-type salary basis. Andrew Conlan-Trant: Within the supply chain, some supply chain organisations may manage that differently. Our view is that delivery staff are not on performance as much. Q386 Chair: As prime contractors, this may not be the case here, but we have heard that some specialist subcontractors have received far fewer referrals, some have received inappropriate referrals, some have complained about the funding model and that the transfer of financial risk is inappropriate, and some have even gone out of business. We have heard stories of that this morning. Yet all the prime contractors in the country have received Merlin accreditation, which is meant to say that they have got very good relationships with the supply chain. How can Merlin be improved to better protect all of the providers? I suppose this is to you, Kirsty. Can Merlin be improved to protect the very people it was set up to protect? In some cases, it is not. Kirsty McHugh: I am on the Merlin Standard Advisory Board, so I will declare that. As far as I can see, it is still fairly early days with Merlin. It think it is fundamentally a good assessment tool but it is not perfect. Now we have been through one cycle, where all the Work Programme prime contractors and indeed the prime contractors of other programmes have been reviewed and assessed, we need to go back and review what has worked well and what has worked less well in relation to that. We have surveyed our members on their views. There has been a mixed bundle of views, I have to say, of Merlin. Fundamentally, however, there is a lot of good stuff around that. It does not cover some of the points that you have just raised. Merlin will not cover issues around guaranteed volumes. It just doesn t. I don t think we can get Merlin or any assessment tool to do that. It does not

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG04 Source: /MILES/PKU/INPUT/028832/028832_o004_db_Corrected WPC 06 03 13.xml Work and Pensions Committee: Evidence Ev 79 6 March 2013 Kirsty McHugh, Sean Williams, Andrew Conlan-Trant and Richard Clifton stop subcontractors signing contracts that are not in their best interest. So there is a limit to what Merlin as a tool can do. Can it be improved? Yes it can. I definitely think it can. Sean Williams: We tend to get two different views from subcontractors. Those subcontractors we are using, who tend to be the most effective, give us very high, even positive ratings for our subcontractor management. Those organisations that we don t use tend to give us very low ratings for our subcontractor management. Q387 Chair: Is Merlin on your radar? Sean Williams: I have a 100% subcontracted delivery model. If I don t have brilliant relationships with my subcontractors and my subcontractors are not performing really well, then I am not performing really well. It is a completely symbiotic relationship, and Merlin forms an important part of that. Andrew Conlan-Trant: It has to be part of the culture of supply chain management. We should not just be driven by Merlin as to how we manage the supply chain. The important thing is that we develop sound relationships, that we are supported through the supply chain, and that we manage them effectively through to delivering outcomes. Andrew Conlan-Trant: I would address the ESF issue in Wales. Kirsty McHugh: There are so many. Can you come back to me? I am thinking in terms of primes and subs. Chair: You can give us some more. Sean Williams: I am going to go for two: more referrals and better differentiated payments. Richard Clifton: I would go for the better differentiated payments, but linking that to a proper assessment up front so the right people get the right support. Kirsty McHugh: I think it is around ensuring that there is a very strong relationship with the Department, sharing of information, and ongoing dialogue based on new information coming through. As an industry, we need to get performance up in relation to Employment and Support Allowance customers. Andrew Conlan-Trant: It is also important to acknowledge the regional differences. Chair: Thanks very much for coming along this morning. Your evidence has been extremely useful for us, and we do appreciate that you have given us your time today. Q388 Nigel Mills: A last question: if you could change one thing about the Work Programme to make it work better, what would you change?

cobber Pack: U PL: COE1 [SE] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Ev 80 Work and Pensions Committee: Evidence Wednesday 13 March 2013 Members present: Dame Anne Begg (Chair) Debbie Abrahams Mr Aidan Burley Jane Ellison Graham Evans Sheila Gilmore Glenda Jackson Stephen Lloyd Nigel Mills Anne Marie Morris Teresa Pearce Examination of Witnesses Witnesses: Susan Scott-Parker OBE, Chief Executive Officer, Business Disability Forum, Charles Gray, Group Sales and Marketing Director, de Poel, Gouy Hamilton-Fisher, Head of People Support, Timpson, and Andrea Fozard, Supplier Skills Project Manager, and Mike Lycett, Head of Commercial Centre for Excellence, Transport for London, gave evidence. Q389 Chair: Can I welcome you here this morning? Thanks very much for coming. We are very keen to speak to employers about their experience of the Work Programme, because employers are crucial to making the whole thing work. If I can begin with you, Mike, can I ask you to introduce yourself for the record? Mike Lycett: I am Mike Lycett. I work for Transport for London (TfL) in the Commercial Team and head up the supplier skills team responsible for our particular programme. Andrea Fozard: My name is Andrea Fozard. I am the Supplier Skills Project Manager for TfL. I have day-to-day responsibility for overseeing the work we do through that programme, which includes our partnership with the primes around the Work Programme. Gouy Hamilton-Fisher: I am Gouy Hamilton-Fisher from Timpson. I am responsible for people support, which includes recruitment. Susan Scott-Parker: I am Susan Scott-Parker, founding Chief Executive of the Business Disability Forum. Our job is to make it easier for employers to say yes. Charles Gray: Good morning. I am Charles Gray. I am a Director with de Poel, and I have also been involved in the HM Revenue and Customs (HMRC) PaceSetter programme and a board member for HMRC. Q390 Chair: You are all very welcome, and thank you very much for coming before us this morning. I have a very straightforward question to begin. Do you believe that the Work Programme s objective of bringing people who are furthest from the labour market into sustained employment can be achieved in the current economic climate? Mike Lycett: From a Transport for London perspective, some success has been gained and can be gained. One of the factors that is important for us, though, is that we have rising demand for our transport services, and we had a work programme that was fairly well laid out and set out, so we had a degree of security about future work and the need for skills and jobs. So, from our perspective, yes it can, but the key is the future work that has helped this programme. Q391 Chair: Is it more difficult, though, in this economic climate? Mike Lycett: I suspect it might be for other organisations, but we have been somewhat protected because of the nature of London and the demand for transport from bits of the economy that others may not be experiencing. Q392 Chair: Charles, you are a recruitment agency, so you must have a wider perspective. Charles Gray: The current economic climate is a big excuse. If you have the will and the intent, together with the knowledge of how to do it a lot of employers do not know how and the service providers are not providing them with the education, the direction and the knowledge. Especially in this current economic climate, there are a lot of skilled, knowledgeable and capable disabled people out there who can help companies out of their current economic problems, so it should be an asset and a benefit, not a hindrance. Gouy Hamilton-Fisher: I agree in part with that. Certainly, we at Timpson do not have a problem getting people, but those we have had through the Work Programme have been very poor, and indeed Jobcentre Plus (JCP) were superb in their offer to come and work within one of our branches, just to try to better direct the right candidates to us. We do not have a shortage of candidates, but we are very willing to look at long-term unemployed. That has been evidenced by our work with the prisons and the Timpson Foundation. Our big disappointment is, of the 12 people that have been sent to us, only one has survived, and that is because the other 11 could not get up. Q393 Chair: What has gone wrong, then? Gouy Hamilton-Fisher: I was quite surprised once to be chased by one of the providers for a colleague who had come of his own volition to look for work, but whose name was on their books. That told me that that particular provider was not really looking for the best interests of that long-term unemployed person, but just to collect the money. We were quite disappointed at that.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Work and Pensions Committee: Evidence Ev 81 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett Q394 Chair: Are you saying that the provider is not doing a proper analysis or putting in the proper support to make sure they are matching the correct people to the correct jobs? Gouy Hamilton-Fisher: Yes. Q395 Chair: They are cutting off their nose to spite their face, then, surely. Gouy Hamilton-Fisher: Yes. I would say what you have just said is absolutely correct and, as I say, that was highlighted to us when the excellent manager at the particular Jobcentre Plus that we were dealing with offered, without our suggestion, to come and work in one of our branches to get a better idea of what we were about. Q396 Mr Burley: I am intrigued by your phrase: you had 12 candidates but 11 could not get up. Could you just explain to the Committee what you mean by that? Gouy Hamilton-Fisher: We could not continue to employ them or give them any work experience because they either did not arrive for work, or we had to chase them to find out where they were. They came poorly prepared, in my view. The one person that did quite clearly had excellent initiative, and I wish we had found him earlier. Susan Scott-Parker: Can I add to that? I think this experience is very common. It is possible to get significantly more long-term unemployed and disabled people into jobs, but the problem you have just heard is that the service providers do not match the need of the employer to the need of the individual. They do not start by saying, What would make it easier for Timpson to recruit these individuals? What kind of jobs? Do they do pre-screening? Do they prepare the individual for the reality of working inside this organisation, or any other? One of the reasons we were so delighted to be here this morning is the premise that the employer is the most important user of the Work Programme. Yet when you look at most of the conversations about the Work Programme users, they are focused on the individual. The employer is the essential user, because if the employer says no to those 11, all the investment in pushing these 11 randomly towards the employer is wasted. Q397 Chair: For the contractors, is it just a numbers game, rather than providing a high-quality service for the jobseeker? Gouy Hamilton-Fisher: Unfortunately, that is our perception. It is difficult to encourage my team in HR to see otherwise at the moment. Q398 Chair: Transport for London, you seem to have been a bit more successful. Have you got the same experience? Andrea Fozard: It is interesting to hear the feedback from the other employers. We have worked in the area for some time, working with the Jobcentre and other groups to ensure that some of London s hardest-to-help are able to access opportunities. When we became aware of the Work Programme, we knew it was something we wanted and needed to engage with, and we sat down very early on with all six of the primes that were delivering the programme in London over at City Hall to talk about what we could do. We talked to them at that stage, as Mike referred to, with our demand planning, so with sight of the numbers and types of vacancies that were coming up over the next 12 months, 18 months, three years and so on, to give them a bit of scope around the opportunities that we had. We also talked to them about what our expectations would be as an employer and as a leading client introducing them to our supply chain. It was very clear from the start that we had to be very clear around what we expected from the primes and also what the primes needed from us as an employer. We have seen it very much as a longer-term partnership and collaboration with the primes. We did not expect that, overnight, it would be a very easy, simple process and we would just get thousands of long-term unemployed back into work. However, we were committed to supporting the programme, so we agreed to a memorandum of understanding, which has underpinned our partnership over the past 12 months. That has been fundamental to a lot of the successes. We also have faced challenges through that time. What we think has worked, though, is the idea that the six primes came together collectively and funded a position within the team. Within our team, we have a dedicated workplace co-ordinator who acts as a broker between the opportunities that come up through our supply chain and the primes referring the candidates. Q399 Chair: That broker makes all the difference; brokerage always seems to have been very successful in any previous welfare-to-work scheme. Andrea Fozard: Absolutely. Q400 Stephen Lloyd: But in a sense, Chair, what TfL has done is exactly what Susan was talking about. As the employers, you have really taken charge and taken control and made sure that your needs and your requirements not only are met but the groups that you are working with Jobcentre Plus and the primes are co-ordinated through that. Andrea Fozard: Absolutely. We have had, I would say, a good experience in London with the intent from those primes. There has been that commitment right from the start to collaborating. From my perspective, they meet six-weekly to talk about a range of activities across a range of industries. I am invited to that six-weekly meeting to make sure that we continue to have an input in that and are able to combine with any other activities or plans that they have around other parts of London. Q401 Debbie Abrahams: Is this fairly common? Andrea Fozard: No. Q402 Debbie Abrahams: So it is rather a unique position. I think it is an excellent position, by the way. What sort of numbers do you deal with on an annual basis? Andrea Fozard: We have just finished our year-one pilot, so the numbers that I will present today are based on that. In the first year, we got 112 long-term unemployed people back into work within the supply chain. We are in a fortunate position as well where we

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Ev 82 Work and Pensions Committee: Evidence 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett can provide some information around jobs sustained. That is obviously important for the Department, but also critical for ourselves. One of the reasons we got involved in this is that we have a wealth of opportunities, and we want to make sure that Londoners disadvantaged Londoners in particular are able to access them; however, we would like them to stay in work, because that is what provides us with a solid workforce. From the data that we have, we now know that after three months of those candidates going into work, 87% are sustained; after 6 months, 77% are sustained; and after 12 months, 67% are sustained. Q403 Debbie Abrahams: That is really good. Because of the high volume of people coming through, that is the way that funding the co-ordinators really works for you. Andrea Fozard: Absolutely. We sat down at the end of year one with the primes collectively, and looked at whether we continue with this. They said, Absolutely, yes, we would like to. Will they continue funding the posts? Again, yes, absolutely they will. We have set ourselves even more stretching targets for what we hope to achieve in year two. Debbie Abrahams: It seems a really good model, Chair, doesn t it? Chair: It shows what can be done, yes. Q404 Glenda Jackson: Mr Hamilton-Fisher, can we go back to the 12 and the 11 who did not get up in the morning? Had they actually had job starts, or were they simply put to you as potential? There is an imbalance in what you are saying, because the programme only delivers for the providers on the results. They were not getting results, so why were they wasting everybody s time? Are you in a position to hazard a guess? Gouy Hamilton-Fisher: I am not, to be fair. My impression was that certainly eight of those people had not had any preparation whatsoever; they had just been sent to us. We do quite a bit of work with the prisons, so we have got a programme of training people, giving them work experience and then assessment upon assessment, so we can make sure they do stick to us. There is nothing familiar about those who are sent to us from either Ingeus or A4e. Q405 Stephen Lloyd: That must be incredibly frustrating for you. Gouy Hamilton-Fisher: It is, because it is a fabulous opportunity. Q406 Stephen Lloyd: It must be demoralising for your own staff as well. Gouy Hamilton-Fisher: Yes. Particularly because of what we have done off our own back with the prisons, we thought this would be a golden opportunity. We have got 90 new branches opening this year just with one supermarket alone. We are expanding and we are on record year profits, so there is every opportunity to continue to employ people. Chair: But they need to match them up. Q407 Nigel Mills: It seems like the Work Programme is not working wonderfully well in all situations for people who are furthest from the labour market. In June, we will see the first cohort who have gone through their two years on the Work Programme leave it, sadly for many, without having found a sustained job. Do you think there is a role for employers in trying to do something with those presumably very hardest-to-reach groups? Susan Scott-Parker: Employers play a crucial role because they have the jobs. From our experience, if the well-intentioned employer finds it difficult to attract suitable candidates at the right time for the right vacancies the ones, say, in our membership who want to do this right, or like Timpson then for the rest, it is not going to work at all. The challenge is that the system seems to be fragmented and uncoordinated in terms of how it enables the individual to move step-by-step to the right employer for the right vacancy at the right time. The programmes that we have seen work best and it is not a million miles from what TfL have done are where the employer says, I have vacancies coming up in the next year that look like this. Will you have candidates that could match those vacancies? I want you to come in and spend time on site to get to know my business and how we recruit, and help to audit my policies and procedures. If I am using panels for interview and you have an individual with Asperger s who is likely to do badly at the panel, help me to get rid of the panel and find a work-trial approach that makes it easier for them to prove what they can do. The system at the moment is not funded to meet the needs of the employer in this way. We are focused on people with disabilities in particular, and I am concerned that if the Work Programme is failing long-term unemployed, imagine how difficult it is for the employer to pull disabled long-term unemployed people through that process. When we sat down with the National Autistic Society, they brought us 50 CVs, so that we could see the talent and the qualifications and what they were interested in, and then we brought a group of companies together that we knew in the next year or two were likely to have jobs to match. We brought the individuals in to meet the companies to get an understanding of what was getting in the way: why we were struggling to attract good candidates and why the candidates did not go to these companies. We learned that the job interview disadvantaged many of these individuals, and so the members agreed to do work trials. We have had hundreds of people with Asperger s find work as a result of bringing the demand from the employer together with the supply of candidates in a structured and systematic way, but somehow the funding regime does not encourage these providers to collaborate. My final story would be: if a member rings a local agency and says, I am interested in filling an accountant s job. If you have got a disabled accountant, I would be interested in looking at this, they will say no. They do not ring round every other agency to find a disabled accountant so that this company can recruit, because the funding does not reward them for getting someone in from another

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Work and Pensions Committee: Evidence Ev 83 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett provider. Similarly, they do not put an ad in the newspaper to say, We have got companies looking for disabled individuals with the following skills. Come to us and we will match you to the right employer. They just push candidates almost randomly, in our experience, at the employer and hope that a few stick. Q408 Glenda Jackson: How many employers would you say have this approach to employing people with disabilities? It clearly is not every employer in the country. Susan Scott-Parker: No, clearly. Q409 Glenda Jackson: How do we patch into this group? Susan Scott-Parker: If you are talking about employers in general, the point is that the agencies do not set out to make it easy for employer X to do this. They do not approach the employers and say, We have got candidates coming through that seem to match the vacancies you are looking for. We can help you to get Access to Work funding, if there is any need. We can audit your policies. We can do all these things for you. There is no offer to the employer who is not aware that would intrigue them and make them think that it would be business-sensible to do it this way, because you want people who are good to come through. The approach is simply, Employers need to do better, and then, when they do get interested, they cannot find the candidates. Q410 Chair: Is Work Choice involved in any of this? Do you recruit through Work Choice at all, or encourage your employers to recruit through Work Choice? Susan Scott-Parker: Of course some employers do, but, again, it is a two-year-long programme, and it is not geared to start with, What do employers need in this patch and how do we get these individuals to that employer? Our members have very productive partnerships with Remploy and so I get quarterly updates on how many individuals are coming into our partner companies from Remploy. Remploy has structured a partnership with Royal Mail that has almost 2,000 people coming through, because it starts by saying, How does a manager in Remploy fill vacancies up? This is the process they go through. How can we make it easier for them to give Remploy first shot at filling that vacancy? How do we minimise the risk for the employer? It is a carefully thought-through process. Charles Gray: It really comes down to treating the employers like customers. Like every good customer, you do not tell them what they should do or how they should fill their requirements; you have to make a proposal that is attractive to them and make it easy for them to buy. They have got enough pressure right now. Too many of the service providers are just pushing out candidates and they are not entering into a discussion with the employers. Treat them like a customer. The phrase that was used earlier was supply chain. Treat it like a supply chain that starts with the customer and works its way back. Do any of you who go out and buy anything today have to work very hard at it? No; the most successful companies make it easy for you to buy, by meeting your needs quickly and accurately. We are not doing that. We are not listening to them; we are not talking to them; and we are not supporting them. What we are doing is pushing candidates. Q411 Stephen Lloyd: When you are, like TfL and others, you get a really good result. Charles Gray: Exactly. Andrea Fozard: I think it is worth saying the year has not been without its challenges. We have faced what has been spoken about today on the panel. We have had large volumes of candidates thrown at positions that do not match the very basic criteria. We have had candidates not prepared for assessments and interviews. But our commitment as an organisation was to work with the primes to address this. We are not going to see a total culture shift overnight, and we are aware of that, but by being able to have difficult conversations with our suppliers, as well as the primes, around managing expectations on both sides, over the course of the year, we have seen the numbers increase. Q412 Graham Evans: I would like to say thank you to Charles; you are exactly right. In my constituency, there is the Petty Pool Centre, where severely disabled young people go and are educated to a very high standard. For me, the difference is that they work with the local employers in catering and janitorial positions. These disabled people severely disabled mentally are able to get jobs. If organisations can work with clients as you have described there for disabled people, surely it is not beyond service providers to do the same. Charles Gray: Can I just raise one point on that? As an employer, you really do not care if the person is seven feet tall or four feet tall. If they can do the job and help them with a competitive advantage and they show up on a regular basis and they are supported, you will go out of your way to keep a good employee. Q413 Teresa Pearce: Obviously, TfL has had success here, but you have had success because you have a number of filters before the person arrives, and you are an employer with quite a sizeable HR function. For smaller employers who do not really have that within that organisation, it will be quite a challenge, because you have had to do an awful lot to get a very successful outcome. Do you think only large employers with a sizeable HR function could get the results you get? Andrea Fozard: You are absolutely right; a considerable amount of resource has gone in from TfL as an organisation to support this and to embed it and get it up and running. However, we have seen our hands-on time decline, as the programme has become more secure and positioned. You are quite right; from a large organisation s perspective, we have been able to put that resource in. That is why I talk about the longer-term partnership and collaboration. I think there is absolutely activity that needs to take place from the primes perspective for how they work with employers. It would be very difficult for a small

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Ev 84 Work and Pensions Committee: Evidence 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett employer. You would go to the primes in the first instance; maybe get 25 CVs come through; they would not be the right candidates; and you would disengage. There is definitely a piece of work and I know that the CBI are doing a lot of work around this to try to build that partnership between employers of all sizes and the primes. Yes, our size has helped us. However, what we are really committed to doing over the next 12 months is also sharing some lessons learned. Whether you are an SME 1 or a national organisation, you need to approach the partnership in a transparent and honest manner in order to build a relationship. If I am an SME and I need someone to come and work with me on Monday, I would rather have a relationship with a prime that could tell me, I am very sorry, but we do not have anyone at the moment to meet those needs. However, let s start that conversation so that next time we do have those candidates. There is definitely work that needs to be done on both sides, by employers and the primes, around this. Q414 Glenda Jackson: Andrea, and again coming back to you, Gouy, when the primes sent you candidates who could in no way fill the potential job, did they give you any reason? When you say to them, Why did you send me these people? what do they say? Or do they not say anything? Andrea Fozard: There have been frustrations throughout the year. In some ways, we are fortunate because we work with all six primes in London, so we see variable results, if I am being frank. There are a couple of primes in particular that we have had an absolutely impeccable service from; you could not really ask for more. Q415 Glenda Jackson: What is that impeccable service? Andrea Fozard: What we do is make sure that, when we work with the primes, we are very clear. We engage with our suppliers. We find out exactly what their roles are, what their company culture is and any competencies they need. We will then organise a meeting with the primes; a representative from each of the primes will come to a meeting with our supplier to hear about the roles. Everyone is very clear that is the opportunity to ask any further questions, etc. The workplace co-ordinator the funded position will then do that matching. Some primes go along; they listen; they take notes; and they fulfil the specification that we ask them to. Others, on occasion, appear to totally ignore it, as though they were not in the room. You are right; that is hugely frustrating. There has been an occasion with one particular supplier where they have said, I am not working with the primes anymore. I am not having it, because I am just sick of this. We then worked with them and worked with the primes to mitigate what had happened, and we have worked through it. One of the things we track is the number of candidates that have been referred to us against the number of vacancies and the number of jobs. For example, over the year, we have had 567 Work Programme candidates referred to us, of which 112 have gone into 1 Small and medium enterprise. work, so four-to-one for every job, which is not a terrible stat. We found that earlier in the programme, that was a lot higher; we were getting 20 or so people that were not meeting and our approach was very much, If you cannot meet the specification, you will not be able to submit. It was almost a three strikes and you re out approach. We said, If there are any questions, come back to us. Over time, we have seen that greatly reduce. It still happens, but it is an exception rather than a rule. Q416 Chair: You have been able to deal with that because you have worked very hard with the primes. Is there potentially a problem in the mandated work activity that claimants have to do? In other words, if you are JSA claimant, you have to apply for X number of jobs in a timescale, or you have to send your CV in to X number of employers. Is that maybe why you are getting inappropriate applications? Is that something you would recognise? There is a nodding of heads. Susan Scott-Parker: That must be true. Listening to TfL s experience, try to imagine how much energy what we are hearing there really takes from an employer. You have to really want this. The word partner is an interesting word. These providers tend to regard the employer as the problem or the target. My instinct is the word customer, as Charles mentioned, is really important. You cannot work in partnership with people you do not value even as customers and users of the services that you offer. We are trying to encourage these providers to see the employer as an important customer, which means we have to do some basics. For example, we will prescreen candidates for you, not just throw them at random. We will spend time on site and get to know your business, etc. Partnership is the next stage after that, where you say to the employer, I have got some candidates coming through. They are not quite job-ready. Would you be prepared to give them two or three months, so that they get a sense of what this is about? We will support the manager while that is happening, but we are honest with them: This person is not yet ready for that job offer. That is partnership for me. TfL have really moved into that quite quickly, by the sound of it. My plea is: try to find a funding system that requires the providers to demonstrate they meet the basic needs of the employer as customer. I think that would have a huge impact throughout the system. Q417 Chair: At the moment the incentive means the more CVs, the better, rather than the appropriate CVs. Susan Scott-Parker: Absolutely. We have never seen a main provider come in to learn how to help a disabled person get through an employer process. If you are helping the individual, you need to be employer-expert. You need to say to the individual, The employer is going to look at you and think, He is going to cost too much or He is going to be too hard. You might have to navigate inaccessible online recruitment, and we are going to help you with that, because they understand the hurdles the employer is going to put in front of any applicant. The process that TfL has described is, in effect, a first shot, is it

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Work and Pensions Committee: Evidence Ev 85 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett not? You have given first shot at certain vacancies to a pool of candidates from the Work Programme. Most employers will simply expect the individual to compete with other candidates for the job. That means that the employer has to find it even easier, if you like, to recruit that person, because everybody else looks as though they are less risky. Andrea Fozard: With our suppliers as well, the jobs are open to others, so this is an add-on to their recruitment process. The Work Programme candidates are effectively competing against others that are not on the Work Programme, but the idea is that we work with them to get them up to the same level, so they can compete on a fair level. One of the things you mentioned, Susan, was around the drivers that move this behaviour around sending a multitude of CVs. From working with the six primes, effectively they are recruitment agencies, and my understanding is that the advisers on the front level have targets, so they have a number of CVs they need to send. There is definitely a culture within the organisations themselves to be able to find a way to remove that pressure, so that in the longer-term, they are providing a better-quality service and there is not an adviser at the end of the month needing to hit a target to keep their own job. Q418 Graham Evans: Can you name the organisations you are referring to? Andrea Fozard: I would really need to go back to refer to my notes, rather than throwing a prime s name out now. Because we have worked with them over 12 months, I would be hesitant to name and shame, so to speak. It is something we have worked with them to address, but it is just a culture. I worked in recruitment myself many, many years ago, and it is a culture that exists in that environment. It is target-driven. Q419 Stephen Lloyd: One of the challenges of the Work Programme is that each adviser has a caseload of between 80 and 120 clients. Can I move on to Access to Work? That is a crucial area that I know Susan knows well. I have got a couple of direct questions for you, Susan. In your experience, do you feel Work Programme providers are sufficiently aware of the Access to Work programme? Susan Scott-Parker: No. Stephen Lloyd: I agree. Susan Scott-Parker: That was an easy one. Q420 Stephen Lloyd: The next thing on that is that, as I know you know, the DWP does not allow Work Programme providers to access Access to Work, because they see it as a dual subsidy. Do you think that is a sensible approach from the DWP? Susan Scott-Parker: No. We need to come back to the purpose of Access to Work. It has two main ones. Many employers naturally assume hiring people with disabilities is too expensive. It just sounds like it. Quickly you can say, Actually, that is not true. Access to Work is there. Most employers then just move on. Very few people with disabilities need Access to Work in order to work, but it is a hugely important message in marketing terms to the employer that if you do employ someone who does cost more, it is there, and if you need an assessment to determine what adjustments the person needs, the Government will pay for it. The second purpose is to enable the employer to make the adjustments the individual needs. Even though the funding goes to the person, the employer and the person are in this together, so the providers, if they are going to help employers hire more disabled people, need to know how to deploy Access to Work the assessment process and the funding in such a way that the employer can just say, Oh, this is easy. Let s do it. I do not much care if the providers get the money directly or if they simply act as the expert advisers that help the employers to cover the costs, the way the money goes into the individual and the adjustment cost, but the providers have to be able to say to the employer, Access to Work is there. That is what it is going to do it for you. This individual does or does not need it. I am going to help you with the red tape. Q421 Stephen Lloyd: Would the others of you agree with Susan? In either your own experience or the experience of other companies in your sector, is there much knowledge of Access to Work? Andrea Fozard: From our perspective, when we looked at the end of the first year, we tried to drill down a little bit further into some of our numbers to see who the people were that were getting the opportunities with us. We have made a commitment with the primes that we want to do more around this; we want to see more disabled candidates coming through. TfL as an employer embraces all types of people and positively encourages working to get more disabled people into the workforce. When we looked at the end of the year, we were happy with many things; however, we are seeing year two as an opportunity to really drive that forward. Susan Scott-Parker: How many disabled people did you get? Andrea Fozard: At the moment, where we struggle with our data is that, while we get numbers, we do not have the ability to say, We have this many disabled people, and this many women. We have agreed that in year two what we shall be doing is, on the assessment days we have with each of the employers, asking all candidates referred to fill in a form that will provide that detail for us, which we can then track. At the end of year 2, we will be able to come back and say, These are the numbers in these different groups. Q422 Stephen Lloyd: That is absolutely crucial, because without benchmarking it is very difficult. What about yourself, Gouy? I know Timpson is very much focused on the prison side, which is highly admirable. Within that, does your organisation have much knowledge of Access to Work? Gouy Hamilton-Fisher: No, not really. I have no evidence that would help me provide a suitable answer on it, to be fair. Q423 Stephen Lloyd: That is fine. That tells me what I need to know. Susan, as you know, on the back of Liz Sayce s review, the Government included an

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Ev 86 Work and Pensions Committee: Evidence 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett additional 15 million in the current Spending Review to strengthen and improve Access to Work. We can probably safely say you think it is a good idea, but are you seeing any improvement in that on the ground? Susan Scott-Parker: The investment in Remploy offering an Access to Work service to people with mental health conditions is hugely important. That is a group that I fear all too often is lost in the Work Programme debate here. Many other programme providers do not really regard them as having disabilities; they are not expert as providers in how to advise employers on how to adjust for these individuals. That is certainly an improvement. The recommendation that the employer contribution is waived will make it easier for the programme to focus its efforts on streamlining the service and enabling more people to access it. The biggest problem we have is the assumption that the frontline providers should not be the experts, in effect. We would want every jobseeker with a disability to be told very soon into their process that Access to Work is there and might help them. Instead, the assumption is that somehow we target communication at the small business community, where you might see one or two disabled applicants in a year. These guys are not going to remember that Access to Work is there. But every Jobcentre Plus adviser and every prime adviser should all know about Access to Work, because if the individual meets the employer primed with that information I know that I qualify for Access to Work and this is what it is going to make it possible for us then it is again easier for the employer to say yes. Q424 Stephen Lloyd: That has half-answered my next question, but let me ask it anyway so that you can add anything else to it. What do you believe an effective welfare-to-work programme should do to link up employers with disabled jobseekers? We have talked about Access to Work and having common knowledge of that at Jobcentre Plus and among the primes. We have also talked about the employers and having them as customers right in the middle of it. Is there anything else you would like to add to the Committee now? Susan Scott-Parker: If the contractors were required to understand how employers adjust for applicants and to understand the processes employers use to attract candidates and assess them, they could help the employer to remove obstacles that are disability-specific and help the individuals to navigate the process. But that would require the contractors to be compelled or incentivised by funding in some way to start conversations with employers, individually and perhaps in small groups, to say, What vacancies are coming up? What are you looking for? and to spend time with those employers really understanding that. That alone would have a huge impact, but they are not funded to do anything remotely like that. Stephen Lloyd: Or incentivised, or what have you. Susan Scott-Parker: Indeed. Or threatened, or whatever it takes. Q425 Stephen Lloyd: I have one final Access to Work question. I will give you a sneak preview, Susan. A year or so ago, when Chris Grayling was Minister for Employment, I said to him around Access to Work that there are additional costs for some disabilities, and if prime providers, or Work Programme providers, are not allowed to access Access to Work, frankly, they are not going to pay the additional cost, because it will not do their business model any good. The Minister s answer was, Stephen, I understand what you say, but we cannot subsidise twice. What would you have said to the Minister if you had been in my position? Susan Scott-Parker: Access to Work is meant to be funding that goes to a person that enables them to cover the costs of the assessment and any adjustments that are unreasonable and extra, so Minister, if the money is going to the person, it goes once. Where is the double funding? Stephen Lloyd: I will put that to the new Minister for Employment when I see him next week. Thank you. Q426 Chair: Susan, is your organisation a membership organisation? If any MPs find a small business that would quite like to employ disabled people but is quite frightened of the prospect, would we be able to refer them to you for the kind of help that you have been explaining this morning with your member companies? Susan Scott-Parker: I wish I could say yes, but we are funded entirely by member fees, and so I have a team of 33 people that are working with 400 members. Q427 Chair: So they would have to join your organisation. Susan Scott-Parker: Yes. But I would say that, if this small employer is in Leeds, there should be a phone number he can call and say, Help me figure this out. How can a Work Programme with hundreds of millions of pounds not have a phone number for the small company to call? I do not understand that. I would suggest they go to Remploy. I know that sounds simple, but in our experience Remploy frequently does sit down with the employer and say, What do you need? But how can there not be a phone number for that person to call? Q428 Chair: Is that help not sitting in Jobcentre Plus? Susan Scott-Parker: No. Chair: I thought that was what the disability employment adviser was for, but you are right; there is not a single number. Q429 Glenda Jackson: I am trying to drill a little bit down into what we mean by disability in this context. Up to now it seems to me that you have all been saying, in a sense, it is something that is easily recognisable, but what we are seeing in other evidence is that people with the most complex needs, which can cover the whole range of physical and mental disabilities and then some more, are not even being considered for any of these programmes. Are you lacking information? Is it the fault of the providers? We have already seen that they keep sending you other things, and I thought the point you made about

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Work and Pensions Committee: Evidence Ev 87 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett them keeping their jobs was very interesting. Is it our failure, really, as a society to recognise what truly constitutes a disability, over and above those that we already know about being hard of hearing and having poor sight, for example? Do you see what I mean? Charles Gray: Recognise and educate. Q430 Glenda Jackson: Yes, but from the point of view of getting people into work, we are also seeing a lot of evidence of people who are completely incapable of work they have never experienced it and no one has ever told them how to go about it as in your example of people not being able to get up in the morning. There is a great deal of work that has to be done on the individual before any sane employer is going to look at them. On the issue of you saying employers are customers, is there something that they could be feeding into that process now that says, Yes, we know it is difficult, but we can possibly do this.? Gouy Hamilton-Fisher: Talking with my peers, there is a common fear of employing disabled people. The umbrella is very broad and there is little information about it. As an employer, one is not only nervous of health and safety legislation but also employment legislation, which seems on the face of it to be a barrier. I love what Susan says about providers sitting down with employers and saying, It is not that difficult. This is what you might need to do. That would be fantastically refreshing and would help to assuage some of those concerns one would naturally have as an employer. Q431 Mr Burley: That segues quite nicely on to the willingness of employers to recruit the long-term unemployed. Some witnesses we have had in this inquiry believe that there is a general unwillingness among employers to employ long-term unemployed people. Do you think that is a fair statement, or, given your comments about 11 out of 12 not even bothering to get out of bed, is it the other way round? Gouy Hamilton-Fisher: It is difficult. I find it hard to persuade my managers, but one could not find an easier employer to approach than us, simply because one only has to have a personality to be able to get the interview. We do not have interview panels; there are no assessment groups. The person merely has to turn up, smile and be able to present themselves in front of customers. It is that simple. If it is that easy, I am not sure how difficult it is to give us the right type of people. Q432 Mr Burley: Why do you think, then, people have this attitude that there is an unwillingness among employers to employ long-term unemployed people? Charles Gray: Can I raise something? Everybody in a business reports to somebody, and if you are a well-intentioned manager and you want to employ disabled people, how difficult is it to sell it upwards in your own organisation, how risky is it, and how expensive is it? We are not helping managers to hire disabled or long-term unemployed people; we are making it more difficult for them. Managers have enough trouble; they take the line of least resistance. Is there a helpline where they can learn about Access to Work? Imagine an employer who has to justify it to his or her boss; you are making life very difficult for them. We all report to somebody. Susan Scott-Parker: We have to remember that recruiting anyone is difficult and risky. It is like getting married. We know that interviews are a terrible predictor of performance, which is why we have invented probation. If what we are doing is asking an employer to imagine the potential of someone when there is nothing in their CV because they have not been working for two years, what we have is the need for the providers to be expert on how you translate what that individual has done in the last two years in terms of running their lives and their community involvement into the language an employer can recognise in terms of skills. I would say to Jane Campbell 2, You are either dependent on a team of six people or you manage a team of six people, and you have to do all the scheduling, the payroll and everything else. The providers do not help an individual to explain what they know and can contribute to the business, nor do the providers understand what the employer requires from the person as they are coming through. For example, a long-term unemployed person often does not do well at interview, which is why we encourage our members to do work trials. Give the person a week, 10 days or two months to demonstrate what their potential is on the ground. The providers do not encourage employers to offer work trials, because they are not expert on what stops a disabled person from getting a job, which is in the control of the employer or in the control of the person. They are still just assuming that, if they throw enough people at this world of work, magically some will get through. Q433 Mr Burley: Charles, you mentioned helplines. Is there anything else you think the Government could do to encourage you guys to employ long-term unemployed people? Charles Gray: I have been in the lucky position over the last 10 years where I have worked with a large number of private sector clients, small and large, as well as public sector clients. It comes down to education and leadership. Where does a manager go to learn about Access to Work? If you go on the website, it is painfully hard. You want to make it easy for people to gain this information and sell it up in their organisation. I would also like to know what happens when it goes wrong. We have to help people, so when things do go wrong, we give them support and guidance on this. Susan Scott-Parker: And give the managers support. Charles Gray: Yes, exactly. Education is a big part of it. The other thing about it is: what about some kind of dare I say it regulator; somebody who sets standards, can set targets for the agencies and understands the end-to-end process? Q434 Mr Burley: There is a lot of talk at the moment about things like quotas for women on boards and so on. Do you think we should have a quota system to try to encourage people? How hard should the Government be in forcing people? 2 Baroness Campbell of Surbiton.

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Ev 88 Work and Pensions Committee: Evidence 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett Charles Gray: The Government should be very clear in its direction and what it expects, but quotas this is a personal opinion sometimes do more damage than good. One of the things is work trials, as Susan mentioned. We had a work trial where we brought in a disabled person; they became part of the team, and the team supported them and created a support network for that person. Maybe this idea of trials is better than quotas. I think people would find a way around quotas. Q435 Jane Ellison: I am really interested by this point that is coming across now about the lack of support for employers in terms of preparing to take disabled people into the workplace, etc. I have had some personal experience of that, and I have been asking this question of disability charities for the last two years: who does an employer go to? Have any of you got any experience of any of the disability rights groups or charities being in a position to give employer-facing advice on employing disabled people? Gouy Hamilton-Fisher: I know that Timpson has been approached by a number, especially where we have tried to look at employing ex-service people. I cannot for the life of me remember any names, and I have not, stupidly, brought any. Certainly, I was very impressed with those. I really am struggling to remember the name of the charity that approached us. I think they were based in Glasgow, and they were willing to come to us and explain how that might be easier. Work trials are something that is often mentioned, and it is something that we employ very much within the Timpson Foundation for ex-offenders. We have given a number of work trials. Q436 Jane Ellison: That is your initiative. Gouy Hamilton-Fisher: It is. Q437 Jane Ellison: I am trying to get to the bottom of whether there is a big gap here. A lot of effort has gone into enabling rights, etc, but there is not enough concentration on what expert advice can be given to the other side of the fence to employers to prepare them and enable them to employ disabled people. Andrea Fozard: From our perspective, we would like to see more people with disabilities coming through to our employers. We work with our employers to challenge perceptions. You mentioned earlier the perception of the Work Programme. There is a fairly poor perception of the Work Programme among a large number of the suppliers that we deal with. That is mostly due to some of the press and media coverage, which is what they generally see. With regards to disability in particular, even prior to our partnership with the Work Programme, we made particular strides to engage with Remploy to talk about how we could make sure that vacancies that are coming up we are able to provide access to for those people. From our perspective, it is all about levelling the playing field for people, whatever their background may be. Q438 Jane Ellison: But was that your initiative? Andrea Fozard: It was. What I would say is we are driving now to work with the primes, because we need to see more people come through the Work Programme with disabilities. We want that to happen. They have been open to working with existing partnerships that we have; where we have had recruitment drives, they have worked with our partners. As an employer, we would like to see them do more. We challenge perceptions with our suppliers in a range of areas ex-offenders in particular is one we have worked on over the past couple of years and we have success. Our employers are open, but these people are not being referred through to us. Susan Scott-Parker: Can I answer that question with a couple of examples? The funding discourages the prime contractors from sending disabled individuals to the disabled charities that might be able to help. That is one observation. The second thing is that we have got two things running here. One is the scrounger perception, which people with disabilities are really struggling with. The question has always been for me: why would an employer hire a scrounger? All of that is getting in the way, but we do see some good examples. The National Autistic Society is still doing brilliant work helping employers to train their managers to delegate in new ways so that these individuals can get really good jobs. Project Search, which GlaxoSmithKline has just piloted, helps people stuck in the further education system. We have to look end-to-end; they are stuck in FE and so they are not even going into the Work Programme yet. They have got 12 individuals with complex requirements going through a programme that sees them doing internships in different departments across the company. Already five of the 12 have been offered jobs and two have moved into independent living. The point with Project Search is that it starts with the employer What vacancies have you got? What do you need? and then matches the individuals into this programme, blending education and on-the-job training. It typically gets 60% to 80% success rates, compared with 10% to 20% for this group, because it starts with the employer. We will be promoting that like crazy. Q439 Teresa Pearce: What you have just said is it is easier to get a job when you have got a job; when you have not got a job and you are out of work, there is always a risk to an employer in taking you on. They ask: Why have they been out of work? If you have been out of work long-term and you have got the label of shirker or skiver over your head employers read papers, too it is about challenging this perception. It is really important that, when the Work Programme do your CV, they explain the gap. I went to the Work Programme provider locally to ask for someone to come and work part-time in my office and they sent me so many CVs from which it was clear, because I investigated them, that the person had been out of work looking after their children. They did not say that; there was just a gap of six years. You have to wonder, but if they had said all the different things that person had done, anyone at home with children is not skiving. We need to understand that employers

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Work and Pensions Committee: Evidence Ev 89 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett do not live in their factory; they live in the world, and they read the papers. We all need to challenge that. Susan Scott-Parker: Yes. We see the need to stop generalising. My response to the sort of question, Are disabled people employable? used to be, You do not ask if Canadians are employable. Q440 Mr Burley: There is a charity in my constituency called the Newlife Foundation, which raises several million pounds a year for disabled children and employs over 100 disabled people locally. What I learned from my visit there is that you have to break them in gently. They will have someone who maybe starts working half a day a week and then over time they put them up to a day, and they end up working full-time; but it is a gradual process. They understand that because of the nature of the charity and the social enterprise they run. Do you think other employers are similarly accommodating, or realise that it is not like taking on an employee straightaway to a do full-time job and you may need to be more accommodating in order to get disabled people into work? Susan Scott-Parker: That is where I was going when I said we do not generalise. I would be saying to the employer not, Would you be accommodating and bring people you have not met yet into jobs you are not sure you are going to fill?, but, at the right time, I have got Harry here. He has got these skills. He looks like a good match. This is what he needs from your manager. This is how I am going to support you. You focus on each individual, because they will all be different. Then the employer is facing, Oh, George, as opposed to generalities about people who are not applying. Q441 Mr Burley: Gouy, in Timpson, if someone said, I want to work, but I am only willing to start off doing two days a week, or just mornings, because I want to ease my way in, is your organisation prepared to be that flexible? Gouy Hamilton-Fisher: Absolutely, yes. It is a bit like re-employing somebody from long-term sick; it is on a phased basis. Clearly, you have to make the accommodation, and we are willing to do that to get the right person, absolutely. Q442 Debbie Abrahams: Reflecting back on the question about what we can do to encourage employers and to promote employers taking on both long-term unemployed and disabled people, Andrea mentioned the workforce data monitoring; I wonder if that is a route in. If you routinely monitor how many women, older people and disabled people you have as a proportion of your workforce, that is surely a prompt to large organisations in particular, but to all organisations. It does not happen, but should it be happening? Susan Scott-Parker: We have looked at the monitoring thing for more than 20 years, and I would say flatly that no organisation will ever know how many disabled people it employs, because most people with disabilities have none visible. If you are a really good employer, why tell you, because I am already doing fine? If you are not a good employer, I would be crazy to tell you. You will never know. However, monitoring whether or not the agencies that are giving you candidates are putting forward candidates that need adjustments of some sort, even if it is just challenging an assumption as an adjustment, makes perfect sense. Members have wasted so much time trying to collect data that they cannot use because it does not give them helpful information, but you can certainly work with your suppliers to try to get a better mix of candidates coming through. Q443 Debbie Abrahams: Even if it is anonymous? That was the principle of workforce monitoring. Susan Scott-Parker: Where members get better results is in employee satisfaction and employee engagement scores where the chief executive says, Do you approve of me? Do you like working here? and those sorts of things. Companies that have been able to disaggregate disabled employee satisfaction scores, question by question, and compare them to non-disabled employees find that is helpful, because if they see that disabled employees are less likely to expect fair deals at promotion, they can then look at what is going wrong in the promotion area. The statistics that are gathered in those surveys are really useful and our members are actively seeking to improve those scores on a daily basis. Q444 Mr Burley: I have a final question for Andrea and Gouy. Not that the motivation necessarily matters, but was your motivation for your schemes out of a sense of corporate social responsibility, or out of a business-case-based approach? Gouy Hamilton-Fisher: A bit of both. It was really just the success we had in the prisons. I have worked for Timpson for 30 years, and I could not believe how blind we had been to a wider recruitment pool. Once we had recruited our first 192 ex-offenders, we suddenly realised there was much more out there. Dealing with organisations like those Susan represents and the like has opened our eyes. It is a bit of business need and a bit of recognising of corporate responsibility, but selfishly, yes, we feel good about doing things like that. Andrea Fozard: I would mirror that. It is both things. There is absolutely a business need within the industry that we work in. Engineering is one of our core functions, and there are huge skill shortages. The average age of an engineer is now 55; he is white and he is male. That does not reflect the communities we serve. As a public sector organisation, TfL will deliver the best service by being able to reflect our communities. That also gives us a very strong mandate throughout the business and the organisation. At the same time, from a corporate social responsibility perspective, it is absolutely the right thing for us to do. Mike can say more about this, but we spend Government money and therefore we must see positive community benefits from that. Mike Lycett: Particularly with our suppliers, there is absolutely a business need in our supply chain, because they have the jobs that need to be filled. There is a business need to put people in touch with those jobs. Like Timpson, ours is a dual responsibility. As you would expect, there is a strong corporate social

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Ev 90 Work and Pensions Committee: Evidence 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett responsibility ethos that pervades TfL as an organisation, but it is definitely a dual thing for us. Q445 Sheila Gilmore: What is coming over to me very powerfully from all of you is the need to distinguish between different groups. We talk a lot about people who have very clear disabilities, and there are also people who perhaps do not. Long-term unemployed people may be disabled, but they may not; they may have mental health problems, but they may not. Would you all agree that we need to be much clearer that they are not one group? Susan Scott-Parker: Absolutely. The Work Programme providers need to understand what particular disability-specific obstacles different groups encounter. The obstacles that a wheelchair-using graduate encounters will be different from the obstacles a 45-year-old individual with some problems with his hands encounters. Understanding what disability-specific obstacles need to be removed for different groups is crucial, and yet we do not expect these providers to demonstrate any know-how in this domain. The second thing would be that the focus in terms of job placement is on the individuals, and so it is the providers that really need to understand what needs to be done differently, so that this person can demonstrate that they can do the job. Ultimately, the employer is looking at an individual and the support needs to be there for the manager if things need to be done differently to help him learn how to do that. Q446 Sheila Gilmore: In terms of working with Work Programme providers, what seems to be happening in London, from what you are saying, is there is a degree of co-operation. The system was perhaps set up to be more competitive than that, because one of the measurements of success in London is whether one prime s performance is better than another. Do you think the co-operation model or the competition model is working best, or have you only had experience of one? I am looking at TfL in particular. Andrea Fozard: From a delivery perspective, we know which primes are delivering best for ourselves. There are a couple that have taken steps to provide a fantastic service. The way we view it is that the collaboration is driving that behaviour. Where the primes have really got behind the partnership, they are the ones that are seeing the results. From our perspective, yes, that is a good thing, because effectively, while they are working together, they are competing against each other for the same pot of funding at the end of the day. Q447 Stephen Lloyd: Out of curiosity, Andrea, are those couple that you say are working much more effectively doing better on the league tables for the numbers of people they are getting into employment overall, from what you have seen? Andrea Fozard: From what I understand, yes. We have been trying to drill down to look at why we are getting such great results from these primes in particular. One of the key things is that, with those particular primes, there has been a continuity of staff working with us as employers, so we have been able to build that longer-term partnership. With a number of the other primes, it has been a pretty continuous flow of different leads, and that makes it very difficult for them to understand our business and our requirements. That is why I think there are very variable results across the country. We have the luxury of seeing all six together, but it is very dependent on individual offices and primes. Q448 Glenda Jackson: Susan, you said pretty categorically that providers are not taking on board the individual requirements of the people they are supposed to be helping, yet they were awarded contracts by the Government because one of the Government s requirements was that the most difficult, hardest-to-reach unemployed people and that covered the whole range of what we call disabilities were going to be met. Do you have evidence from your members that you could furnish this Committee with I am not asking for it now to show the providers that are being used by your members are markedly failing to meet what we were told the Government s requirements were? If you have, could you let us have it? Susan Scott-Parker: We could get in touch with members and see if we can pull it together for you. I will be frank and say we got in touch with quite a few in preparation for today, and could not find very many that to their knowledge had ever used a Work Programme provider. Glenda Jackson: Really? Chair: That is telling in itself. Stephen Lloyd: You are mostly the major companies, are you not? Q449 Glenda Jackson: We have had evidence presented to us that a high proportion of vacancies never go through any of the established areas. Susan Scott-Parker: It may well be that some of the members have recruited from these providers and do not know it, because they do not know how the system works at all. I would be happy to get a better understanding afterwards of what kind of questions you would like to ask, and we could certainly go out and survey the members. Q450 Glenda Jackson: I think it is salient that your members have never been approached in this way. Susan Scott-Parker: Not that they are aware. Q451 Chair: We have found that people who are on the Work Programme do not know they are on the Work Programme, so it is not necessarily ignorance of the employers, but the individuals as well. Susan Scott-Parker: What we found is that the providers we talked to had very low expectations of the employability of the individuals. They had low expectations of the willingness of the employer to adapt and do stuff, and low expectations of the individual. The park and cream phenomenon, which you are aware of, is very significant, particularly when it is a disabled person, because the contractors cannot imagine the disabled person in work; they do not know how to do it.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Work and Pensions Committee: Evidence Ev 91 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett Glenda Jackson: If you could provide us with that evidence, we would be very grateful. Q452 Nigel Mills: Do you have any views on how the differing approaches of some providers work, or do not work? In my area, one provider effectively has one base in Derby, which is about 10 miles from most of my seat, and the other one has a more local, smaller base. Do you think you get a better outcome if you have got the providers nearer the people they are trying to help and nearer local employers, rather than being stuck somewhere centrally, or do you think it makes no difference at all? Charles Gray: Can I address that? If you were to ask 10 service providers to write up on the wall what they think their process is, I guarantee you would get 12 or 15 different processes. There is no standard, good or bad. In answer to your question, there is a surprising lack of data, so we do not have that, but what it comes down to is those that have standards, that make an effort to understand their customer and that specify it out and then go back. We have a lot of service providers that never meet the candidates that they are providing. They have never, ever met with them or spoken with them directly. It is so variable that it is hard to answer that. Glenda Jackson: That is the black box, is it not? Q453 Sheila Gilmore: One of the advantages of the approaches of both TfL and Timpson is that you have got a clear idea of what your, or your suppliers, needs are, and there are very specific jobs at the end of that. One of the previous criticisms of a lot of training programmes, which much predates the Work Programme, was that they were constantly training people but with nothing particular in mind. We set one up in Edinburgh years ago that was about our health service, which was identified as being a growth industry in the area. We set up something that very specifically worked with the health board as the employer, people who were unemployed, and training that fitted that, and giving people at least a guaranteed interview at the end the whole thing that there is something that is not just abstract. Do you think that is one of the reasons why it is working better for you? Andrea Fozard: Absolutely. I mirror exactly what you say there. I know we are very fortunate in the sense that we have opportunities there at the end of this. The primes are engaged because they know there are opportunities. The next steps for us are looking at our future demand, looking at what opportunities we know are coming up over the next 12 months and working to ensure that the primes are able to prepare their candidates that may be further away from the labour market in this time to move them closer to where we need them to be. We have also identified that, while we have a variety of roles that have been filled through the Work Programme, fundamentally, each and every role includes customer service. That is paramount for Transport for London. We now know that if we can work with these Work Programme candidates to prepare them with excellent customer service skills, that will provide them with what they need. You talked about the black-box approach. While I think it does drive innovation and it is great, two key things are coming out of this programme for us as lacking. Teresa, you mentioned earlier on CVs. CVs can be shocking, even once people have sat down with a Work Programme adviser. What we see is not reflective of the individuals. We have met people who have got five or 10 years construction experience, and it is not on their CV. It is outrageous. That is one rant. CVs are important, as is interview preparation. These are two standard things. We do believe it is important to monitor, because it is a pilot for us and we want to be able to learn from the year. One of the areas that we are really focusing on is the conversion from interviews to job starts. By the time that Work Programme candidate gets to the stage where they are sitting in front of our employer, the employer is engaged, they have been through various assessments in the selection process, and it really is down to their interview skills. Only 50% of them across the programme have gone on into a job at that stage. Effectively, that is the same number again that could have, if they had been prepared to the level they needed to be in an interview scenario, gone on into work. What I would say is that, over the course of the year, that number has greatly increased, so we are looking at a yearly average, and that is building on lessons learned throughout. That very much is a focus now in our partnership work: it is around CVs, interview preparation and looking at what we can do with generic competencies that we know come out of our jobs. Q454 Sheila Gilmore: Is the Work Programme co-ordinator that you employ paid for by TfL? Andrea Fozard: No. Currently, that post is funded through the prime contractors, and the agreement has been made that they will continue to fund that for a further 12 months. However, it has already been acknowledged in the session that we do put additional efforts and support in ourselves. Mike Lycett: One position is funded by the primes, but it is a position within a team that we already have, so that one person gets extra support from the team. There is one role directly funded, but it does not then become a stand-alone role; there is a support system to help whoever is in that role. Andrea Fozard: Yes, and it links into some of our other priorities around apprenticeships, etc. There are other people in the team who all work together, and it is about trying to combine those so that, moving forward, the next step for us with the Work Programme is linking into the apprenticeship opportunities, etc. Susan Scott-Parker: What we have seen in the past that works very well with people who have been out of the labour market for a while is what we used to call customised training, where you would bring a group of 10 or 12 individuals together and prepare them over a period of three, five or perhaps seven days for the interview help them understand the business that they were applying to and get their confidence back up. As far as we can tell, the funding for that is now nowhere. We do not see the prime contractors approaching employers and offering to run

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Ev 92 Work and Pensions Committee: Evidence 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett programmes like this for them, because they are still focusing on just throwing individuals at the world of work. Has TfL asked them to do customised pre-training? Are they funding it? Andrea Fozard: We are in discussions at the moment as part of the stage for year two whereby it is particularly important for us to ensure that young Londoners have access to our opportunities, and we have been driving that behaviour with the primes over the past 12 months. Through the team that Mike referred to, we also run a programme with the London Transport Museum, which is called Routes into Work. It is a three-day pre-apprenticeship, pre-employment training programme. Susan Scott-Parker: Who pays for it? Andrea Fozard: In the first year, we have contributed towards that. We have put some funding towards it, and the London Transport Museum has drawn down on other charitable funding, etc. However, we are at a stage now where that programme is no longer sustainable, so we need to look at how we can fund it if we are to continue with it. It has been very successful to date; there have been 140 young people through it, of whom 50% have gone on to work within our supply chain. We know that it works and we know that our suppliers are supportive of it. We are in discussions with the primes now in London to look at whether or not they will contribute to continuing to fund that programme for us over the next 12 months, so that we can have specific Routes into Work activities each month, focused on the core competencies that we know our supply chain is looking for, so that we are then starting to build that pool of candidates that are ready for work with our suppliers. While it has not been signed off as such, we have spoken about it, and we will be bringing the London Transport Museum to the next steering group in London to present the offer. That is very much our intention. Jane Ellison: I wanted to pose a question for you to have a few moments to think about and come back to. We have started asking people at the end of witness sessions for one thing they would change that would make a difference. I want to say that now and let you have a few minutes to think about it, rather than leap on you. We will make that the last question. We are interested in longer-term recommendations for our report, but in particular we are interested in relatively quick-win things that people could do now to achieve the objective of this inquiry, which is to help disadvantaged jobseekers in the Work Programme. I am just putting you on notice: we will ask for one thing from each of you before we end this session. Q455 Nigel Mills: Andrea, you mentioned that you were disappointed that some people sent by providers still did not have a decent CV and they had no interview practice. Is that something you see also from people who are coming from Jobcentre Plus? It is a bit concerning that someone, say, has been a year under the auspices of Jobcentre Plus and then on the Work Programme and still no one has managed to get their CV and interview skills sorted. Andrea Fozard: Yes, from my experience, whether it be Jobcentre Plus or the Work Programme, there can be a general inconsistency, depending on which adviser they meet or what day it is. It is for the companies, I believe, to look at developing a more structured process so there is almost an assurance that needs to be instigated in the way they operate. We get bad CVs from Jobcentre Plus and we get excellent ones. It is hard to say it is unique to the Work Programme. Because of our partnership work, it is something that I particularly think should be addressed. We have addressed it through our programme, but it is probably an issue more widely. Q456 Graham Evans: Gouy, Timpson have been able to set up academies in prisons to teach the skills needed to work in its branches essentially, teaching prisoners to become cobblers. What difficulties did you face setting up that scheme? Gouy Hamilton-Fisher: We faced difficulties from the prisons themselves and some of the cultures of the prisons. In a particular prison, we were stopped at every opportunity from getting a steady flow of prisoners into an academy. Essentially, what we do is set up a space within a prison; we try to encourage the management there to have a steady flow of prisoners coming through, so that we can have a look at them to see whether they would be able to apply themselves to our training and to stay there and not be disruptive. That has proved the most difficult bit. What we have done is assigned a Timpson ambassador. This person visits the 82 prisons we are dealing with at the moment, and he bullies the governor or the local management to make sure that prisoners, when they first come in whether they are going from court on to another prison, or whether they are going there for their sentence pass the academy, so that they know that opportunity is there. For goodness sake, we pay for all of this. Repairing shoes is not rocket science. I do not like the word cobbling ; it is like a swear word for us, because it is slightly more technical. Graham Evans: Sorry. Gouy Hamilton-Fisher: The only thing they do not do is cut keys, for obvious reasons, but they do engraving, watch-repair, jewellery-repair, dry cleaning the whole lot. This is for business reasons, because in 2004 we happened upon a guy who had such an amazing personality that we thought, Gosh, that is exactly what we need. In fact, we changed our entire recruitment process around that one meeting and said, We are not interested in CVs, for God s sake. Most of them are awful anyway. Come and present yourself for an interview. Turn up on time and have an attitude that you want to work, and we can guarantee you an interview at the very minimum. What we found is that of the hundreds of prisoners who have come to us for interview, the vast majority stay. We are not as good as TfL at collecting data, because there are only four or five of us in my department, but the reoffending rate those we know get their collar felt back again is fantastically small. I would suggest it is almost in single figures. What we have found is, if you give them a job and give them direction, they are not going to reoffend. We are saving the country millions. Susan Scott-Parker: Many of them will have disabilities.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Work and Pensions Committee: Evidence Ev 93 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett Gouy Hamilton-Fisher: They do, and those types of disability that are hard to define: considerable mental problems. Give people a task; give people a purpose; and give them an opportunity, which we do, then they will Q457 Graham Evans: Yet the Prison Service puts barriers in your way. What is the cost of the scheme? How is it funded? Gouy Hamilton-Fisher: I do not know the cost of the scheme, but I can provide all of the financial data later. Susan Scott-Parker: But you fund it all. Gouy Hamilton-Fisher: We had to start somewhere, because we were not getting any help. We have just recently qualified for funding, and I think that is only weeks old. We fund everything at the moment. Q458 Graham Evans: The Timpson Foundation funded it. Gouy Hamilton-Fisher: Yes. Q459 Graham Evans: How easy would it be for other types of employers and Work Programme providers to replicate what you do? For example, you also own Max Spielmann, so you are in retail; you also do photo processing. Gouy Hamilton-Fisher: That is right. One area that most people do not touch and I do not know if it is because of our perception of that particular individual is the female prisoner. Female prisoners are fantastically discriminated against, and we find that of all the people that come to us, those who really struggle to present themselves are female prisoners. I do not know if it is just society s view of female prisoners. What we realised is that, by accident or design, the majority of shoe-repairing Timpson people are males; the majority of photo-processing Max Spielmann people are female. It is just the way it is. What we said is we would open up in I am not sure if it is Thorn Cross or Forest Bank; it might be Forest Bank a Max Spielmann academy, which I have visited many times myself, where female prisoners take on the skills, and 16 weeks prior to their release, we give them a work opportunity in our Max Spielmann branches, they stick and they are employed. Our Manager of the Year for 2012 was a female ex-offender running one of our Max Spielmann branches. Full-time employment; fantastic. Some prisoners are not good for us, I understand that, but they might be good for other people. While they have got skills from our academies, these are not just the practical Timpson skills, but also retail skills that are cross-transferable. We have involved Iceland, Pets at Home and Travelodge, because they have either warehousing or cleaning jobs that the person might be better suited to. We are trying to encourage them to do it, and that is difficult. Q460 Graham Evans: What you are saying is other employers could replicate the Timpson Foundation if they wanted to. Gouy Hamilton-Fisher: Easily. Susan Scott-Parker: But the contractors are not promoting it to you; you are doing it the other way. Q461 Glenda Jackson: Could I just ask one question on this? There has been a thrust from a previous Minister in DWP, who is now in the Ministry of Justice, to help prisoners who will soon be leaving prison to get their benefits in order. We have had evidence that this is markedly failing to work, because one of the first things that is required, say, by JCP is a National Insurance number and they do not have one. The reason for this is it seems to me that you have got a marvellous scheme running and yet you are still receiving opposition from the people who you would have thought would be most keen to assist you. Is that a fairly accurate assessment? Gouy Hamilton-Fisher: That is very accurate. When the door closes behind the prisoner when he is released, we help with a week s worth of groceries, because they get 50 in their pocket, or whatever it is; and we liaise with any accommodation needs, because they do not want to go back to the same place they were nicked at because they are likely to reoffend. Given that we have got nearly 1,000 branches nationwide, we are able to move them anywhere, and we do, at our cost. Those first few weeks are absolutely critical, because otherwise the person will go back to where they came from, reoffend and go back inside. Q462 Glenda Jackson: There is a clear paradox between what Government is saying about wishing to reduce reoffending and getting people with disabilities into work. Gouy Hamilton-Fisher: Yes. Q463 Chair: We are going to come back to Jane s question, which is: what one thing would you change about the Work Programme? I was going to say you are only allowed one, but if you are really bursting and you have got more than one, we will allow you. Charles Gray: I would go to Ms Jackson s point. You are rewarding the wrong behaviour. I used to work with the banks, and they would pay people if the cash machine did not run out of money. What people would do is fold the second-to-last $20 bill, so it would jam; it would never run out of money, but people could not get the money. Look at your end-to-end process and see what you are doing, so you are getting the right results, and reward that way. Right now the reward mechanisms, especially for the service providers, are not meeting the customer needs. Q464 Graham Evans: Charles, it is because you come from the automotive manufacturing industry and it is a success story and you know about customers and customer service that you are saying that. Charles Gray: That is because we almost died, and we went to learn from somebody else. By the way, this has worked in other environments. In HMRC, if you want to see lean, go up to NICO in Newcastle. It can transfer. Susan Scott-Parker: I would say create some kind of a regulatory body over this, so that it holds the Work Programme and the broader welfare-to-work system to account in a way that the funder cannot. It would be asked to do what Charles has described: to pull the learning out of private sector lean thinking that says

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 13:29] Job: 028832 Unit: PG05 Source: /MILES/PKU/INPUT/028832/028832_o005_db_WPC 13 03 13.xml Ev 94 Work and Pensions Committee: Evidence 13 March 2013 Susan Scott-Parker OBE, Charles Gray, Gouy Hamilton-Fisher, Andrea Fozard and Mike Lycett start with the customer as the employer and push the system to meet the employer needs, because better services for employers equals better services for disabled individuals. Gouy Hamilton-Fisher: I would say bully providers to bully their way into employers, to get them to understand what the employer really needs. That way they spread their learning, they pick up best practice, and they enable the person that they are representing to be able to stick to that organisation better. Andrea Fozard: I would suggest looking at the way the primes engage with and enable their own supply chains to provide employers with one point of contact and one umbrella so we know that, by working with the primes, we are working with the disability organisations and we are working with all those organisations that are working with ex-offenders, etc an umbrella approach. Mike Lycett: We have done a lot with our suppliers, and we have made our suppliers aware of the programmes. I do not know how you do it, but they did not seem to be very aware of the programme themselves. Anything to promote it because that is where there are lots of jobs would help the scheme. Chair: Can I thank you very much? We think this has been a very good session, and we were absolutely right to get employers in. Apparently, it was quite difficult to persuade employers to come to speak to us, so we really appreciate that you did come to share your experiences, both the good and the bad. That is exactly what we were looking for. Thanks very much.

cobber Pack: U PL: COE1 [SO] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Work and Pensions Committee: Evidence Ev 95 Wednesday 20 March 2013 Members present: Dame Anne Begg (Chair) Debbie Abrahams Jane Ellison Graham Evans Sheila Gilmore Glenda Jackson Stephen Lloyd Nigel Mills Teresa Pearce Examination of Witnesses Witnesses: Mr Mark Hoban MP, Minister for Employment, and Ms Julia Sweeney, Contracted Customer Services Director, Department for Work and Pensions, gave evidence. Q465 Chair: Thank you very much for coming along this afternoon, Minister. This marks our last evidence session in our inquiry into the different claimant experiences of the Work Programme, so you are very welcome this afternoon. If you can introduce yourself and your officials for the record. Mr Hoban: I am Mark Hoban. I am Minister for Employment. I have with me Julia Sweeney, who is the interim director responsible for Contracted Services, which includes the Work Programme. Q466 Chair: Minimum performance levels (MPLs) how do you respond to Sean Williams of G4S who told us that the real lesson to draw from the primes failure to meet the year-one minimum performance levels was that they themselves were completely inadequate for the task? Mr Hoban: We set out very clearly when the Programme went out for tender the level of performance we expected throughout the life of the contract. I think it is absolutely right that we are ambitious for the Programme; we should set some demanding goals for primes to deliver. There are a number of issues why primes fell short of the minimum performance levels in the first year. I think that the challenge around mobilisation of their supply chains was much greater than they anticipated. The economic climate was not as strong as they hoped for. I make no apologies for the targets we set. They set the right objectives for the Programme, but there are some challenges around delivering those. Q467 Chair: So you do not take any responsibility that actually you just got the levels wrong. Mr Hoban: The levels are the ones that we have been set. There was quite a long process that took place prior to the contract going out, setting those levels. There is one area, Dame Anne, where I might just highlight an issue in terms of where the MPL was set, and that was for payment group six, for Employment Support Allowance (ESA) claimants, where actually this is a relatively new programme; it is a relatively new benefit with very little past experience on how employment programmes work for these claimants. I think there is a challenge about the setting of the MPL for that payment group. There was an extensive programme and processes of negotiation and discussion, between ourselves, the Treasury and Cabinet Office about what that MPL should be, and the primes all knew that MPL when they signed up. Q468 Chair: Most of the claimants were straightforward Jobseeker s Allowance (JSA). In fact, the problem was that they were mostly JSA; there were very few of the other categories. Are you not, as a Government, making it incredibly difficult for the primes or setting them up to fail, if you like? If they do not hit their minimum performance targets in year one, they are unlikely to make them in year two or it is going to get increasingly difficult in year two, because they are always going to be a moving target for them. Mr Hoban: We have not set them up to fail. We have set them up to have some difficult targets to meet. That is important. This is a scheme to get people into work, and I do not think we should make it easy for primes to hit those MPLs. I am not sure I agree with your comment about making it harder to hit in year two. Obviously, we are going to publish data on performance at the end of May, so I do not want to say anything now to prejudge that data. What we saw, particularly in the figures that Employment Related Services Association (ERSA) produced to the end of September last year, showing 200,000 job starts, demonstrates that there is performance in the pipeline. Chair: We are going to be coming to exactly that question. I am not going to take my colleagues, because I know that that is a question and we know we are coming on to those ERSA figures in just a moment. Mr Hoban: There is plenty of time to achieve six months job outcome in the two-year period. That is why ERSA thought it was important to publish that job start data to get a sense of how many jobs had been started, to demonstrate there were people in that pipeline and that you could achieve good performance in year two off the back of that. Q469 Graham Evans: If job outcome performance continues to fail to meet the contractual arrangements under minimum performance levels, at what point are you able to take action against under-performing primes and what form would that action take? Mr Hoban: There is a range of measures we can take, Mr Evans. I made it very clear, when we published the data in November, that we can take action against under-performance. We wrote to five primes in certain areas to highlight the need for improvement plans. My team, and Julia leads this, engage very closely with primes on performance, through a frequency ranging from daily through to monthly meetings with them,

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Ev 96 Work and Pensions Committee: Evidence 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney depending on some of the issues that primes have. We have started that engagement. I have spoken to a number of primes highlighting the need for them to raise their game, that they need to achieve the MPLs, proving we are not going to let them off in trying to hit those MPLs. The next lever that we have is a market-share shift, so where there is a gap in a CPA (contract package area) between primes that is more than 3%, we can move market share from one prime to another. We can move 5% of that market share from an under-performing prime to a stronger-performing prime, and we intend to use that mechanism. The final sanction is actually that we could move a contract from a prime. We can decide they are not making sufficient progress or there is no sign of them making sufficient progress to hit those MPLs. As a last resort, we can move that contract away from them. If we need to do that as a Department, we will do it. Q470 Stephen Lloyd: On both those issues, Graham, if I can chip in there, I understand and support the concept, because then obviously we are going to be rewarding the better-performing primes, so on the surface it looks absolutely sensible. Comments have come up from the expert witnesses and I would be really interested in how you would respond. Let us say, in a few months time, you have two primes in an area. One is clearly outperforming the other, so you do want to shift it. My first question would be: what management systems are in place to ensure that the jobseekers that are with the poorer-performing prime do not actually lose out, because clearly that needs to be taken into account? Secondly, is it really a realistic option for the DWP to terminate a prime contract? The first thing is how you manage the worst-performing primes for those jobseekers who are with them. Secondly, are you really serious about possibly terminating a contract? Mr Hoban: Let me assure the Committee and anyone who is interested in this that I am absolutely serious about this. I do not think it is acceptable for under-performance to continue. We are letting the unemployed down if we do so. It is wrong for the taxpayer to allow this under-performance to continue, because effectively we will be paying benefit for longer. It is unacceptable for poor performance to continue and we will not hesitate to use the contractual powers at our disposal to penalise poor performance. On the point about the market-share shift, this would be for new referrals going to a prime; it will not affect the referrals that have already been made to them. What is quite interesting, and I have talked to a number of primes that have used this already with their subcontractors, is that what you tend to see is this: you do see a reward for better-performing subcontractors. What you also see, which I think is quite interesting, is it means that there is then a lighter caseload for the under-performing contractor. I hope that would mean that there would be an increase in resources on those people who are attached to that subcontractor, which would then lead to an improvement in outcomes. That has certainly been the experience of one or two primes I have spoken to that have done their own market-share shift within their supply chain. Q471 Stephen Lloyd: Would it be a fair statement to say, backing up what you have just told us, that, yes, the Department is crystal clear that it will use that sanction if it chooses to and if it has to? Secondly, say I am one of the primes that is performing worse; I lose 15% perhaps of jobseekers who have shifted to a better-performing prime and you are crystal clear that you are prepared to do that. Equally then, if I improve as a poorer-performing prime and demonstrate that I have clawed my way back and am getting more and more jobseekers into work then, potentially in a year s time or so, I might actually get rewarded for that good performance. Is the DWP keeping that level of intelligent flexibility within the process? Mr Hoban: It is. Just to be clear, the maximum transfer is 5%. You have to be fair about this and to say to those providers that actually raise their game that the market shift can be reversed. That is absolutely right. We have to have some incentives in the system. Just one point I want to raise that just goes back to Dame Anne s question about MPLs; there is one issue that primes raise to us in the context of MPLs. Because the MPL is based on this year s outcomes and this year s referrals, a beneficiary of market-share shift would see a slight dip in their performance potentially, because their number of referrals has gone up, whereas a prime that has lost market share would see a slight improvement in their MPL, because you have fewer people flowing on to your programme. You still have people who have referred to previous years; you can still claim job outcomes for them from there. There is a nuance or a subtlety in the MPLs on market-share shift that we just need to bear in mind. Q472 Stephen Lloyd: Let us go back finally to the potential of termination, that a prime has not stepped up to the plate. You made it crystal clear the DWP is prepared to take the final sanction. Are you confident that, if you have to do that, the DWP would have the systems in place that could then cope with the 5,000, 10,000 or 15,000 jobseekers who are with the failing prime? I appreciate the strength of statement that, if necessary, you will pull contracts, but I would want to be satisfied that, if that does happen, those people are properly accommodated and dealt with. I do want to be satisfied that the DWP has that plan in the locker if it ever needs to be implemented. Mr Hoban: What we have done is we have looked at this scenario. It is right that you would expect us to have done so. Our expectation would be that a new contractor would move in and become the prime for that area, and effectively take up that workload, rather than it coming in house, although that is a fallback option. My expectation would be that a new prime comes in. Q473 Debbie Abrahams: You mentioned that you would consider converting from one prime to another. Can I ask what the circumstances would be? You mentioned the 3%, so there is already thinking in my own area a difference in primes of at least that.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Work and Pensions Committee: Evidence Ev 97 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney Bearing in mind that, today, we had figures where there was an increase of 92% in people over 25 who were on JSA for over two years in the last year an increase of 92%, Minister. At what stage will you actually take those sanctions? Mr Hoban: Also, Ms Abrahams, you should look at the other figures in today s Labour Market Statistics release, which show that long-term unemployment fell this month. Debbie Abrahams: Not in my constituency. Mr Hoban: I am just saying that, overall, long-term unemployment fell this month and that is the second month running. We are seeing people on the Work Programme get into work. Debbie Abrahams: It has nearly doubled in a year. Mr Hoban: The point I am making is, if you look at long-term unemployment, it has actually fallen this month. This is not a session on long-term unemployment, but I am very clear and that is why I set some very ambitious goals for primes and why I make no apology for the MPL targets that we set that we want primes to deliver the right outcomes. The difference between this programme and previous programmes is, before, most of the money came regardless of whether or not you got an outcome, whether or not you got somebody into work for more than six months. This scheme is actually designed to deliver the right outcomes for people who are unemployed, the right outcomes for taxpayers for paying by results and the right outcome for primes. Primes only get paid if they are successful, so all the incentives are in there to get the right outcome. This is a much better scheme design than the previous schemes, which paid people regardless of whether or not they got good outcomes. Q474 Glenda Jackson: Could I just ask a question on the reduction in long-term unemployment? Do you have the divisions of which category of people are in that reduction? Mr Hoban: It is all set out in the Labour Force Survey. Q475 Glenda Jackson: What does that mean? Mr Hoban: There is a weekly pile of data. Q476 Glenda Jackson: Yes, but your programme actually defines people into various benefit groups, and there is a pricing structure for those. You have just said to us that long-term unemployed, people unemployed for more than two years, has fallen. I am asking whether you have the stats that tell us which category of people are in that fall in unemployment. Mr Hoban: Ms Jackson, what you will see in the figures is that they show the number of people in long-term unemployment defined by the ILO Labour Force Survey. Glenda Jackson: Which includes students. Mr Hoban: It depends. You can break down the categories by age, by education and whether they are in employment or not. It also has the Jobseeker s Allowance payment count in there as well. Q477 Chair: When would you take any action in terms of market-share shift? At what stage into the contract we are over 18 months, getting on for two years of the contract would you make that decision? Mr Hoban: The market-share shift: we have to allow providers to demonstrate what they are capable of doing. If someone was on the programme for two years, we would look at the performance of providers over a two-year period. Q478 Chair: You do not get your two-year data until another six months further down the line. Are we looking at two and a half years from the beginning of the Work Programme before you actually take any of these decisions? You are going to have that time lag in the data. Mr Hoban: Absolutely. We have management information that the Department uses to help manage these contracts, but I would expect to see market-share shift to have completed by no later than the end of this year. Q479 Sheila Gilmore: One of the reasons for randomly allocating people was to be able to assess which is doing better. Is that information going to be available soon, because quite a lot of individuals find that random allocation quite difficult? When the Permanent Secretary was here a few months ago, he suggested that might be looked at again. Mr Hoban: It is certainly the model we are going to use for this programme. It is the right approach. It is interesting; I visited Australia last month to look at how they run their equivalent of the Work Programme. There, there is an element of choice by claimants, but my understanding is most of them are actually allocated randomly. The claimants do not express any choice as to which provider they will go though. Q480 Sheila Gilmore: I appreciate that but, in a few cases, people have asked and had strong reasons for doing so. I had a case a few months ago when somebody was sanctioned for six months because of that situation, and I think the Permanent Secretary did suggest, when I asked about that, that it might be looked at again. Mr Hoban: It might be, but that would be quite a significant contractual change and I think it would require some systems changes to do that. Q481 Chair: In reply to Stephen, you gave the example of a provider that might lose market share because they were under-performing and that might improve their performance. For some, the bigger risk will be that it actually threatens their financial viability, particularly as, from April 2014, there will not be any attachment fees. Mr Hoban: That is exactly why, Dame Anne, we are very focused and they are focused on driving outcomes as high as possible, as quickly as possible. Actually, their financial viability is under threat if they do not perform well. They recognise that risk that is there. Q482 Chair: What risk assessment have you carried out with regard to the viability of some of the providers when these attachment fees disappear?

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Ev 98 Work and Pensions Committee: Evidence 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney Mr Hoban: We have been very clear that, when the contracts were awarded, the providers knew the attachment fees would disappear. That was something they understood and they modelled their financial performance on the back of that. Q483 Chair: My question is: it is one thing for them to know it is going to happen; it is quite another thing for it to happen and they, as a result, as a company, go down the tubes. Mr Hoban: There are two points to make. The first one is that we do monitor very carefully the financial position of Work Programme providers. That is something that Julia s team do, and we understand their financial position. Also, I do not think it would be right to keep people at an under-performing Work Programme provider just simply because we were not sure about the financial viability of that provider. Q484 Chair: Again, what is the chance of anyone else coming into the market if there is no attachment fee and there is nothing upfront, so that they would be able to take on some of the work that has been left behind? Mr Hoban: My experience has been that there is no shortage of people who are keen to take part in this market. Q485 Stephen Lloyd: One of the things that has come out from a number of providers is that the two-year length of time is a good thing, because it gives them the time and space to work on getting those harder to get to job-ready or jobs to that position. That is a good thing. However, what has also come out is that, realistically, the sorts of numbers that the primes are saying to us that they are hoping to be able to get into sustainable jobs are around about 30% or 40% I use that figure fairly loosely, because it is guesswork at the minute. That means that, with the best will in the world, anywhere between 60%, 65% or 70% perhaps, at the end of those two years, clearly are not going to be in post. What arrangements and plans have the DWP started putting together first, to manage that number of people who perhaps are not in sustainable employment after two years and, secondly, actually to support them in a way that their confidence would not then be completely shot and it would be impossible to ever get them a job? Do you get my point? That is a very large cohort, and it needs real underpinning plans to manage those folk, and also to maybe help work with them, because they may eventually get work. Mr Hoban: I think, Mr Lloyd, that is an important point. We will have been through a situation where people, let us assume someone who was 25 or over, would have been unemployed for at least a year when they joined the Programme. They would have spent two years on the Programme and have obviously returned to Jobcentre Plus (JCP). We need to think: what do we do to help them back into work? It may be that a number of those people will have had work experience during that time. They may have started a job. They may not have got a job outcome, but they hopefully would have found some work. Broadly, a quarter of those who had been referred to the Programme, by the end of September last year, had some work. What we need to do is to look at what else we can do that will move them closer to the labour market. We did a couple of pilots last year. We published evaluations of these; I can talk about them reasonably freely. One was for perhaps those who are closer to the labour market, where we have a community activity placement (CAP). They would do a combination of making some contribution to the community and, at the same time, doing job search. For those who are further away from the labour market is a thing called OCM, ongoing case management, trying to do some more intensive work, building on work the Work Programme would have done with people, to identify what the barriers were to getting them back into work and what the right interventions were. They may be interventions that Jobcentre Plus can do by themselves; it may be that we would have to buy in interventions using our Flexible Support Fund. Evaluations on both of those proved to be reasonably effective. It struck me, in talking to some of the advisors in the East Midlands I think it was trialled in Leicestershire and Derbyshire that actually it was effective at reaching out to some of the hardest to place and finding employment opportunities. We are thinking about this and it is something that the Department is very much focused on, at the moment. We hope to be able to make more announcements in due course. Q486 Stephen Lloyd: If I can drill down a wee bit on the due course, because it is not too long in the foreseeable future, could you give the Committee some sort of indication of perhaps when the Department might publish some outline plans about what you would be proposing to do with those individuals? Can you give some sort of broad outline? Mr Hoban: What we would hope to do, assuming there is agreement from colleagues, is use something, for those who are furthest away from the labour markets, based on those two interventions. For people who have had six or nine months work whilst on the Work Programme, but are unemployed at the time when they leave, the fact that they have had that work demonstrates we should be able to return them to the labour market. What we are trying to do through the Work Programme is encourage sustainable employment, rewarding providers for getting people into work for six months or longer. Q487 Chair: Will there be a son of Work Programme for those who have got some hope of getting work? Mr Hoban: What I would say, Dame Anne, is there will be more intensive support for those who have returned who have not had much work experience or have not had much employment on the Work Programme. I am just really keen to make sure that we do as much as we can to help the long-term unemployed back into work. There are some big barriers there; there are some challenges. We do need to provide some support beyond the Work Programme for those people who do return.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Work and Pensions Committee: Evidence Ev 99 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney Q488 Stephen Lloyd: To be fair, a percentage of that 60 70%, I think you are quite right, may well have had six or seven months work and, through bad luck, the company may have gone bust and so they have lost their job. I would expect them to be pretty job-ready, which would be a success of the Work Programme. I do not underestimate the reality that a percentage of that 60 70% or whatever and I do not know how high or how low it would be clearly are folk who will need just some additional support or networks or programmes to maybe reduce that level even further into long-term work. I suppose the point I am making is that for some of them probably the JCP can shift them on quite quickly, so that they may hopefully be job-ready, because they may just have lost their job after a few months. Is the DWP cognisant of the fact that there will be a percentage for whom some proper additional support will be necessary? Will you be publishing those ideas or details in due course? Mr Hoban: I recognise that, absolutely, there will be some people who return from the Work Programme who will have moved closer to the labour market, but not close enough to be work-ready. They will need additional support and continued support, and we will provide that, over and above the existing Jobcentre Plus offer. Q489 Glenda Jackson: Simply on that additional support, your Supplementary Estimate shows that 248 million will have to go back to the Treasury in 2012 13, because job outcomes have been lower than expected. Is that budget going to be ring-fenced for you? Could you go to the Treasury and say, Look, sorry; we need this money back because we have to put in greater support? Mr Hoban: It is a ring-fenced budget. Glenda Jackson: So no money is going back to the Treasury. Mr Hoban: Sorry; that means the under-spend has to go back to the Treasury. Q490 Glenda Jackson: That is what I am saying. Could you make the argument that, because the programme has not worked in certain areas, that is not in fact an under-spend? It is a delayed spend. Mr Hoban: You can be assured that we would deploy all the arguments possible to the Treasury to make sure this programme is funded. Q491 Glenda Jackson: Is that a commitment? Mr Hoban: We have discussed it with Treasury colleagues. Ms Jackson was a minister, and she knows the process as well as I do, I think. Q492 Chair: I will tell you what I am concerned about, Minister. We are talking about possibly 60% or 70% of people who have been through the Work Programme for two years, who still have not got a job. They have already been unemployed for a year to get anywhere near the Work Programme in the first place. They have been out of work perhaps continuously. That is a large number of people out of work continuously for three years, by this time. If Jobcentre Plus and all its interventions in the first year have not worked and if the Work Programme with all its interventions, which were meant to be very intensive, much more specialised and all of those things our report will show whether we believe that is the case or not have not worked, what on earth is going to work in year four? Mr Hoban: It is a good challenge, Dame Anne. You are absolutely right: someone who is getting to that point, if they have had no work in that three-year period, there are some really big issues to deal with. Q493 Chair: Is that not what the Work Programme was meant to do? That is what it was sold to us as. Mr Hoban: Let us be very clear. You criticised us earlier on the MPLs, I think for being too ambitious. They assume that 40% Chair: I am just asking the questions. Mr Hoban: We recognise, and the MPLs recognise, that we are not necessarily going to get everybody who is on the Work Programme into six months employment. We are sufficiently realistic about the effectiveness. The challenge is that there are people who may have been unemployed for a lot longer than a year. There may be people who have gone in and out of JSA and Training Allowance, for example, who have actually been unemployed for way more than a year before they joined the Work Programme, in reality, who are dealing with alcohol issues, other substance abuse issues, perhaps a poor level of qualifications. Chair: We accept all of that, but the way that the Work Programme was promised, and indeed the contractors we have spoken to actually say the difference about the Work Programme compared to previous ones, is they have the person for two years. They are quite hopeful that they can do the best they can for the person in two years, but that might still not be a job. Mr Hoban: Absolutely right, Dame Anne, and I am not denying that at all. Performance metrics demonstrate that we are very clear about the minimum levels of success we expect to get. We do not expect to get 100% of people on the Work Programme into work. There will be people coming out from the other end who still have significant barriers to getting into work. I was talking to a provider last week, to give you an example, a provider in the South West. This is an ESA participant in the Work Programme, who has not left the house for some years. To get them into work may not be as easy as two years; it may require a longer period of time. The group of people we are dealing with do have some quite deep-seated challenges, in some cases, to get them into work. We cannot give up on them. We cannot say, at the end of two years on the Work Programme, Well, we tried our best for the last three years. That s it. You re off our hands. We have to do something else for them, and that is why we have looked at OCM and the CAP, as a way to give more intensive support, particularly for those people who have been on the Work Programme for two years but, actually, have not had much by way of work. Q494 Debbie Abrahams: The example that you gave, Minister, and I believe your sincerity in wanting

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Ev 100 Work and Pensions Committee: Evidence 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney to do the best for this group, but does that not mean then the Work Programme is not the right thing for them? Somebody who has not been able to get out of the house: surely, although they may have all the qualifications in the world, if they have not been able to get out of the house for two years would indicate that they have a more intensive level of need other than being able to just supply them with a job. It is about getting it right for that person, right at the beginning. As Dame Anne says, to have gone through a programme that does not meet the need, does not get them back into a job and puts them back on a revolving door into the system, they are going to be worse, after having gone through it, rather than better. Mr Hoban: I do not agree with that. What we should be doing is trying throughout. Either the Work Programme or Jobcentre Plus tries to remove those barriers. Sometimes it is about removing them one at a time; other barriers might be relatively low, so you can remove those barriers quite quickly. We have had situations where people have been written off on things like Incapacity Benefit (IB) for 15 years and actually been found fit for work. The barriers about getting them into work for 15 years, they have been written off by society and by the state should not be underestimated. I do not think it is an overnight job helping them back into work, but that is why it is important to give the Work Programme two years in which to help them, but also to recognise they may need more intensive support when they come out. Q495 Nigel Mills: There will be a group of people, Minister, who have got to the end of the Work Programme and are nearly there, but just not quite. It does seem a bit of a pity to not give them that final help or shove, depending which we are. One option would be to switch them to the other Work Programme provider in the area and perhaps give them some kind of incentive to really push those people. We are talking here about programmes that are using future benefit savings to justify themselves. Is there any scope for saying, Actually Provider One has failed; let s give Provider Two a chance to really push them into work? Mr Hoban: That is an interesting point about whether a prime contractor should be able to provide further services in the future. We have to be careful about what message that sends about incentives to the primes. Nigel Mills: I am saying it would be the other prime; it would not be the same one. Mr Hoban: I think it depends on how extensive the post-work Programme support is. You might be suggesting that they all start from scratch with a new provider. Certainly in our post-work Programme support, we need to think about the roles that primes could play in that. Q496 Glenda Jackson: It is all around this area, really. I have already touched on the differential pricing, which does not seem to be effective. You said yesterday in the Chamber, during the Back to Work Schemes Bill 1 that up to the end of September, 200,000 people found work as a consequence of the 1 Now the Jobseekers (Back to Work Schemes) Act 2013. Work Programme. People have got work through the Work Programme. I would like to know: a) where that figure comes from; and b) whether you can define what constitutes work in the meaning that you presented to us. If I go on to the main thrust of this, ERSA s day-one job-start data, for example, showed that job starts for ESA and ex-ib claimants are way, way behind the main JSA group: less than 1% compared to nearly 37% in the JSA 18-to-24 group. Again, for the third time, why is differential pricing not having the intended impact on job outcomes in the ESA and ex-ib groups? Just before you start answering that, I will throw another one at you. The Government has continuously said that the centrepiece of the Work Programme was to get the hardest-to-reach people, those who had been unemployed for longest the example you gave was a precise one that has already been given by others to get them back to work. Our understanding was that the primes got their contracts because they could show Government that they had the support, the expert experienced support coming from other groups, to be able to deal with some of these hardest-to-reach groups. It is not happening. I hope you have not forgotten the original two questions. Chair: I should have cut her off after one, so you could have answered them one at a time. I am sure you can manage. Mr Hoban: I can pick and choose, but let me go through the questions. The job-start data was provided by ERSA, the trade body. They collected that data from each of the primes in their organisation. Julia, can you remind me how they classify work? Julia Sweeney: That is entry into a job, so that is at the start of the process that takes them to a job outcome, should they reach the six-month point. Q497 Glenda Jackson: Does it cover how long they are actually in that job? We know people go in one day and are out of work at the end of the week. Mr Hoban: It is anyone who has started a job. Glenda Jackson: It does not tell you how long that job is. Mr Hoban: Not in that measure, no. It just talks about job starts. Obviously job outcomes are predominantly for six months or longer. It is a fair challenge about why there were fewer job starts for ESA claimants. I certainly think it is the case that, when the Programme started and this is something I suspect the primes will have said in giving evidence to you; it is something they bend my ear about quite a lot at the start there was quite a large volume, in fact probably a larger-than-expected volume, of JSA claimants referred to the Work Programme. The referral rates for ESA claims were much lower than originally forecast. Those forecasted volumes have now picked up to broadly where primes expected them to be. One of the answers from primes is that without sufficient volumes of ESA claimants they felt they were not in a position to either use the specialist suppliers they had put in as part of their contract, at that point, or develop the expertise and experience to deal with people who are ESA claimants and the challenges that they faced. Actually, quite a lot of the

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Work and Pensions Committee: Evidence Ev 101 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney providers, either at prime or subcontractor level, have had experience elsewhere of dealing with people with disability and getting them back into work. Certainly that is a very strong strand of people s experience in Australia, for example, where many of the providers do work with JSA and ESA claimants. Now the volumes are flowing through. My experience of talking to primes and their supply chain has been that they are now raising their game, and rightly so, frankly, for this particular group of claimants. They were not performing very well. They know that the Department is very focused on what they are doing. Now the volumes are flowing through. There is much greater use of specialist subcontractors and much greater innovation taking place, in the way in which they support people in the ESA groups. For example, I was talking to one prime that is using healthcare professionals in their delivery to give advice on some medical issues that will help them remove the barriers to work. Different groups are looking at other ways of providing motivational courses, using Cognitive Behavioural Therapy (CBT), for example. What we now see is the providers really gearing up to support ESA groups. I hope that, when the figures are published in May, they will demonstrate a real change in the way in which people in the ESA groups are getting into work. Glenda Jackson: I am sure the Committee will be very interested in that evidence, because it runs absolutely contrary to the evidence we have received so far. Q498 Sheila Gilmore: Can I just ask a follow-up question, which I think is based on our visit yesterday, or largely based on our visit yesterday, but also something that was said when we had some of the providers in? One organisation in particular, which is now called, I think, CDG, which is the result of a recent merger with the Shaw Trust, was clear from the evidence they gave, both at one of our evidence sessions here and while we were at the Jobcentre yesterday, that they are putting in a lot of extra effort, which is not coming out of the money that is coming into the Work Programme from Government. They do have other sources of funding. It included, for example, giving people the kind of healthcare support that I think you were talking about, at approximately I did write it down I think it was about 900 a head. That was not coming from the Work Programme, and they did not expect it ever, even if they got some of those people into work, to cover that, not least because some of these people were not in any of the high category groupings anyway, even if they got them into work. Is not what is happening there that some of that extra work may be being done, but it is not actually within the Work Programme contract? Mr Hoban: Clearly the primes have the responsibility of managing their finances. If they are able to access other sources of funding that is their choice. We are saying that, for the hardest-to-help group, we will pay up to 13,800. That is three and a half times more than we pay for the lowest group. Q499 Sheila Gilmore: That assumes two things here. It assumes that that hardest-to-help group is correctly categorised. A lot of the evidence we have had there may be further questions on this is that they are not necessarily. The evidence from the prime providers yesterday was that they do not distinguish or they are trying not to distinguish. They are helping those people anyway, because they are actually quite hard to help, but they do not have the right money attached to them. Nevertheless, that hardest-to-work group are not always getting the money, even if they got them into a job. A lot of them may not progress that far in the two years. Actually, the evidence from these people is that they have to put in extra money, which they do not expect, within the pricing structure, to recoup. If they are having some success or they are putting in this personalised work that we expected, it is actually coming off another funding source. It is not actually coming out of the Work Programme. Mr Hoban: I do not think there is anything particularly startling about that. For example, people on the Work Programme can participate in Skills Funding Agency-funded courses. There is no problem in accessing other sources of funding to support the work of the Work Programme. There is a limitation on that, but there is no problem about accessing that money where that is appropriate. The issue about whether people are differentiating or not is a matter for the primes. We have been very clear: we have given them operational freedom. We set minimum service levels in conjunction with them. It is a black-box model. That means they are free to innovate, free to produce the best service possible. If they do not differentiate that is a choice that they make. Q500 Chair: It comes back to that we have been told, at the beginning, that the differential pricing structure would make a difference. From a lot of the evidence we have got, no, it has not. The vast bulk of claimants going through the process are being treated as they would have been under any previous system, and the ones who are getting extra help may not be the ones who have the high price attached to them. It is the primes or the subcontractors or whoever is delivering the service on the ground and making the analysis as to who should get what appropriate help. If that money is not available for them through the differential pricing structure, which it is not, they actually have to find other sources of funding, sometimes through charitable giving. Mr Hoban: Dame Anne, I think there is a challenge for the Work Programme providers. There are some very expensive interventions out there. I have talked to some specialist charities that have some very expensive interventions. That is fine if people want to access those. One of the challenges is, if we are going to provide more support to a much wider range of people, how we take those interventions and operationalise them, so that they can be available to more people. There is no bottomless pit here. It requires people to be innovative, to look at what works, to look at how they can structure things and the way that will help.

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Ev 102 Work and Pensions Committee: Evidence 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney Chair: The point is it is not the pricing structure that is doing that. That is the point we are trying to make: it is not the pricing structure that is making the contractors make those decisions. Q501 Glenda Jackson: For example, G4S has stated candidly that the Work Programme would not be able to achieve job outcomes for homeless people or people with severe mental health conditions. St Mungo s has told us that their homeless clients require support before they are ready to engage effectively with the Work Programme. As Dame Anne said, despite the differential pricing structure, those people with the most complex barriers to work are simply regarded as being too difficult and nobody is handling them. Could there be, within the present structure, scope for establishing separate programmes for these jobseekers, even though we were told to bore everyone by repeating that the Government s whole thrust with this policy was indeed to tackle and assist those people who were hardest to reach and to get into work? Mr Hoban: There are two points there. First of all I do not think it is right to say that the Work Programme cannot help people who are homeless. I have met people on the Work Programme, who have been placed into jobs, who are homeless. I would just counsel caution here. I am not surprised that Work Programme providers are asking for more money. We should not be surprised that they should take this opportunity to ask for some more money, but I do think they can get good outcomes. I have met people who have been helped into work with mental health conditions. Sheila Gilmore: That is what they were contracted to do. It should not be such a great surprise, surely, Minister. They were contracted to do that job and we are expected to applaud and say how wonderful it is that they have got people into jobs with mental health problems. Mr Hoban: Ms Gilmore, what I am saying is that they can get them into work. Your colleague, Ms Jackson, was saying that they cannot. I am actually making your point, Ms Gilmore, that actually they can get into work. I think the contractors are capable of giving people the help they need to get into employment. What they need to do, thinking about value for money, is think about what is the most effective way to get people into employment. Q502 Sheila Gilmore: Are you going to account for the extra money? I ask this because I think it is important. I am hoping these people are successful. A lot of what we heard yesterday was actually very encouraging about the kind of approaches that Shaw Trust and others are taking. However, it is clear it would appear to be clear that to do that, to make that progress with people and give them things like that medical support and to help them manage their condition, so that they could reach that floor from which they could progress is that going to be factored in when we decide how much this programme has cost? One of the things that has been said and will be said is that this Government has measured its Work Programme against previous work programmes on the basis that this was going to be the cheapest. It will be much cheaper, therefore much better value for the taxpayer. If, in fact, the reality is that it has to be subsidised from other sources, I am not saying that is a bad thing I think it is a good thing but we have to be realistic, do we not, about the cost? Mr Hoban: The cost to the taxpayer is the amount of money we spent on the Programme. If providers seek to supplement the money we pay them on an outcome from other sources that is their choice. That is not a choice that is available to commercial organisations, which I expect to make a profit from this. Q503 Glenda Jackson: I did not say that homeless people cannot find work. This was the evidence that has been presented to the Committee on an actual field trip. Members of the Committee heard that, not infrequently, Jobcentre Plus does not even know the individual they are dealing with is homeless. Yesterday on a field trip, the evidence was presented to the Committee that, in many instances, for homeless people Jobcentre Plus does not even know their phone numbers. It is not unusual for homeless people to keep that kind of information to themselves. That is not the central issue here; the central issue is that a programme was set up which, we were told, was going to concentrate specifically on the hardest to reach. There was a pricing differential. Apparently 1 billion has already been spent, and we have received evidence that the most difficult clients are being parked. It used to be called creamed and parked; it is just parked now. Mr Hoban: I think what we should do is wait until the results come out in May and see what the evidence is. Glenda Jackson: You have had almost 18 months. Mr Hoban: Unfortunately, what I cannot tell you is what the results are to date. I am not allowed to do that. We shall have to wait and see what the progress is. Julia wants to add something. Julia Sweeney: Could I just give a couple of examples of some of the structures that are in place? The health issue is a really interesting one. Some providers are dealing with it through mainstreaming their service. Some Work Programme providers have occupational health therapists available to anybody who feels they need help with health and wellbeing. They are delivering very well in support and delivering good outcomes for ESA customers. On the blended funding question, it is a really interesting one. One of the things we wanted Work Programme providers to do was to innovate and to enhance services to unemployed people. Some of the best providers are bringing together a whole host of services, funded by other agencies, and delivering them coherently to Work Programme participants. There is one centre in Birmingham where they have justice, skills, health and education monies, all in the same place. They have the credit union in there as well. Work Programme participants get the blended help that they need, not all funded by the Work Programme. Actually, that enables them to achieve outcomes more efficiently and more effectively than if that Work Programme participant had to go to five

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Work and Pensions Committee: Evidence Ev 103 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney venues, visit five different people and try to join it up themselves. There are very different approaches. We will get a sense, as we head into year two and year three, of how that innovation is playing out in terms of outcomes and which groups are benefiting the best. There will inevitably, I think, be some groups where there are some real funding or supply issues, in terms of the help that they need, because we have not worked with them in this work-focused way before. There are lots of answers, and we will know which are the best delivery mechanisms pretty soon. Glenda Jackson: Your scheme was set up as a black box. That was the answer we were given: the black box, which was innovation. It was all going to be wonderful. What you are not saying Jane Ellison: Glenda, can I just correct you? Glenda Jackson: Can I just finish this one question? Jane Ellison: I was actually on yesterday s field trip, which actually you did not attend, so I would like to put some questions to the witnesses in relation to that. Q504 Glenda Jackson: If there is best practice, is the Department going to spread that best practice around all the primes or will it take the contract away from primes that are not doing it? Julia Sweeney: We are doing it in real time, and the market is doing it themselves. Providers are also sharing good practice. They really care about getting this right and delivering a performance to the levels that we expect. Q505 Jane Ellison: I was just following up the point that Ms Sweeney was just saying. We did hear some very interesting evidence, some positives and some negatives yesterday. A number of the primes that we met on our trip to Brent yesterday morning were very positive about some very hard-to-reach groups. We did pose the question to them about how they were using that experience and, if you like, how they were trying to harness best practice. It sounds like you have some thoughts about doing that centrally. I just wondered, when you said you were going to look across a scheme at how people were working, particularly the hard-to-reach groups, what you are going to do with that information. Mr Hoban: There are two things. First of all, we will be evaluating this scheme as we always do, and using evidence to demonstrate the effectiveness of different approaches. What we are also doing is setting up a best-practice group to look at some challenges, look at some of the hard-to-help groups and work out what is working well and what is not working well. That is not necessarily being prescriptive, because different organisations have their own style. I had a meeting with Gingerbread, for example, where we talked about how Work Programme providers work with lone parents. There were some dreadful examples and some great examples of practice, even simple things, like ensuring that you ask a lone parent in for an interview when their child is at school or has got care. It sounds very straightforward, but does not happen all the time. There are some practical guides. We can share different approaches to use of healthcare professionals. Are they mainstreamed? Do they get specialist contractors in to provide that? It is that free flow of information and discussion that we want to promote through a best-practice group. That is very different from saying, This is the DWP way and this is what you shall do, because providers will have different approaches, but what we need to do is get more data out there about these approaches and what they feel works well in their situation. Q506 Glenda Jackson: In the light of your experience of programmes that work and programmes that do not work, is there a possibility that you could be looking at additional work programmes that really are looking in a much more detailed way at some of the hardest-to-reach clientele? Chair: Specifically, we are talking about Work Choice. Anecdotally, we have heard good things, but then we do not have the data to back that up. Almost all our witnesses say that Work Choice is doing well. It would be interesting to see the data. Mr Hoban: Work Choice is the responsibility of the Minister for the Disabled but, as it happens, I went to visit a Work Choice provider in my constituency on Friday. It was actually Mencap, which works with CDG-Wise. There are some good things we can learn from Work Choice about the amount of in-work support that is offered. I spoke to Mencap, which employs somebody through Work Choice, but also the Co-operative Wholesale Society, CWS, which employs people through Work Choice. In-work support is absolutely vital, but of course what they do, what Work Choice is able to do, is provide support beyond a fixed period and provide more extensive support. Some of the lessons from Work Choice can be used on the Work Programme. For example, how do you get an employer to think about how a job can be broken down into manageable chunks for someone who has been absent from the labour market for a while? How can we support employers to make reasonable adaptations to their processes it might be just, say, recruitment to help people. Q507 Stephen Lloyd: On that specific question, if I can, Dame Anne, do you have a view about possibly allowing the Work Programme providers to have access to Access to Work? For instance, as I think I mentioned to you before, if you have a deaf person who uses sign language, BSL, and has been away from the job market for a long time, maybe 10 years, that individual is going to need a fair amount of interpreting provision to go through the interviews, to be trained and to then go to the job interviews, but they are not actually allowed to access Access to Work, which is a very good scheme. Is it possible that the DWP might think about joining up those dots? Mr Hoban: It is an area we do need to think about. There is a difficulty about Work Programme and Work Choice, as they both work through prime contractors, and they are rewarded separately for that. We should be looking at how we can utilise these schemes to the best effect and join them up. Q508 Glenda Jackson: What about pre Work Programme support?

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Ev 104 Work and Pensions Committee: Evidence 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney Mr Hoban: Pre-Work Programme support is often the support that Jobcentre Plus will offer. We do give Jobcentre managers quite a lot of flexibility about what they can offer. We have devolved budgets down to managers to enable them to buy services to meet particular needs. To give you an example, the Cardinal Hume Centre, which is not very far from here, is a very, very good integrated service. Julia was talking about the one in Birmingham, where all the services are brought together. The Cardinal Hume Centre does the same thing. Actually, Jobcentre Plus buys in support for the homeless from the Cardinal Hume Centre. The Flexible Support Fund is there to be used to provide intensive interventions, intensive support, to people who are some distance from the labour market. We do not want people to have to wait for the Work Programme before they get access to this. Jobcentre Plus does also buy in services from other homelessness charities as well. Q509 Glenda Jackson: Is that budget a separate budget? Mr Hoban: Yes, very much separate from the Work Programme and it is very much under the control of Jobcentre Plus managers. Q510 Chair: The numbers going into Work Choice are capped. Again, some of the evidence suggests that they could make a lot more use of Work Choice if it was not capped. Is that something that you are looking at? Mr Hoban: The best thing to do, Dame Anne, is to get my colleague Esther McVey to drop you a line on the stats. Chair: It is also not payment by results, so there is a very different funding model as well. Mr Hoban: Yes, absolutely. Q511 Debbie Abrahams: The Committee has heard evidence from witnesses that the pricing structure, which is generally related to the benefit type that claimants are on, is a bit of a blunt instrument. We wondered whether the Department, whether Government, is considering a more holistic approach to assessing employment needs and employability, and within that relating both the pricing structure and the interventions that would be appropriate, such as some of the very good ones that you have just talked about would be available. Mr Hoban: It is a good question. What we have is a range of approaches to identifying the payment groups that people should be in and the amount of money that should be linked to that payment group. For example, there is a separate payment group for ex-offenders. We have just launched a pilot where there is additional funding for people who have drug and alcohol problems. There are people who have been referred to payment groups by virtue of the benefit that they are claiming. I would say there are a mixture of approaches to identifying why people are in different payment groups; it is not just about benefits. You do raise an important point, and it is something that we need to think about quite carefully, both in the context of the interpretation of results, but also future direction of policy. There will be people on Jobseeker s Allowance, for example, who have mental health conditions. There are a number of people on Jobseeker s Allowance who will be self-declared as disabled, using the DDA 2 methodology, who will not go into one of the groups that get the higher payment. That is why it is quite interesting the approach that providers take. Some will not seek to differentiate between payment groups and provide a wide range of services to every payment group, such as having occupational health available to everybody. Some will perhaps triage on a range of different factors, including employability, and not necessarily by benefit. Q512 Debbie Abrahams: On that point, then they must be doing some form of assessment. That would seem a very good example of the model that was being used that you have given. Presumably, they will have to assess. Are you actively considering a more holistic assessment that relates to the whole person s needs, including their employability? For example, we heard about the Australian Job Seeker Classification Instrument. I know that New Zealand, several years ago, again had a more holistic approach in terms of identifying the overall needs for the person. Mr Hoban: I think there is a broader point and not just something related to the Work Programme. One of the things that the Secretary of State and I are interested in is looking at much more segmentation for jobseekers, from when they walk in through the door. You are absolutely right: in Australia, they have the Job Seeker Classification Instrument. Having seen it, there are some benefits to it. There are some challenges, too. We need to think about that in connection with future policy development, but it is a very interesting idea and one that we are looking at quite carefully. Q513 Sheila Gilmore: Can I just ask on that, who do you think should carry out the assessment? We had some different evidence on this from different people. Some of us were probably a little anxious about whether that should be done by providers who, after all, might have a vested financial interest in assessing somebody as high need. At what point in the process do you think that might take place? Mr Hoban: You are right to highlight that concern about providers. The flipside is and this is the anecdotal feedback I got from meeting some of the Australian providers that having the Government to do it means that, sometimes, the banding between the four categories varies depending on budget pressures. Sheila Gilmore: It is an interesting question. Mr Hoban: It is an interesting question. What you need to do though, Ms Gilmore, is have an approach that commands confidence and has credibility, and a recognition that people s distance from the labour market changes over time and is not necessarily all in the same direction. Someone may actually fall ill whilst on the Work Programme and actually move further away from the labour market, so it should not necessarily be fixed at any point in time; it should be reviewed from time to time, potentially. The method of assessment is important, too. Ms Jackson referred 2 Disability Discrimination Act 2005.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Work and Pensions Committee: Evidence Ev 105 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney to people not necessarily declaring that they are homeless at Jobcentres. This was a comment that was made in Australia, in connection with the Job Seeker Classification tool that they use. It was based on a very short interview. People did not necessarily admit to having mental health issues or being homeless. We need to think quite carefully about how effective it is. Are we sure that it will deliver a much more targeted and focused use of resources? Q514 Debbie Abrahams: Moving on to assessment for fitness for work, we heard some horror stories when we received evidence. One man who had been assessed as fit for work actually had cancer and died a few weeks after he was deemed fit for work. That was the evidence from a provider. I know things are improving, but it still far from perfect around the Work Capability Assessment. How can providers refer back into the system those beneficiaries who should not be there, who should genuinely not be there? Mr Hoban: The challenge here is to ensure that we do get the Work Capability Assessment (WCA) right. We are ensuring people get the right support. You are also right; we are seeing improvements in that. There is still some way to go. I am the first to acknowledge that. It is that assessment and then the decision made by DWP staff that determines which group people go into, whether it is the fit for work group, whether it is the ESA WRAG (work-related activity group) group or the support group. If there is a view that someone s condition does not enable them to benefit from the Work Programme, there is an appeals mechanism in place. Q515 Debbie Abrahams: There is no direct referral then for the providers back into JCP, which has been suggested. Mr Hoban: I can see the argument for doing it. Do not get me wrong. Equally, what I am also very wary about is making it too easy for providers to say, I do not want to work with this person. Let s pretend they are not fit enough for work. We have to have some checks and balances in this. Q516 Stephen Lloyd: I understand that argument, Debbie, if I can chip in. There is some legitimacy to it but, by the same token, when we had a group of work providers in only the other day; we asked them very directly, Was it getting better? They said Yes, it was. We also asked them very directly, Are you all, and I include Shaw Trust in this, which is one of the charities, still receiving referrals of people who are clearly not fit to work? They all said yes. I am very supportive of the model for payment by results, 100%; I have been in business for years before politics. My question to DWP is: why is there no payment by results mechanism for Atos, which does the WCA, either based on appeals or success, whichever way you define it? I am not clear that the same performance-by-results robustness that you have with the work providers is applied to the company that does the WCA. It is clear, though things are getting better, that they are not getting better quickly enough. Mr Hoban: I do not want to go back to my first evidence session in front of the Committee. Chair: But they are connected. Mr Hoban: Absolutely. There are a couple of things I would say. The first is this: if we brought in a payment-by-results mechanism for Atos, I am sure people would find ways in which they felt that the system was being organised to get more people declared fit for work, paying people for a process and something like that, where actually the outcome is, What is the right prognosis for this person, based on the evidence that has been presented? It is much better to be paid by the number of people you see, rather than setting any targets. Targets can be open for misinterpretation, manipulation and to distortion. I would be really uncomfortable about going down that route. Of course, where Atos fail to deliver the service we expect in terms of volumes, then there is a service credit that comes back for that. The other thing I would say is regarding the ESA claimer group, PG 6. We are referring people to that payment group who are not necessarily fit for work now; if they were, they would actually be on JSA. What we are saying is that they would perhaps be fit for work in three months time, six months time, or up to a year s time. What we are expecting the Work Programme provider to do is use that time to move them closer and closer to work. It is absolutely right that they are not fit for work the day that they appear, otherwise they would be on JSA. However, over the next period of up to a year, we expect them to be fit to work. Therefore, rather than wait until they are fit for work to get started, let us give them some help now that is appropriate to their medical condition, rather than write that year off. Q517 Stephen Lloyd: I do take your point. I think that is a fair point. All that I would pass back is to urge that the DWP continues to keep a very, very close watch on the appeals process. If after Harrington, which I totally support as well, and after a lot of the changes that were put in, we are still getting a large number of successful appeals if we define it that way, i.e. the appeal decides that they clearly were not fit for work then I would urge that the DWP does not write off any further possible sanctions to improve the quality of outcomes. It was only two weeks ago that the providers were sitting in front of us. I think these are reasonably sensible people, even though I know that they would say it to a certain extent, I do not think the Shaw Trust or the CDG would. I do urge you as the Minister within the DWP to continue keeping a very close eye on the level of improvement or not. Mr Hoban: Absolutely, Mr Lloyd. We are committed to continual improvement in the WCA. We have just appointed Malcolm Harrington s successor, Dr Paul Litchfield. We have had Harringtons One, Two and Three; we will have Litchfield One and Two. I monitor this process very closely, because I want to make sure we get better outcomes from the whole WCA process. Q518 Teresa Pearce: Minister, on the point you raised about the Atos contract: you said that if you set a target that would not be a very good thing, and that it is better for people to be rewarded or paid for the

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Ev 106 Work and Pensions Committee: Evidence 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney number of people they see. I think the point that Stephen was making was that yes, that is fine, but they need to get the decision right. There seems to be no penalty in there. In most contracts, you would be expected to get things right X amount of the time, and there would be a flex at the end to say Okay, we accept that a few will be wrong. However, so many go to appeal. I know that Atos have been paid extra for the Harrington improvements, but it seems that it is a one-sided contract: if they do things better, they get more money, but if they do things worse there is no penalty that you can invoke. Would you look at that? Mr Hoban: One of the challenges, Ms Pearce, is that Atos can make a recommendation on which the DWP have to make a decision themselves. The decision on which group somebody goes into is not made by Atos: it is actually made by the Department, using recommendations from Atos, but also the medical evidence that GPs and others have requested. We should be clear where the decision-making focus is on this. The reality is that if you look at the dropdown menu that tribunal judges are completing, I think in about 0.4% of cases, the reason why the judge is overturning the Department s decision is down to the quality of the Atos assessment. Actually, one of the principal reasons why decisions are being overturned is because more recent information was supplied by the claimant. Of course, neither Atos nor the Department has had a chance to see that before it is used. Stephen Lloyd: But then that is a profound systemic problem for the DWP. Chair: We could go on forever on this, and I suspect we might need an extra evidence session to do that. Q519 Debbie Abrahams: I have just one final question, and it relates to the Work Focused Health- Related Assessment. You will recall that this was specifically about assessing how a claimant s condition might be managed to help them find and stay in work. That was suspended by the DWP in 2010, and we wondered what the reason was for not reinstating it. Surely this will actually help providers with a more generic assessment about how people can find and stay in work. Mr Hoban: It is a good question. We have looked again at whether this should be reinstated. My sense is that, at the moment, it would be duplicating what the Work Programme should be doing, which is trying to work out what someone can do and find the right job for them and their health condition. It is something that we keep under regular review and we will think about it again shortly. It has potential, but in a way it has been superseded by where we are at. Chair: I would like to bring in Nigel. Graham Evans: Just before he starts, Chair, I would just like to say that some of the examples used are the lowest common denominator. When people die of cancer, you will know from your background that sometimes it can be a long-term condition or a shortterm condition. Some people die within weeks of diagnosis, so to use that as an example, I think it is Debbie Abrahams: Graham, to be fair, that was the example that G4S gave at the last evidence session. Graham Evans: Tony Gubba, a well-known radio personality, died of cancer after a very short illness. He died within three weeks. The point I am making is that sometimes it is very difficult to diagnose. Q520 Nigel Mills: Can I take you back to the black box approach, Minister, which we touched on earlier? Do you have any regrets about how that approach was set up? Mr Hoban: First of all, it was my predecessor who established this. Nigel Mills: Exactly. There is no blame for you. Mr Hoban: I have reflected on this. I think it was the right approach. I think that it is right to give a group that are actually some very experienced providers the flexibility to determine what is right. Obviously it is underpinned by minimum standards. I did actually have the chance to look at the alternative to this in Australia. The element that is outcome payments is much lower than in the UK; they get more payments for inputs. I felt that one of the issues there was that it had almost squeezed out innovation and flexibility from the system. The alternative is to share best practice and have lots of rigorous evaluation to find out what works, rather than to be prescriptive. I do feel that local labour markets differ, and the nature of the people referred to the scheme differs. Therefore, I think it is right to experiment with different approaches, as long as they are successful. Q521 Nigel Mills: The initial evaluation of the programme found that there was not quite the level of innovation going on that you were probably hoping for at the start. Do you think that the black box is now actually delivering that innovation and those new approaches that it was intended and expected to deliver? Mr Hoban: I think what happened and Julia might want to add some colour to this is that at the start, there was quite a long mobilisation phase. A lot of people perhaps who were existing providers thought they could do what they did before and that that would be okay. I think that there was a bit of a shock to the system when they did not achieve the MPLs at the end of year one, and a real sense of What can we do that is actually going to drive up performance? I think that that has then led to quite a lot of innovation taking place. When I was in Gloucester last week, I went to visit one of the providers there, JHP. They are now doing some very specific and intensive courses along a vocational pathway. That is different to what they were perhaps doing six months ago. You have got a lot of providers who are perhaps focusing on selfemployment now. We have got one provider who is looking at a virtual adviser to deal with remote areas. There is a lot of innovation going on. You see a lot of innovation going on in the ESA area as well now, compared to what it was. I sense that there is a growing momentum as people think What am I going to do to get to the next level of performance? What do I have to offer? Julia, what is your view? Julia Sweeney: The first year was very much scaling up and getting the service in place. Huge numbers of people were participating in the Work Programme at

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Work and Pensions Committee: Evidence Ev 107 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney the end of the first year. We are seeing some real innovation in the skills area, particularly with blended funding, tailored routes into work and a link to local labour markets and local employers. There are some quite good examples coming up there. We are seeing very different models of employer engagement, and some interesting dimensions coming up there. In terms of structures, we are seeing innovation all the way from how the managing agent role works in some providers through to different supply chain relationships. They are all teaching us some very useful lessons about how the market operates. There is a lot of innovation on health. A lot of new approaches are emerging on developing local partnerships and starting to get in the door with LEPs (Local Enterprise Partnerships) and local partners and thinking about how services are tailored. We are also seeing some very different approaches on digital. These providers can do things with IT that we just cannot do within the Department, because of the scale of the build and the time that it takes. I do think that we are seeing innovation. The critical question is whether innovation leads to better outcomes. For some, it certainly will. For the Department, understanding what is happening across 18 primes and 40 contracts and looking at what excellent looks like will give us some very good intelligence as we move into evaluation and think about what the next phase of delivery looks like. Q522 Nigel Mills: So you are not sat in the Department, thinking, If only we had a bit more power or a bit of a lever to encourage some providers to do things that they are not doing, or stop them doing things that they are doing? Julia Sweeney: Our leverage is quite strong. The Minister talked at the beginning of this session about the capability that we have within the contracts to leverage good performance, to shift work, and to take work away from people if they are not delivering. This is a very responsive contract. We have very open relationships with providers. At account manager level, we are working very closely with chief executives of the primes, and performance managers are in delivery areas all the time. We know exactly what is happening, we know what good looks like, and we share that information around the network. Primes do so themselves: we have a number of networks where we sit down with primes and their partners. I think there is a very dynamic relationship across this market. It is an exciting time for the market. We have got new entrants and new structures. We have got people coming into the welfaretowork area who have not worked with us before. It is a very rich learning experience for the Department, as well as an opportunity to drive good outcomes for customers. Q523 Nigel Mills: I take the point that if they are not meeting targets you can do nasty things to them. However, it is possible, is it not, to meet the overall target but not be performing very well for some particularly hard-to-reach parts of the cohort that you have. In that situation, it would be much harder to take any action; you could not divert people away from them in that situation. Do you think that there was actually a case for having some standard in there that said, Actually, you need to do at least this for everybody? Julia Sweeney: That standard exists. Mr Hoban: There is a minimum standard in place. We have agreed that with each of the providers, and that is something we monitor compliance with. Do not underestimate the power of focus on some of these payment groups. Talking to the primes who have been very focused on the JSA 18-to24s and the 25pluses is very interesting. As we talk more about ESA claimants, you start to see a real focus on that from the primes. I think that we do need to make sure that primes are held to account for every payment group, not just through principal payment groups. Q524 Nigel Mills: I am sensing that you are happy that the black box is working. Do you think there is a case for any independent oversight, outside of the Department, on what primes are doing? Perhaps some independent quality inspection or something? Mr Hoban: If you think about the participant s experience, when they go to their prime or their subcontractor for the first time, they will be told what they should expect to see by way of service. They have an opportunity to raise complaints, and there is an Independent Case Examiner who will adjudicate on those complaints. A lot of the evaluation we do is also independent as well. Q525 Chair: How would a contractor be held to account? If a contractor decides to just look at part of the cohort and ignore all the rest, as long as they are getting just enough people into jobs, there is nothing else you can do because of the black box. Mr Hoban: We do take the compliance with minimum standards very seriously, Dame Anne, and we do audit those. Julia, do you want to talk a bit about that process? Julia Sweeney: The minimum standards articulate the level of service that a customer can expect from a provider. They are shared with that claimant as they move into the programme. Actually, if you go around and look at either primes or their subcontractors, those standards are quite explicitly there in the workplace and on websites. There are customer feedback boards, and they change and enhance those in response to customer feedback in the main. Performance managers and our assurance team audit those standards, so we can be assured that people are seeing their advisers regularly and that they are getting that service level. Q526 Chair: We know that is not happening. We have heard of somebody who sees their advisor for half an hour every week great and someone who has to phone up their adviser and does so every couple of months to ask and beg for an appointment. Is that the black box? That does not suggest that there are any minimum standards. Julia Sweeney: Minimum service levels are not exactly the same across each prime contractor. If they are not being met, then the claimant has a very clear route to escalate that complaint. It is probably important to note that complaints are almost always

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Ev 108 Work and Pensions Committee: Evidence 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney resolved locally, which means that they are resolved to the satisfaction of the claimant. We have very few getting to the Independent Case Examiner, and, in fact, we have had none adjudicated on as upheld. I think that says something quite positive about the experience people are having within the programme. Chair: It may be that the claimant does not know what the obligation of the provider is. Mr Hoban: However, Dame Anne, the claimant does get details of what the minimum service standard is when they sign on to the Work Programme. When they go and see their subcontractor or their prime they should be given those details. There should be very clear standards set at that point. Glenda Jackson: I have not heard that. I have got constituents who did not even know that they were on the Work Programme. Q527 Jane Ellison: Rather than use anecdotal evidence, is it possible to supply the Committee with some data around this? Mr Hoban: Yes, absolutely 3. Jane Ellison: That would be very helpful. Chair: That would be useful, so that we can see how different they are in different areas. It is quite difficult to know how they can be so different. Mr Hoban: No problem at all. Q528 Sheila Gilmore: Some of the examples that you have been giving are very interesting. Is there an independent research project going on in parallel with all of this, and is that going to be published? What is being described here, frankly, does not look like what the Work Programme was the idea of having a hub with all sorts of services together is fantastically good, but that is not the same as the Work Programme with its chain of suppliers and so on. Is somebody doing research, so that that will be published? Mr Hoban: We are awash with evaluation, which will be published. This almost goes back to the point about the black box. People have different models for the provision of specialist services. Some might all be in one location, and some might do it a different way. It depends on their business model and their approach. Q529 Sheila Gilmore: So it will be published? Mr Hoban: Yes, the evaluation will be published, absolutely. Q530 Sheila Gilmore: The supply chain was one of the things that was said to be important from the outset. When the BBC surveyed third sector organisations that were listed as contractors on the Work Programme by the DWP, they had responses from 184 organisations. 40% said they were not part of the Work Programme. Of those who were in the Work Programme, 73% said that they had had fewer referrals than expected, and 41% had received no referrals. Were a lot of these organisations simply used as bid candy in the first place? Mr Hoban: I do not think that there is any evidence to suggest that. We talked about the mobilisation 3 Details of the Minimum Standards are published on the Department s website at: http://www.dwp.gov.uk/docs/ provider-minimum-service-delivery.pdf. phase earlier on, and we talked about the rampup of ESA volumes. A lot of these are specialist contractors that the Work Programme providers had lined up. As the programme has evolved, the nature of the relationship between primes, subcontractors and specialist provider services has evolved. Some services have been provided in house that might have been subcontracted before. There is a mix there, but one thing I do take comfort from is the last stock take of subcontractors. We have actually seen an increase in the number of voluntary and community sector organisations taking part, and they still by far make up the biggest chunk of subcontractors in the programme. Q531 Sheila Gilmore: So you are not of the view that the work is not feeding down, then. You think it is feeding down. So why do some of the subcontractors not actually have any work? Mr Hoban: I am not saying that it is feeding down. I am saying that some subcontractors may have come in at the start of the programme, and the primes may have felt I do not need that service anymore. Alternatively, because the level of ESA volumes at the start was so low, it might not have been economic to refer people to a particular specialist subcontractor. I think that the supply chain is changing; it evolves. I was talking to primes who have taken people out of their supply chain because they were not performing, or they were not able to offer a service at a reasonable price to the contractor. There is a whole batch of reasons why people who might have been in at the start are no longer in now. Q532 Sheila Gilmore: What action can the DWP take against them if they are not passing on the work, and if you are satisfied that it is not for one of these good reasons? Mr Hoban: They are not required to pass on work. It is a black box. Ultimately, they have to decide how they get the job outcomes. That is what they are being paid for, and that is why we set up this programme of payment by results. They have to decide what the best way to deliver better job outcomes is. One of the messages that is coming out to me from the way that providers are responding to increasing ESA referrals is that, where there are specialist services there from subcontractors, they will tap into them. Julia talked about the managing agent model earlier G4S are an example of that all of their work is subcontracted. In some supply chains, there may be a changing roster of subcontractors, depending on the performance. Q533 Sheila Gilmore: Some small organisations have gone out of business. Some were told at least locally, although this may have changed again that with the coming of the Work Programme, the previous funding that they had had, say, through local authorities was not going to be forthcoming. I know that this happened in Edinburgh. People who were doing employability services previously under various programmes, including some funded locally by local government, were told that since there was now the Work Programme, the local authority would no longer be funding that kind of activity, because it was all supposed to be done under the Work Programme.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Work and Pensions Committee: Evidence Ev 109 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney They have lost the funding that they may have had through the local authority, and if they are not getting contracts or not getting as much as they had expected through the Work Programme, then they are actually losing business. Mr Hoban: I cannot be held accountable for the actions of local authorities, but I do think that there is a real challenge here. The payment by results model we use in the Work Programme does present some real challenges to contractors of all types and sizes. One of the things that I sense when talking to a range of providers is a move from previous funding models where there is much more paid upfront and much more paid for progress measures or particular interventions to a payment by results model has been quite challenging for a lot of organisations. Of course, what we cannot do is guarantee a certain level of referrals into the Work Programme. We cannot stop people getting jobs before 12 months, simply to keep rolling the referrals up. Glenda Jackson: But you have said on more than one occasion that there has been an increase in the ESA claimants. Mr Hoban: Yes, absolutely. Q534 Glenda Jackson: Do you have any theory as to why that has happened? Mr Hoban: As the policy has bedded down, we have been able to release people with a longer prognosis onto the Work Programme. The original stage was people who volunteered, who received ESA, were put onto the programme: people who had been through the IB reassessment process could volunteer to be on the Work Programme. Now we are referring greater volumes, as we refer people who have got a prognosis of up to 12 months on to the Work Programme. We are seeing that policy shift getting more volumes through. I was thinking more particularly about the JSA volumes, over which we do not have control. Q535 Sheila Gilmore: If most of the work is done by a subcontractor, and they get somebody into work or if all of the work is subcontracted, in effect is it right that the prime still gets the large chunk of money for, it would appear, not doing a lot? Mr Hoban: The prime then pays the amount that is owed under its contractual obligations to the subcontractor. When subcontractors entered into commercial negotiations with the prime, they agreed their payment mechanism, and that payment mechanism varies from contract to contract. You will have some who effectively bear the exact endtoend risk that the prime was, who will be paid on a payment by results basis. You have some specialist Tier Two providers who are paid on a calloff basis, paid for a service that has been delivered. There are some commercial negotiations between the primes and their subcontractors. Q536 Sheila Gilmore: Does this come back down to the question of whether there is really equal contracting? For a lot of organisations, this did appear to be the only show in town. It was take this or leave it. If you are paying, let us say, 13,000 for somebody who is hard to place, at the end of the day somebody gets all of that money for them being hard to place. If the work is done primarily by one subcontractor I know there is an example in my constituency, which works with people with mental health difficulties most of the heavy lifting is done by that organisation, but they do not get most of the fee. They get about half of the fee. Mr Hoban: There is a commercial negotiation here. The prime will not get any payment if the organisation is not investing enough in getting somebody into work. It is actually in the prime s interest to ensure that there is fair recompense for the work that is being put in: otherwise, people will not go into work, and they will not get any money at all. I think there is a commercial negotiation here to be had. I think one of the challenges, though, Ms Gilmore, is how we ensure that people who are subcontractors in this programme have the management capability and financial capacity to enter into some of these contracts. I know that a number of primes have done some good work with subcontractors to help boost that capacity and to manage that risk. This is not a riskfree operation, as I am sure you appreciate. Graham Evans: I think you have largely answered this, Minister, but when we had evidence from G4S who subcontract to their primes they said in their evidence that a lot of the third sector providers are just no good. As you have said, it is a commercial decision whether you want to put yourself into that arena. Mr Hoban: There is a real challenge to anybody. Some private sector providers may not be any good, either. I think that a number of contractors who have been longestablished players in this market have found the transition from the payment by input to the payment by result quite challenging, and have taken some time to adjust to that different model. Any organisation taking part in this needs to have financial strength and the capacity to manage what are risky contracts. Q537 Chair: We need to move on. I was going to ask about the Merlin Standard. It seems as if it is a toothless animal that really does not do very much. Have you thought about giving any more powers to Merlin assessors, to be able to fine primes who treat the subcontractors unfairly? Mr Hoban: I think the Merlin Standard is setting some very clear standards around the relationship that there should be between a prime and a subcontractor. We have taken some steps to strengthen that: Michael O Toole, who is the crown representative for the voluntary and community sectors, is now sitting on the board that supervises this. We do monitor compliance with it as well, which I think is important. In terms of future development and penalties, I will think about that one. Julia, do you want to talk a bit more about the Merlin approach and whether it could be strengthened? Julia Sweeney: Yes, I can do. I think Merlin has been a relatively effective instrument, actually. The formalisation of the relationship through the sector has been really helpful. The board is active. We recently had an organisation achieve Excellent on Merlin for the first time, so it shows that that process is driving

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Ev 110 Work and Pensions Committee: Evidence 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney up standards. We have also had an organisation fail, which will as a consequence need to be reassessed. I do think that we are using the breadth of the standard, and the work that Michael will do with us will be very welcome. The sense I get from the industry and industry representatives is that this is a good mechanism that is providing a good structure around our subcontractors. Q538 Chair: There is presumably no penalty on the organisation that failed? They just get the chance to take the test again, if you like? Julia Sweeney: There is a penalty therein, because they have to pay for that test. Q539 Chair: How much do they have to pay? Julia Sweeney: I cannot remember the exact amount. I can drop a note to the Committee if you would like. 4 Chair: I get the sense that, if something seriously needed to be dealt with in terms of the relationship between primes and subcontractors, Merlin would not be there to step in and help. Julia Sweeney: I get the sense, when I visit subcontractors and primes on the Work Programme, that relationships through the supply chain are pretty good. This is a very collegiate delivery organisation when you look across supply chains. There is a very strong focus on delivery, and a very good, healthy sense of competition in terms of delivering well. I think that Merlin is part of that infrastructure that allows people to have that relationship. There have been particular instances in which your witnesses have felt things are not working, and we would be very happy to look into those. However, the general sense I get from the network and the industry is that Merlin is broadly a good thing. Mr Hoban: Without wishing to make policy by anecdote, I have done two roundtables in recent weeks with the voluntary and community sector: one down in the South West and one organised by the National Council for Voluntary Organisations (NCVO). Merlin did not crop up as an issue in either forum. Q540 Teresa Pearce: I just wanted to talk a little bit about the Work Programme data. It was something like 17 months before we received any: it was November 2012. Was there a reason for that delay? Mr Hoban: First of all, when we publish data, we need to make sure that we have got a reasonable picture. I do not mean a good picture, but a proper representation. There is a requirement for validation, and, of course, the vast majority of people who join the scheme would not be able to qualify for a job outcome until at least six months have elapsed. Doing it much earlier would not have Teresa Pearce: But 17 months is a long time. Mr Hoban: Absolutely, and I think that there was some discussion about that. The publication date was set before I arrived in the Department. We are now moving to publication on a six monthly basis. The next set of results will be published on 28 May, and it is right that there should be timely data on this. 4 Note by witness: The unit cost is 8,584 per assessment. Q541 Teresa Pearce: You said earlier that you are awash with evaluation, and you also mentioned that you get management information. Is there no information there that would be easily shared and that would help? The reason I ask is that six monthly reporting given the size and the importance of this programme might be too infrequent. Some of the evidence that we have heard is that people within the supply chain believe that more transparency of data would help with good practice sharing and innovation. Contrary to what you have said, Ms Sweeney, some of the sub-contractors have said that they have not seen very much that is new in the Work Programme, and that everything is the same old stuff that they have seen before. What they are asking for is more information, so that when there is innovation, it can be spread. Mr Hoban: There are two things in there. In terms of quality of evaluation, that is published, and there is a regular cycle. There seems to be lots of different evaluations being published over time. On the performance information, primes are able to and should share data within a supply chain on outcomes. I think that most providers do that, and some actually enable their subcontractors to access that data on an almost daily basis. That provides a spur there. Primes do organise opportunities through which they can share data and experiences within their supply chain. I share your view about the frequency of publication of data. I would like to move to a much more regular publication of data, but we do need to make sure that it is properly validated and verified. There are some reports and checks that need to go through that, but I want to see more data published on a timely basis. Q542 Teresa Pearce: Would you support the publication of data for outcomes below prime contractor level? Mr Hoban: I think that that happens already, or should happen already, certainly within the supply chains 5. Q543 Teresa Pearce: A prime might say that if there is somebody out there who is doing fantastic stuff, they want to be able contract with that organisation as well. If they do not know, it is kept within that supply chain. Does it not help, in business, to know exactly what is working and what is not? Mr Hoban: One of the things that struck me about this and I know you will have had a flavour of this from the evidence that you have got is that this is a pretty incestuous industry. They know each other very well, and they all seem to have worked for each other or contracted with each other before, so I think that they know what is happening. That is one of the reasons we are setting up the best practice group, to help promote that sharing and get good practice out there. It absolutely should not be the preserve of the primes, but should be promoted more broadly. 5 Note by Witness: I can confirm the Department does not publish data relating to job outcomes (or any other performance data) achieved by individual sub-contractors within Prime Provider supply chains. As the Minister for Employment states, Primes share this information across their own supply chains.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Work and Pensions Committee: Evidence Ev 111 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney Q544 Teresa Pearce: One of the other points that was raised was that, if the Work Programme is going to succeed, people need to believe in it. People need to think that it is worth engaging with. If information could be given outside of the supply chain to, say, local authorities, MPs and local opinion formers, that would be a good way of raising the profile of where there is good practice. At the moment, they feel constricted by the way that the data is collected and published. Mr Hoban: I have two points on that. First of all, where something is part of National Statistics, it cannot be shared until it is published. Those are the same rules that govern a whole host of National Statistics that are produced. However, I have seen two really good examples of primes engaging with their local Members of Parliament and local partners. I have seen it in Hampshire, where A4e have a good and effective way of engaging with MPs: not necessarily sharing performance data as such, but actually talking about the type of people they help; the people they work with; some success stories; and innovation. I know that in the South West, one provider I cannot remember which wrote to MPs in the South West. Steve Webb gave me a copy of the letter he had got from the prime. There are ways in which primes and subgroups can engage with their local communities without having to breach national statistics rules, and I would encourage them to do that. Sometimes, I think that the work that they do is one of the best kept secrets. Q545 Teresa Pearce: I have visited my local work provider, and also engage with them as an employer. That was not a wholly satisfactory experience, I have to say, although I think that was down to one particular person there rather than the whole organisation. The voice that seems to be missing in all of this is the individuals on the Work Programme. Would you not want to systematically survey people when they are on the Work Programme? Earlier, you quite passionately described people who are really far away from the workplace, who have just been dumped and left. Confidence is a really important issue for them, and it needs to be a really personal service. We need to know what is working and what is not. For those of us who have been in work for a long time, it is hard to imagine what that must be like. Surely having a systematic survey of satisfaction levels of people who are on the Work Programme would be a good way to find what, for them, is working. Mr Hoban: Julia touched on this earlier on, and I have certainly seen this in practice, when I have been out and about meeting providers. There is a lot of work that providers do to establish the views of people using their service. There is a lot of interest in really good outcomes; a lot of interest in customer experience, and in the quality of the interaction between advisers and claimants. This is all looked at carefully by providers. Of course, there are routes where someone who is unhappy can raise a complaint about their service, but I think that the best test is whether people are getting into work or not. Teresa Pearce: Well, I think that is the outcome that we all want. Q546 Graham Evans: There is some evidence that officials within the DWP are hostile about the working relationship between Jobcentre Plus and Work Programme providers. We have been told that Jobcentre Plus sometimes fails to pass on basic information, such as homelessness, telephone numbers, and the like. What can be done to improve that basic flaw of communication? Mr Hoban: The relationship between Jobcentre Plus and the Work Programme is really important. Earlier on, we touched on post-work Programme returns. When I talk to Jobcentre Plus staff, it is interesting that they now see the merits of a very strong relationship with Work Programme providers. That has helped to provide them with a real incentive to improve that relationship. Neil Couling, who became the Director of Work Services towards the end of last year, has taken this on as a priority. He has set out a series of measures that we should be taking to improve the quality of that relationship: warm handovers, if that is something the Work Programme provider is looking for; co-signing, and co-location. There is a real emphasis on raising the quality of the relationship between Jobcentre Plus and the Work Programme providers. The conversations I have with providers would suggest that good relationships are in place, certainly at a district level. I think we need to do a bit more with local officers the quality and consistency of that relationship. Q547 Graham Evans: The key ingredient for this to work is the engagement with good quality employers. There is evidence to say that employers are not aware of this scheme, or in many cases, that there is an unwillingness to engage. Organisations such as Transport for London do a fantastic scheme, because they can plan for the future in terms of recruitment. Is it possible for the Department to look into engaging such organisations as Transport for London, and to get more people like that to work closer with Jobcentre Plus? Speaking personally, I did a jobs fair, and I am currently working with Jobcentre Plus in Runcorn and Northwich. In my experience, they are a very easy organisation to work with: the key thing is getting employers to engage with their Jobcentre Plus. Is there more that can be done about that? Mr Hoban: Let s look at the Work Programme and employers first, and then move on to Jobcentre Plus. The issue of engagement between the Work Programme and employers is a challenge. Different Work Programme providers have different approaches, so some will focus predominantly on SMEs rather than larger employers. Some employers particularly big employers with a national recruitment model find it difficult to engage with the Work Programme. Some of the Work Programme providers themselves are actually working on this, and finding a common sales force, or a common point of contact between the Work Programme and national employers, to increase their engagement. There is more we can do on that. The CBI are very supportive of the Work Programme, and are continually seeking ways in which the relationship between the Work Programme and large employers can be strengthened. Sometimes Work Programme

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Ev 112 Work and Pensions Committee: Evidence 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney providers find large employers to actually be quite difficult to work their way through: Who is responsible for recruitment for your shop? Oh, I don t know. I think it is someone in London, or someone here. There is a twoway process there of improving engagement. On Jobcentre Plus, one of the things I am keen to do as is Neil Couling, the director is to actually improve the quality of our engagement between Jobcentre Plus and employers. We have got an excellent National Employer Service Team. It manages 200 accounts. I opened a Premier Inn last week in Waterloo, which just recruited 1,100 people. We have a very close relationship with Jobcentre Plus, and I did find the right people to work for that business. There are some real success stories there, and I am keen to make sure every employer has a Premier Inn level of service. We are taking steps to raise that quality of engagement. Like you, Mr Evans, there are some excellent examples of really good engagement with Jobcentre Plus and employers. People forget, I think, what Jobcentre Plus can offer. Of course, before Christmas, we launched Universal Jobmatch. Two million people are registered with Universal Jobmatch: they have their CVs, their experience and their skills on there, ready to be matched with good vacancies. Q548 Graham Evans: You mentioned CBI. I think it would be common sense for the local Chamber of Commerce to work with the local Jobcentre Plus. Those two organisations are respected within the community, as far as I am concerned. Marrying those two together and having them work closer together might be one way of helping things along. Mr Hoban: Absolutely. We have a really good relationship with the British Chambers of Commerce and local chambers. We have some very good partnership managers in place, whose role is to build links with local employers. The British Chambers of Commerce have very helpfully promoted schemes like the Youth Contract, the Wage Incentive and the Work Programme in their publications. We have signed a series of memoranda of understanding with trade associations. The IGD did a fantastic Feeding Britain s Future event last year, giving young people the opportunity to work in the food business. This was partly as a consequence of a desire on their side supported by Jobcentre Plus at a national and local level to identify young people to take part in that scheme. It is a multichannel engagement, and I would like to get it to as many employers as possible and really spread the good news about what Jobcentre Plus can do. Q549 Teresa Pearce: On the issue about employers, engaging employers is really key. Particularly for small employers, taking on anybody is a risk, and they see it as a risk. Taking on somebody with complex needs, or who has been very far away from the workplace or maybe previously had an alcohol problem, is a bigger risk. You said to me once before that you cannot be responsible for what the media writes, but as the Minister, you can be responsible for how your Department presents facts. I would just ask you to bear in mind that, when negative stories come out from the Department in the press about people who have been on benefit for a long time, it actually increases the discrimination against that person getting a job, because the employer reads the paper too. It is very hard for people who have had problems and who are trying to overcome them to get over that hurdle. You said to me once before that you are not responsible for what is written in the paper, and I accept that, but you are responsible for how your Department sometimes spins information. I do not believe that has happened on your watch, but it did happen previously. I would just ask you to please bear that in mind. Mr Hoban: One of the things that, as a Department, we are very keen to do is to get some really good news stories out there about people who have faced challenging circumstances and have got into work. It incentivises and motivates people. If you can read a story about someone who has perhaps been out of work for 10 years getting a job, then you think Well, why can t I do that? The press team in the Department spend a lot of time getting stories into our local papers about good news, and using case studies. I am very keen that Work Programme providers and Jobcentre Plus find good examples where someone has overcome some quite tough circumstances to get into work, because that can be very motivating. Chair: I was about to say: if you can get good news stories into the press, please tell us. We would all like to know how. Mr Hoban: Our finest minds are working on it, but it actually does work. Local newspapers are much better at this than national newspapers. On the point about employers, the Federation of Small Businesses make the point to me frequently that actually smaller employers can be much better at accommodating people with more complex needs. They are less likely to have a rigid recruitment process that weeds people out. They are likely to be more flexible, and they will take a view on circumstances. At one of the roundtables last week, I was talking to Nacro, who are trying to get employers to think very carefully about whether they have a box on their form asking for a CRB (Criminal Records Bureau) check. They are asking Does your business actually need to have a CRB check for someone to be employed in it? They are really pushing that challenge, because some of those ways they use to weed people out act as a real barrier to people with all kinds of challenging circumstances getting into work. I went to visit Freshfields, the law firm, a few weeks ago. I was looking at a project they were running with Business Action on Homelessness, and I started realising that a number of people on that programme, in that room, were exoffenders. I asked Freshfields about this. I said You re a big law firm and you re taking these people on, and their argument was If we can do it, everyone else can do it. I think it is about positive stories, not just about employees, but about employers who are prepared to take a risk and take somebody on. Teresa Pearce: I look forward to more positive stories about strivers.

cobber Pack: U PL: COE1 [O] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Work and Pensions Committee: Evidence Ev 113 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney Chair: We took some very good evidence from Timpson about their ex-offenders scheme. It was absolutely excellent. Graham Evans: On the good news that Timpson were doing in prisons, the press went Timpson teaches prisoners to cut keys in prison. The press will never give you anything. Q550 Nigel Mills: I have worked quite closely with A4e, one of the providers in the East Midlands, who have an operation in my constituency. The other provider in the Midlands have their nearest operation 10 or 15 miles away. It seems much harder to get them to work with local employers who are more spreadout, perhaps away from where their location is. Is that something that you have seen as a general experience, that if there is a local branch it is easier for them to work with employers, and the further away they are from a provider, the harder that is? Mr Hoban: Sometimes that is the case. I do not know if there is any evidence to back it up. For a number of people who arrive in work, travelling to an employer can be an issue, and it may be easier for them to get to work if the job is a mile down the road rather than 10 miles down the road. Sometimes it is a response to circumstances, and the ability or willingness of jobseekers to travel, and also the travel arrangements that are in place. We were talking about joint working earlier on, and cooperation. I think I am right in saying that Amazon have a big warehouse in the West Midlands. Providers, JCP and Amazon work together to provide the transport to get people to work. That is a really good example of partnership working in practice, but I think that sometimes providers do find jobs that are convenient for jobseekers. Q551 Nigel Mills: One issue I have locally is that I have a proposed new supermarket turning up, which as you can imagine for a new Morrisons in a market town is not wonderfully popular. One idea I put to them was if they promised to take 20% of their new employees from local long-term unemployed people, perhaps working with the Work Programme provider, that might be a way of being more socially useful to the area. Sadly, they have not bothered to reply to me on that. Do you think there is actually a role, working with other Departments, to say whether big new developments should be trying to link in planning conditions and trying to recruit the long-term unemployed as part of the Work Programme? Mr Hoban: Absolutely. There is a lot of focus on this. Developers can meet their Section 106 obligations through recruitment. I had a very good session with Land Securities, who seem to be redeveloping the whole of Victoria Street (in London SW1, near to Parliament). They have actually said that their subcontractors must recruit people from the local labour market and train them up, including those who have been long-term unemployed. They work with homelessness projects like the Passage as well, so I think people can make that contribution. The other thing I would say on Morrisons is that last week I was in Gloucester, and I met Morrisons. They are building a new supermarket in the Railway Triangle. Richard Graham, the MP for Gloucester, will tell you all about this. They are committed to taking people on from the local community. I think a number of supermarket chains are doing this. Tesco are doing that for regeneration stores that they are opening. There is a lot of interest, I think, and employers are now increasingly seeing themselves as having an obligation to the community that they serve. If they recruit people from the local community, then local people will come and shop with them as well. I think we will need to make sure that we get the longterm unemployed and youth unemployed into those opportunities, too. Q552 Sheila Gilmore: There is nothing new about that, and neither is it necessarily something that has to be tied to the Work Programme. One of the things we heard about yesterday was the Wembley hub, which was the result of a Section 106 and was a partnership between mainly JCP because it predated the Work Programme, although they had got in Work Programme providers as well and the local council. Yes, it was a Section 106. Yes, funding had gone into it. And councils have been doing this up and down the country, long before the Work Programme was implemented. Mr Hoban: I am not saying that this is in any way new or revolutionary. I am saying that it is happening, and that more employers are interested in this. I think often councils saw Section 106 agreements as an opportunity for more infrastructure, and now skills training is an opportunity there, which I think is a good thing to be celebrated. Q553 Sheila Gilmore: Are there still sometimes some obstacles raised that you cannot do that for procurement reasons? You sometimes hear people say Oh, but we can t Chair: The biggest problem is often that they put certain restrictions on the qualities and qualifications they are looking for, which rules out the local unemployed people. Mr Hoban: I think that Land Securities have a very good model of overcoming that quite happily. They are asking their contractors to recruit people with no skills and train them up, which I think is a really positive example for developers to follow. It can be done, with a will. Q554 Nigel Mills: Obviously, this whole programme has been quite a radical change, with the payment by results and things. We are now nearly two years in. Are you now thinking that there is anything you wish you had done differently or added, or wish you could change as part of this programme, that would make it more effective, especially when other Government Departments are looking at similarly structured programmes? Mr Hoban: I have looked at this quite carefully in the few months since I took on this role, and recognised the interest in payment by results across Government. I think, actually, it is a very bold and imaginative scheme. I think there are some really good features in there. When I have talked to other Ministers elsewhere in other governments, not just in the UK and have met work programme providers in

cobber Pack: U PL: COE1 [E] Processed: [17-05-2013 14:03] Job: 028832 Unit: PG06 Source: /MILES/PKU/INPUT/028832/028832_o006_db_Corrected 20.03.13.xml Ev 114 Work and Pensions Committee: Evidence 20 March 2013 Mr Mark Hoban MP and Ms Julia Sweeney Australia and my opposite numbers in Australia, I come back feeling reassured that we have made the right decisions and that we have got the right design. Going back to Ms Pearce s comment, I do wish that we had more data from the outset. That is something that we are tackling now. One of the things that came out from Australia, although I am not sure I want to go down this route of being dictatorial, was that they insisted on the same IT system for every provider to collect data. I think that is a better and more efficient way of doing it. But I am very keen that we use data to talk about the benefits of the scheme, and also to enable us to manage the scheme and drive through continued performance improvements. Q555 Nigel Mills: But you are not thinking that there should have been more providers in each area, or more or less competition? Mr Hoban: One of the things that has struck me is that this has brought new people into the market: Ingeus, Maximus, G4S, Serco. There are people in the supply chains who are new to welfare-to-work programmes in the UK. You will always see different models with different strengths and weaknesses. We moved from a situation where the Department manage, I think, nearly 500 contracts directly to them managing, effectively, 40 contracts. That enables us to keep the focus on driving up performance, in a way that we were perhaps unable to before. Q556 Debbie Abrahams: Just for clarity, really, in relation to a statement I made about the oral evidence that was given by some of the providers around the Work Capability Assessment: in response to a question about seeing any improvements in the Work Capability Assessment, the particular provider gave this example. We had a client who was terminally ill with cancer referred to us whose life expectancy was shorter than the work-ready prognosis. I just wanted to clarify that. That is from the transcript of the oral evidence. There is still improvement to be made there. Mr Hoban: Certainly, someone with terminal cancer should be referred, pretty much automatically, to the Support Group. I am surprised and disappointed that they were in work-related activity group. Chair: I think that that was the point: there was no mechanism to refer them back. They clearly were not meant to be there, and if they do not turn up, they get sanctioned. Mr Hoban: It is a good point about the referral mechanism. Q557 Chair: Thank you very much for coming along this afternoon. It has been a long session, but, I think, a very useful one. You have clearly settled into your job over the months since we have seen you last, so thank you very much. We will now use the evidence we have received to write a report over the Easter recess, and we will be publishing some time after that. Thank you again, and let us bring the meeting to a close. Mr Hoban: Thank you very much.

cobber Pack: U PL: CWE1 [SO] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 115 Written evidence Written evidence submitted the Business Disability Forum The Work Programme Challenge This submission explores the challenges around the Work Programme and welfare to work policy in the UK. It sets out ways in which the delivery of the Programme could become more efficient and effective by making small but significant changes to the approach. Employers and intermediaries must reposition disability from an issue to do with incapacity, doctors, damage and cost to one concerned with capability, the workplace and investment in human potential. Employers, disabled people and intermediaries must all engage and have high expectations of each other. We set out the case for an employer engagement strategy that supports welfare to work and maximises impact on employer behaviour by: Repositioning the employer from problem and target (ie people whose attitudes must be changed) to valued end user, customer and potential partner. Streamlining the disability to work supply chain so that it more efficiently delivers suitable disabled candidates to employers equipped and supported to hire them on the basis of their capability, to retain them and to develop their potential. We believe it is necessary to reframe the welfare to work challenge as a supply chain challenge and outline six fundamental principles that should underpin any welfare to work policy. Streamlining the Welfare to Work Supply Chain We need to make it easier for employers to say yes to employing disabled people by streamlining the supply chain that delivers disadvantaged job seekers to employers. The Coalition Government has not indicated that they intend to alter the previous government s aim to move to a position by 2025 where 80% of working age adults is in employment. This transformation cannot be achieved unless we recognise that an efficient welfare to work process has the character of an integrated and streamlined supply chain of the kind found in the private sector. We have imported supply chain and lean systems expertise from our members and adapted it to transform the prospects of disabled people. We work to ensure that the push given to unemployed people by employment agencies is balanced by a set of pull related services, and by employers themselves. This approach works by helping employers and intermediaries to make quite substantial adjustments to their recruitment practices. It follows therefore that the prospects of other disadvantaged people such as single parents, the over 50s and black and ethnic minorities can be transformed by application of the same methods. Private sector experience in supply chain management tells us that by systematically making it easier for employers to recruit more disabled people, we can streamline the supply chain, reduce waste, cut costs and deliver a more equitable labour market. A substantial improvement would be seen were the employer repositioned in the welfare to work approach from being simply not in the picture, or the target or (too often) the problem to being the essential end-user of this supply chain and hence valued customer and potential partner. Upstream success in any supply chain is determined by its ability to meet the needs of the downstream user or customer. It is after all the employer who ultimately determines the success of any system that seeks to help disabled people to find and keep work. Welfare to work processes and policies must meet the needs and expectations of both employer and jobseeker or fail. In systems terms, when we design the process door for those who need the widest door everyone else comes through more easily. Any employer engagement strategy must deliver the mix of messages, services, enabling products and personal contact with disabled people that motivates and equips employers to employ people with disabilities and to welcome disabled customers. The Work Programme is a Supply Chain Challenge Our contribution to the welfare to work debate is to help apply private sector expertise to the reform of a complex, uncoordinated supply chain system, so that the system is better able to deliver the right candidates to the right employer, for the right vacancy, at the right time. This will make it easier for employers to employ significantly more disabled and disadvantaged job seekers, while encouraging discouraged job seekers to look for work. The streamlined services and processes which result when disability to work is tackled as a supply chain are much more cost effective than the funding of fragmented and uncoordinated sub-systems, which while they push disadvantaged individuals at the world of work in general, do not enable the employer to pull suitable disadvantaged candidates in significant numbers towards specific jobs. In a properly constructed welfare to work supply chain, actions which push people at employment generally (eg vocational training and CV preparation, welfare benefits which encourage jobseekers to risk

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 116 Work and Pensions Committee: Evidence looking for work) are balanced by actions which pull particular applicants to particular employers such as newspaper or radio advertising designed to persuade pessimistic job seekers to apply for particular jobs with named employers. Successful work placement systems achieve an optimum and flexible balance of push & pull related services. The UK system is however heavily weighted towards push. With the Work Programme, the Coalition Government has an opportunity to tackle the pull dimension in a systematic way. Fundamental Principles that Underpin Welfare to Work Our broad ranging experience of engaging and equipping employers to become disability-smart has taught us that the following basic principles should underpin any system that helps disabled and other disadvantaged people to move into work: 1. The employer must be regarded as the end user of a supply chain which delivers disabled people into jobs, and which helps to keep them in work. 2. Commercial supply chain management principles and expertise would make both the system that delivers people with disabilities (and other disadvantaged jobseekers) to employers, and the wider labour market, more efficient. It would for example reduce the wastage associated with training people for jobs employers do not have. 3. This chain of services funded to help disabled people to prepare for and find work, should be the responsibility of a single Government department and organised as a single throughput system which meets the needs of both employer and disabled person. This would ensure the optimum balance between services that push individuals at the world of work and services that enable employers to pull candidates towards particular jobs. 4. Employment related services should be designed as a co-ordinated throughput system, using the engage, equip and deliver design process. Intermediaries should enable employers and job seekers to move systematically through this process. 5. Welfare to work policy should facilitate employer engagement as a complex interactive process designed to encourage both the employer and the intermediary to work together differently, in a way that promotes disability confidence on both sides. It should also encourage disabled jobseekers to take the risk of applying for work. 6. Exhorting employers to change attitudes should not be done in isolation. It is counterproductive to encourage employers to hire disabled jobseekers if suitable candidates for their particular vacancies do not then apply or if opportunities to build the employability of disadvantaged job seekers are not available or if it takes too long to get advice, assessments, equipment, Access to Work etc. Conclusion Many employers need expert advice on how to remove barriers created unintentionally by their disability unaware systems, be they telephone interviews which prevent deaf people from applying, psychometric tests not adapted for the visually impaired, discriminatory use of medicals, disability incompetent interviewers who make invalid assumptions, use of private sector recruitment agencies which fail to meet their basic legal obligations under the Equality Act to name a few. Information about Access to Work funding is also essential if deep-rooted assumptions regarding the affordability of disabled job seekers are to be challenged from the outset. Employer competent intermediaries understand the processes employers use to recruit and retain employees; they see the candidate through the eyes of the employer; they enable candidates to navigate employer processes and to counter negative assumptions; they advise employers on creating barrier free systems and they support both employer and job seekers as valued customers. The Coalition Government s Work Programme will only achieve its objectives when those employers who set out to employ people fairly and to support the Government s agenda are enabled to find suitable candidates and to get the disability specific support needed by both employer and the individual. The challenge is learning how to apply supply chain management expertise in a way which expedites the journey disabled and other disadvantaged jobseekers take as they move from benefits into meaningful employment. About Us Business Disability Forum is a not-for-profit member organisation that makes it easier and more rewarding to do business with and employ disabled people. We are the authoritative employers voice on disability as it affects business and work to the mutual benefit of business people with disabilities and society more widely. We have more than 20 years experience of working with public and private sector organisations, formerly as the Employers Forum on Disability. Our members employ almost 20% of the UK workforce and, together, we seek to remove the barriers between public and private organisations and disabled people. We are a key stakeholder for both business and government. We have contributed to the establishment and development of meaningful disability discrimination legislation in the UK.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 117 Business Disability Forum provides pragmatic support by sharing expertise, giving advice, providing training and facilitating networking opportunities. This helps organisations become fully accessible to disabled customers and employees. With our members we develop practical tools to assist them in becoming disabilitysmart. A relevant example is where we have developed a Recruitment Protocol and a Recruitment Service Provider Charter, both of which provide recruitment agencies and employers with guidelines and measures they can adopt to become disability-smart. Our pioneering Disability Standard is a measure of an organisations ability to be disability-smart. It provides a framework for confidently and effectively aligning ways of working, changing behaviour and improving decision making across organisations. The Business Disability Forum President s Group and the Technology Taskforce define policy with members and government. The Technology Taskforce is led by Chief Technology Officers who define best practice, establishing in 2010 our Accessible Technology Charter, and support other members in aligning their organisations. Declaration of Interest As a not-for-profit membership organisation with charitable status our work is funded primarily by member subscriptions, income from providing goods and services to our members and from sponsorship. Our members and sponsors include some of the organisations associated with the Work Programme: ATOS, Capita Group, Deloitte, Department for Work and Pensions, Ingeus, PWC, Reed, Remploy, RBLI and Serco Group. We work with around 400 organisations across the private and public sectors and as a membership organisation. A full list of our members is available on our website, www.businessdisabilityforum.org.uk/about-us 1 March 2013 Written evidence submitted by Crisis Introduction 1. Crisis, the national charity for single homeless people, welcomes this inquiry into the Work Programme (WP) and the experience of different user groups. 2. Crisis has a wealth of experience supporting vulnerable people into work. Within our Crisis Skylight centres, we have a dedicated employment team which helps people to prepare for, find and sustain work. We work in partnership with a range of organisations including employers, training providers, colleges and other homeless organisations, matching people to appropriate opportunities and jobs. 3. We have an excellent track record of supporting homeless people into employment. In 2011 12, Crisis supported 5,940 homeless people into formal and informal learning, 423 into paid employment, and 305 into volunteering. We also have a WP contract in the North East. 4. In addition, the Crisis Welfare Network is part funded by the European Social Fund specifically to bring small and specialist organisations together to empower them to support homeless people into suitable, sustainable and progressive employment. The Crisis Welfare Network holds regular seminars and forums across every English region for its members and also gathers the views and experience of current and former clients of its members. 5. The following response reflects Crisis clients experiences and those of the members of the Crisis Welfare Network. In particular, it draws on research 1 recently carried out by Crisis, St Mungo s and Homeless Link, exploring to what extent the WP is helping single homeless people to find work. The researchers spoke to people who are homeless across England; 81 people responded across two surveys, one by Crisis/St Mungo s and one by Homeless Link. 20 in-depth qualitative interviews were also undertaken with people experiencing homelessness and who are or have been on the WP. Summary 6. Crisis is concerned that people who are homeless are not currently being identified as such by Jobcentre Plus and so are not being placed in the correct WP payment group. Providers therefore do not receive increased payments to offer the more intensive support required to help people who are homeless into sustained employment. 7. Our experience and research suggests that homeless people s barriers to employment are not being effectively identified and assessed by WP providers. 58% of the homeless people we surveyed had not been talked to by their WP adviser about their barriers to employment. 8. We have found that standards of service received by homeless people on the WP are worryingly low and many of our clients feel they have been largely ignored by their WP providers. More than half of the homeless 1 Crisis, Homeless Link and St Mungo s (2012) The Programme's Not Working: Experiences of homeless people on the WP. http://www.crisis.org.uk/publications-search.php?fullitem=374

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 118 Work and Pensions Committee: Evidence people surveyed saw their adviser once a month or less and 58% felt that their WP adviser did not treat them with dignity and respect. 9. We do not believe the WP is delivering the kind of personalised, specialist support that people who are homeless need to get into employment. A contributory factor to this is that sub-contractors are not being effectively used to support people into employment with some smaller specialist organisations having withdrawn from the programme entirely. As an example there are now no specialist providers of homeless employment support for people on the WP in London. 10. We are extremely concerned that people s vulnerability is not being considered before they are sanctioned and that those who face the most severe barriers to employment are being unfairly punished. More than a fifth of people we surveyed had been sanctioned and lost some or all of their benefits. Homeless people are amongst the most vulnerable in society and it is very worrying that so many appear to be subject to sanctions. 11. We believe a different approach is required for those who face the most severe barriers to finding work and that the WP s funding model should be reconfigured to better reflect those barriers. 12. We are also concerned that charities, including Crisis, are in effect subsidising the WP. When organisations that are not part of the WP support homeless people into work, the Prime Contractor will still receive the job outcome payment even though they did not contribute towards helping someone find employment. As well as being unfair to the charities involved, this is a terrible waste of tax payers money. Identifying Claimants who are Homeless and their Barriers 13. Through the work of the Crisis Welfare Network and discussions with several other homelessness service providers we have learned that many people who are homeless including a number of people who are actually sleeping rough on the streets are not being identified as such by Jobcentre Plus when they are referred into the WP. 14. If people who are homeless are not being placed in the correct claimant group then WP providers will not be receiving additional payments in order to give the more intensive support that is required for helping homeless people into work. This undermines a central principle of the WP and brings a risk that providers will direct resources away from people who are homeless and towards those who need less help, and are less expensive to support, to enter work. 15. We believe Jobcentre Plus should work closely with local homelessness agencies to better understand the needs of the client group. Jobcentre Plus should have staff who specialise in working with people in housing need. 16. When reviewing a benefit claim, Jobcentre Plus staff need to be able to see whether a provided address is supported accommodation. Benefit claim forms should therefore ask people whether they are homeless and/ or live in supported accommodation, such as a hostel. 17. It would also be beneficial if DWP introduced a quick review process for cases in which WP providers believe an individual has been referred to the wrong customer group. Claimants should be quickly reassessed by Jobcentre Plus and payments to WP providers adjusted accordingly. 18. It also appears that many WP providers are not assessing other barriers that people on the WP may face. We have heard of WP providers failing to ask participants about the issues that may be making it more difficult for them to find a job. We know that many homeless people suffer problems with drug or alcohol dependency and that this is not always being identified as a barrier by WP providers. The survey we conducted revealed that 58% of homeless people had not been talked to by their WP adviser about their barriers to employment. 19. WP Prime Contractors need to be identifying the many factors that often prevent people who are homeless from entering employment. To improve their processes, we suggest WP providers, in partnership with the homelessness sector, continually review the effectiveness of their diagnostic tools; the better they understand their customers barriers to work, the easier it will be to support them to find and secure employment. Improving Standards of Service and Delivering Personalised, Specialist Support 20. We have found a mixed picture in regards to the standards of service homeless people have experienced on the WP. Some have told us that they felt they have been treated well, with respect and that it has been easy to access and talk to advisers. 21. It should also be noted, however, that this is not the case for many more than half of people surveyed saw their adviser once a month or less and 58% felt that their WP adviser did not treat them with dignity and respect. In addition, many of the people we spoke to had been largely ignored by their providers, others reported not being listened to and a range of other negative experiences. One Crisis member reported that his WP provider did not want to see him for four months. He believes that he has been treated very poorly meant to be helping me back to work, appalling that they are waiting four months to see me again.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 119 22. This is a particular problem for many people who are homeless as it often reinforces feelings of low self-worth and trust which can stem from being repeatedly let down by services in the past. It also makes it more difficult for people to build structure into their lives, which is an important part of recovering from homelessness. 23. Most of the people we interviewed and surveyed had received support with their CV, searching for work and interview training. It is particularly concerning, however, that in many cases specialist support which addresses individual need is not being delivered. Instead it seems that WP providers are taking a standardised approach, without sufficient regard or response to individual need and barriers. 24. For example, in an in depth interview, Crisis client Tom told us he was referred to an English class by his WP provider, even though he had a GCSE in English language: They did not look at what I can do but because I was black I was told to do English based on that fact that I was from Africa. 25. We have found instances where being referred to the WP has meant that people are unable to attend existing employment related courses. Homeless people that we talked to had been told that while Jobcentre Plus would have paid for these courses, their WP provider will not. As they were now on the WP, Jobcentre Plus could no longer pay for them. 26. There also seems to be much confusion amongst both people who are homeless and Jobcentre Plus in identifying who is actually on the WP. 27. In order to encourage more individualised action planning, to reflect the type of service each person needs and increase the frequency they receive it, WP providers should develop more specific minimum service offers which help people to understand what level of service they can expect. This minimum offer should not be determined by the type of benefit an individual is receiving. Payments should instead reflect the numbers of barriers individuals face when attempting to move into work. 28. It would also help if WP providers ensured that participants are aware of these minimum service offers and know where to address complaints, if these standards are not being met. Considering Vulnerability before Sanctioning 29. The number of people subject to sanctions has increased dramatically since the introduction of the WP. 2 Jobcentre Plus whistleblowers have previously suggested that those easiest to sanction, including those who have learning difficulties, are targeted. 3 30. In this context it is very worrying that such a high proportion (22%) of the homeless people on the WP that were surveyed by Homeless Link have been sanctioned. 31. We understand that DWP and WP providers see the possibility of sanctions as providing a useful motivational tool, but we are extremely concerned that a consequence of sanctioning may be to unfairly punish those who face the most severe barriers to employment. 32. We are also concerned that, given the findings of our research, it is likely that many people who are homeless have been sanctioned without receiving the support that they are entitled to from their WP provider. 33. We firmly believe that providers and Jobcentre Plus should do more to consider people s vulnerabilities before they are sanctioned. In order to help achieve this, the Department for Work and Pensions (DWP) should extend the existing Employment and Support Allowance (ESA) duty to consider an individual s vulnerability prior to raising a compliance doubt so that it also applies to the JSA (Jobseeker s Allowance) Early Access group. Reconfiguring the Funding Model to better Reflect Barriers to Employment 34. The maximum payment a Prime Contractor can receive for helping someone from the group that specifically includes people who are homeless (JSA Early Access) into sustained employment is 6,600 over a two year period. 35. A report from Off the Streets and into Work (OSW) estimates that the cost of someone remaining homeless to be 28,567 per year. 4 Moving into work can be crucial in enabling people to make a sustainable move out of homelessness. 5 Another report by the Centre for Economic and Social Inclusion for OSW estimated in 2010 that moving people in hostels into employment saves the Government 197.83 per person per week. 6 2 Corporate Watch (2012) Revealed: the punishing reality of the coalition s welfare reforms. http://www.corporatewatch.org/?lid= 4371. 3 Domokos, J. Guardian, 8 April (2011) Government admits Jobcentres set targets to take away benefits. http://www.guardian.co.uk/politics/2011/apr/08/jobcentres-benefits-sanctions-targets. 4 Fothergill, M. (2008) The right deal for homeless people, A report for Off the Streets and into Work http://www.crisis.org.uk/ data/files/admin_uploads/3xe/navigable_pdf_final_version_15042008.pdf. 5 Lownsbrough, H, Crisis and Demos (2005) Include me in: how life skills help homeless people back into work http://www.socialfirmsuk.co.uk/resources/research/include-me-how-life-skills-help-homeless-people-back-work. 6 Inclusion, prepared for Off the Streets and into Work (2010) Report of the cost-benefit evaluation of the Transitional Spaces Project, http://www.cesi.org.uk/sites/default/files/publications/osw_cost_benefit_report_transitional_spaces_project_0.pdf.

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 120 Work and Pensions Committee: Evidence 36. Given the scale of these potential savings, there is clearly a strong case for investing more in supporting those further from the labour market including offering intensive and highly specialised services. 37. We would like to see DWP change the payment structure so that providers are better incentivised to invest time and resources in supporting those who face the most severe barriers to employment. There should be recognition of how vitally important distance travelled measures are for homeless individuals journey towards employment. 38. There is also a need for a preparatory pre-work programme for those who are the least likely to succeed on the WP. This type of support is already offered by Crisis and others outside of the WP and we would like to see specific pre-wp funding made available. Role of the Voluntary Sector 39. Much of the expertise in understanding and supporting people with vulnerabilities, whether within or outside of the WP, lies with voluntary organisations, some of whom are WP sub-contractors. 40. Recent research has, however, found that sub-contractors across the WP are not receiving as many referrals as they expected from Prime Contractors 7. This is despite the Government s assertion that the WP is likely to represent an investment of several hundred million pounds in the voluntary sector. 41. This disappointing picture is borne out by Crisis Employment Services sub-contracting experience in the North East, where there have been just 16 referrals from the WP provider since January 2012. 42. Several other organisations with expertise in helping homeless people into work became WP providers in June 2011. In early 2012, however, St Mungo s left the WP after not receiving a single referral over nine months. Single Homeless Project (SHP) also withdrew, citing a lack of referrals. A recent National Council of Voluntary Organisations (NCVO) survey of charities on the WP found that 47% of respondents felt that their contracts were at risk of failure within the next six months and 26% thought they were at risk of failure before the end of their contract. 8 There is currently no specialist provider of employment support for people who are homeless available on the WP in London. 43. As involvement in the WP becomes financially unsustainable for charities, more may be forced to leave. This could mean that there is less effective support available for the most disadvantaged and those furthest from employment, as it is often these people that charities specialise in supporting. 44. We believe WP rules should be changed to ensure that sub-contractors are able to plan their services better. The Merlin Standard 9 should require Prime Contractors to give an indication of how many referrals an organisation can expect to receive when they first join the WP, so that sub-contractors can better plan their future delivery. Where actual referrals fall below these indicative volumes, prime providers should be required to give an explanation. 45. In addition to those providing specialist support within the WP, many voluntary agencies, including Crisis, continue to provide employment support outside of the WP including to clients who are on the WP. 46. Many of our clients, as well as other homeless people we surveyed and talked to as part of our research, have received very little support from their WP provider and have been encouraged to carry on accessing support from Crisis and other homelessness charities. The perverse consequence of this is that while charities continue to support homeless people into work, the Prime Contractor will ultimately be paid thousands of pounds for a job outcome they did not contribute towards, with charities effectively subsidising the WP. 47. There have been a number of occasions where Crisis have supported people into work who have effectively been parked by the WP provider. One client who has been supported by Crisis since 2010 was referred to the WP in 2012, and when his WP adviser found out he was volunteering with Crisis, effectively left him to his own devices, offering no meetings, advice or guidance. Crisis has since employed the client and the prime contractor will now get paid for the employment outcome and work that Crisis have done. 48. Crisis relies largely on charitable income and so our employment services only have a limited capacity. We are concerned that if we have to continue to subsidise the WP due to the lack of specialist services available and as demand increases, we may find ourselves in a position where we cannot support as many people as we would like and as who need our assistance. 49. We are also concerned that, without the correct, targeted support from specialist organisations, successful employment outcomes for homeless people will be few and far between. We believe Prime Contractors, Jobcentre Plus and specialist organisations should work more closely together to deliver a WP that better supports the most vulnerable and those furthest from the labour market into employment. 7 National Council for Voluntary Organisations, 2012, The WP: Perceptions and Experiences of the Voluntary Sector, http://www.ncvo-vol.org.uk/sites/default/files/sig_survey_june_2012_report_17.9.12.pdf. 8 National Council for Voluntary Organisations (2012) The WP: Perceptions and Experiences of the Voluntary Sector. http://www.ncvo-vol.org.uk/sites/default/files/sig_survey_june_2012_report_17.9.12.pdf. 9 See Merlin Standard website: http://www.merlinstandard.co.uk/.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 121 About Crisis Crisis is the national charity for single homeless people. We are dedicated to ending homelessness by delivering life-changing services and campaigning for change. Our innovative education, employment, housing and well-being services address individual needs and help people to transform their lives. As well as delivering services, we are determined campaigners, working to prevent people from becoming homeless and advocating solutions informed by research and our direct experience. Crisis has ambitious plans for the future and we are committed to help more people in more places across the UK. We know we won t end homelessness overnight or on our own but we take a lead, collaborate with others and, together, make change happen. 12 December 2012 Written evidence submitted by the Department for Work and Pensions 1. Introduction 1.1 The Work Programme was launched as planned in June 2011 throughout England, Scotland and Wales, providing personalised back to work support for long-term unemployed people and for others with significant barriers to employment. 1.2 The Work Programme is designed to give these hardest-to-help groups longer-term support than previous provision, with individuals staying on the Programme for 24 months. This recognises that people with poor work records and other significant barriers to overcome often need substantial support over a sustained period to help them move back to work support that continues even after they have started employment. 1.3 The latest figures for referrals and attachments published on 7 November 2012 showed that 837,000 people had joined the Programme by 31 July. However the large majority of the people who had joined the Programme during that period had been with their provider for less than one year and, as providers are able to claim an outcome for up to two and a half years after a person joins, it is too soon to judge the performance of the programme. In particular, it is too soon to judge performance by job outcomes alone. The Work Programme only rewards providers when participants stay in work and off benefit for a sustained period six months for most; three months for the harder to help so most participants, even if they are in work, have not been on the programme long enough to appear in the official job outcome statistics that were published on 27 November. For these reasons the Department for Work and Pensions (DWP) is also looking at evidence from benefit records and from providers records of job starts to judge performance in the pipeline. 1.4 These records show that participants are moving off benefit and into work. For example, 56% of the people who joined the Programme when it started in June 2011 have had a break in their claim, with the majority being in work. Providers had recorded over 200,000 job starts to the end of September. There is every expectation that this evidence that participants are leaving benefit and starting work will translate into increased job outcome performance. 1.5 Where possible, the evidence provided by the Department seeks to address the individual lines of inquiry that the Work and Pensions Select Committee are particularly interested in, but with the major caveat that it is too early to judge the overall performance of the Programme or to answer detailed questions about its operation. This memorandum covers each point of interest in turn. 2. The Differential Payments Model [The Committee is interested in the extent to which the payment model is incentivising providers to help all participants and thereby addressing creaming and parking ; how effectively the model reflects claimants relative needs; and variations in job outcomes between the different payment groups.] 2.1 The job outcome statistics published on 27 November show differences between the main payment groups, with those on Jobseeker s Allowance (JSA) more likely to achieve job outcomes than those on Employment and Support Allowance (ESA). There are several possible factors or combinations of factors that could explain these differences, including the comparative difficulty of helping people with very significant barriers to employment particularly in difficult labour market conditions. It is too early to determine whether or not the payment model itself is right. The differential payment model was designed to offer very real incentives to support the harder to help groups, with providers able to earn up to 13,600 for getting Employment and Support Allowance recipients into sustained work compared to 3,800 for a young jobseeker. In particular, the payment model ensures that providers can only make a reasonable return on their investment if they genuinely help all their participants; in other words creaming and parking will not pay. 2.2 To further ensure that providers are delivering at least the minimum standard of service they promise for each participant, the Department conducts a monthly survey of a sample of claimants from each contract, requiring providers to rectify any shortcomings identified. 2.3 The report on the first phase of qualitative evaluation of the Work Programme published on 27 November noted some evidence that participants with the most severe barriers to employment were seen less frequently.

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 122 Work and Pensions Committee: Evidence However the report pointed out that less frequent contact is not necessarily indicative of lower quality or less appropriate support, and that this was an issue that requires further monitoring during evaluation. The report also noted that specialist provision for those with particular barriers was considered to be functioning effectively. 3. The Prime Provider Model [The Committee is interested in the model s impact on subcontractors; and the extent to which it helps ensure that participants receive services tailored to their particular needs.] 3.1 The Department is keen to promote healthy supply chains in which sub-contractors are supported and treated fairly by prime providers. To that end the Department supported the development of the Merlin Standard, an independently managed accreditation standard that all Work Programme providers were required to apply for in the first year. 3.2 All primes achieved the required standard. As well as seeking input from subcontractors during the accreditation process, Merlin offers a confidential advice and mediation service for any supply chain organisation experiencing problems with their prime. 3.3 The Department conducts regular supply chain stock takes which show that, apart from a small amount of churn, the numbers of private, public and voluntary sector organisations in the Work Programme supply chain has remained fairly constant. The July 2012 stock take showed 785 (down by 24 (3%) since the January stock take) different organisations listed in the Work Programme supply chains, of which; 368 (47% of total compared to 45% in January) are from the voluntary and community sector, up by five in net terms from January stock take; 125 (16%, of total compared to 17% in January), are public; and 292 (37% of total compared to 38% of total at January) are private, a net drop of 16. 4. The Level of Service [The Committee is interested in the service provided to participants in different payment groups including: whether minimum service delivery standards have been specified in sufficient detail by providers and DWP; and the rigour and effectiveness of DWP s monitoring and complaints procedures.] 4.1 Unlike previous programmes, the Work Programme does not have prescriptive elements where providers are paid for delivering centrally designed processes. So, the Department has required all providers to set out their minimum service delivery standards so that each participant knows what to expect, without prescribing the standards themselves. To do so would have missed the point that service delivery needs to be as flexible as possible to meet the needs of individuals and to fit with each provider s delivery model. 4.2 The Department requires all providers to operate an open and accessible complaints process that participants can use if they feel they are not receiving the promised standard of service or if they have concerns about any other aspect of the support they are receiving. The Department believes that it is right to expect providers to seek to remedy complaints so that they can get their relationship with participants on to the right, positive footing. However, if complaints are not resolved to a participant s satisfaction they can be escalated to the Independent Case Examiner (ICE) who has powers to charge providers up to 5,000 towards the cost of the ICE investigation if they are found to be at fault. 4.3 Up to the end of October 2012, ICE had received a total of 209 complaints of which 165 have been cleared. Of the remaining 44 cases, 17 are currently with a case officer under investigation or attempting resolution, 17 are awaiting investigation and 10 are awaiting a gateway decision as to whether the complaint can be accepted for investigation by this office. Of the 165 cases cleared, 153 complaints went to ICE prematurely, seven were investigated (all not upheld), two complaints were resolved, two withdrawn and one was referred to Merlin mediation. 5. The Black Box Approach to Service Delivery [The Committee is interested in whether the black box approach is proving to be effective in fostering innovative and personalised interventions for claimants in all payment groups; and DWP s role in monitoring this.] 5.1 In procuring the Work Programme the Department took steps to attract bids from a wide range of organisations from the public, private and voluntary sectors including several with experience of delivering employment programmes in comparable labour markets abroad. Similarly, the Department encouraged successful bidders to engage as wide a range of sub-contractors as possible in order to ensure provision meets the varied needs of individuals and the local labour market. 5.2 This led to a rich mix of prime providers and subcontractors and a wide range of delivery models. Others will judge the extent to which these are innovative the Department s primary concern is that the programme should support as many people as possible into sustained employment. To that end no delivery model should

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 123 be regarded as fixed. Indeed, providers are actively encouraged to adapt their delivery models in the light of lessons learned from experience and as circumstances in the economy change. 5.3 Providers must seek the Department s approval for any changes to delivery models. However, as the onus is on providers to use initiative and innovation to deliver the best performance, the Department would normally agree changes that didn t impact minimum service standards and that didn t breach fundamental principles, for example that the service should be free to participants. 6. Regional Variations [The Committee is interested regional variations in job outcome statistics: including whether competition between providers is driving up performance in contract package areas where the economy is particularly depressed; and how provider performance could be improved in these areas.] 6.1 The job outcome statistics published on 27 November showed some variation between contract package areas, and some variation between providers within contract package areas. However this picture is volatile, making it particularly difficult at this very early stage to ascribe variation to different labour market conditions or provider performance. 7 December 2012 Letter to the Chair of the Committee from Mr Mark Hoban MP, Minister for Employment, Department for Work and Pensions When I appeared before the Work and Pensions Committee on 20 March 2013, your committee suggested that we produce statistics on a more regular basis. You will be pleased to know that David Frazer, DWP s Head of Profession for statistics, informed me yesterday of the updated plans for publishing official statistics about the Work Programme. DWP now plan to publish the next set of Work Programme statistics on Thursday, 27 June 2013 and then quarterly from this point onwards. The release on 27 June includes referrals, attachments and job outcomes up to the end of March 2013. In order to provide data to the end of the financial year in this release, publication has been put back from the previously announced date of 28 May 2013. This letter is to give you early sight of this change, which aims to meet the needs of users for more frequent and timely publication of these statistics. I attach a copy of the letter from David Frazer to me on this subject as an annex. 10 He will be happy to respond to any questions you may have in relation to this statistical release. 23 April 2013 Executive Summary Written evidence submitted by DrugScope and Homeless Link DrugScope and Homeless Link are membership organisations whose member agencies provide treatment, support and accommodation to some of the most excluded individuals in society. Both see value in the Work Programme and want to see it meet its objectives. We believe that by making the following changes, the Programme will deliver better results for the most vulnerable and better results for society. These are: 1. Increased payment or a new client group for those furthest from the job market including people who disclose as drug and/or alcohol misusers and/or homelessness. 2. Allow reviews of referrals that appear to be in the wrong Jobseeker s Allowance (JSA) group. 3. Better communication between Jobcentre Plus, Programme providers and treatment non-supply chain services including treatment providers and homelessness agencies. 4. Co-ordinate the Work Programme with overlapping initiatives eg Troubled Families, drug payment by result (PbR) pilots. 5. Consider vulnerability before requesting a benefit sanction. 6. In the event of a sanction being applied, ensure that claimants have access to the information and support they need. 7. Strengthen assessment and diagnostic tools. 8. Introduce interim outcomes for the very furthest from the job market. 9. More specific prime contractor minimum offers or a national minimum standard offer. 10 Annex not printed

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 124 Work and Pensions Committee: Evidence 10. Department for Work and Pensions (DWP) to do more to promote good and effective practice among Programme primes and subcontractors. 11. Greater emphasis on support for self-employment and social enterprise. Introduction 12. DrugScope is the leading UK charity supporting professionals working in drug and alcohol treatment, drug education and prevention and criminal justice. It is the primary independent source of information on drugs and drug related issues. 13. DrugScope has over 400 members, primarily treatment providers working to support individuals in recovery from drug and/or alcohol use, local authorities and individuals. Its member agencies are amongst those providing support to over 200,000 people receiving community and residential treatment, plus harm prevention, advice, education and related recovery services. 14. Homeless Link is the national umbrella organisation for front line homelessness services in England. It is the national centre for information on homelessness and works to improve services for homeless people and campaigns for policy changes that will help end homelessness. 15. Homeless Link has over 500 members including day centres, outreach services, hostels, supported housing, floating support through to employment, education and training services. Its member organisations help support around 70,000 homeless people every year. 16. Approximately 80% of problem drug users (ie those dependent on heroin and/or crack cocaine) are not in paid employment, 11 the corresponding figure may be above 90% for people in homelessness hostels. 12 Whilst this reflects particular difficulties faced by these groups in engaging in the current job market, there is clearly scope for these figures to improve. 17. DrugScope and Homeless Link recognise that work can be a determining factor in enabling individuals in their recovery and to move towards social integration and financial independence. Both welcome the Department for Work and Pensions 2012 Social Justice Strategy 13 including the commitment to provide tailored support to help the most socially excluded into sustainable, paid employment and in particular would highlight the increased prominence given to training and employment in the 2010 Drug Strategy. 14 Involvement in the Work Programme by Sector 18. Whilst neither sector has an agency delivering as a prime contractor, both the substance and homelessness sectors are represented in Work Programme supply chains, generally but not exclusively as Tier 2 or specialist subcontractors. 19. From the most recent supply chain information made available by the Department for Work and Pensions, 15 there are specialist services from the substance sector on supply chains in 15 out of 18 contract package areas (CPAs). There appear to be agencies with expertise in homelessness or housing in 9 out of 18. 20. A number of agencies from the homelessness sector in particular have withdrawn from the Work Programme including SHP 16 and St Mungo s 17 in London. 21. Trust for London has funded DrugScope s London Drug and Alcohol Network Employment Pathways Project to work to improve employment outcomes for people with histories of substance misuse; this has included working closely with the six London Work Programme prime contractors amongst other services. 18 About this Evidence 22. This submission has been developed following separate surveys carried out by DrugScope and Homeless Link, which gathered detailed responses from over 100 Work Programme participants, and by the work with member agencies and service users that both organisations engage in on a day to day basis. 23. A summary of the findings of DrugScope s survey can be found on its website. 19 24. The findings from Homeless Link s survey are incorporated in a joint report produced by Crisis, Homeless Link and St Mungo s, which is available on its website. 20 11 http://www.ukdpc.org.uk/publication/getting-problem-drug-users-back-into-employment-employer-provider-service-userperspectives/ 12 http://www.mungos.org/actionweek/be_part_action_week_2010 13 http://www.dwp.gov.uk/docs/social-justice-transforming-lives.pdf 14 http://www.homeoffice.gov.uk/publications/alcohol-drugs/drugs/drug-strategy/drug-strategy-2010?view=binary 15 http://www.dwp.gov.uk/docs/wp-supply-chains.xls 16 http://www.shp.org.uk/story/shp-withdraws-work-programme 17 http://www.civilsociety.co.uk/finance/news/content/12395/st_mungos_withdraws_from_work_programme 18 http://www.ldan.org.uk/employment.html 19 http://www.drugscope.org.uk/policy+topics/workprogramme2012 20 http://homeless.org.uk/news/work-programme-not-working-homeless-people

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 125 The Differential Payments Model 25. DrugScope and Homeless Link broadly welcome the introduction of a differential payments model and acknowledge that it may go some way towards discouraging the creaming and parking seen in some previous active labour market interventions. 26. However, in mostly using benefit type as a proxy-indicator for barriers, the DWP has missed an opportunity to align the incentive much more closely with need and risks undermining the principle that the Programme should specifically be of use to those furthest from the job market. The current payment model which appears to assume that the needs and barriers of most people on a given type of benefit will be similar does not reflect reality and consequently, creaming (and of particular concern) parking within groups seems inevitable. 27. DrugScope and Homeless Link welcome the variation aiming to counter this, the Jobseeker s Allowance Early Access customer group, which provides for early entry to the Programme for people who have experienced a number of issues, including homelessness and histories of drug and/or alcohol use. 28. This customer group also provides for a larger payment as part of the effort to align incentives and need. In our recent client surveys, 54% of homeless respondents and 43% of respondents with histories of drug use saw their adviser once a month or less; it is not clear that these customers are getting the level and quality of service expected. Treatment and support providers confirm that the predominant experience is one of infrequent appointments and little support. 29. However, it should also be noted that for this group, anticipated payments per participant using DWP s indicative expectations are lower than for other customer groups at under 800 per person, compared to over 1000 for others. 21 30. To think of the costs of homelessness and addiction in purely financial terms is inherently imprecise, but relevant to the principles of the DEL:AME switch, which can broadly be thought of as investing to save. A 2008 report by the New Economics Foundation for Business Action on Homelessness 22 found the annual cost to the state of each homeless person to be in the region of 26,000. The cost of drug dependency is more difficult to ascertain, but in 2012 the National Treatment Agency (NTA) estimated the total cost to society of drug misuse as being in the region of 15 billion. 23 31. Experience so far has shown that for the furthest from the job market, the maximum payment on offer to providers of just under 7,000 (before the application of any discounts) is insufficient to provide an effective service, and may not provide a strong enough incentive. Crucially, it also fails to reflect the potential cash savings to society in the event of a homeless person or person with a history of addiction being supported into work by investing more money now, society can quickly make substantial savings. 32. Furthermore, people who are homeless or who have histories of drug misuse are not consistently being identified as such and are consequently often placed in one of the mainstream JSA groups, giving Programme providers an incentive that is weaker still. The relatively low payment and frequent non-identification or nondisclosure undermines the policy objectives stated in the 2010 Drug Strategy 24 and runs counter to principles of the Work Programme to provide more personalised help and that providers are expected to handle the journey into work and the early stages within a new job when those hardest to help are in the most fragile position. 25 33. We believe that it would be beneficial to people eligible for but not referred as JSA Early Access if a review process for referrals was to be implemented; at the moment, too much depends on Jobcentre Plus (JCP) getting the referral route right. As a bare minimum, communication between JCP and providers needs to improve and ideally warm handovers adopted. DrugScope welcomes the new joint working protocol developed between the National Treatment Agency, DWP and Work Programme providers 26 but will be watching keenly for signs of operational improvement. Homeless Link urges DWP to consider an equivalent protocol for the homelessness sector. The Prime Provider Model; its Impact on Subcontractors and Provision of Tailored Services 34. As referred to in paragraph 21, a number of agencies from the homelessness sector have withdrawn for reasons including a lack of referrals. Fewer agencies from the drug and alcohol sector have withdrawn, but again, referrals have not yet met reasonable and informed expectations. This is particularly concerning as the implication is that a substantial store of accumulated expertise across the two sectors is not being accessed. 35. Onerous and potentially costly contracting arrangements make it difficult for smaller projects to take part even when their activities and outcomes could be of interest to providers; this is of particular relevance in 21 http://lseo.org.uk/sites/default/files/downloads/work_programme_report.pdf and http://lseo.org.uk/sites/default/files/downloads/ Work_Programme_report.pdf 22 http://www.bitc.org.uk/document.rm?id=8850 23 http://www.nta.nhs.uk/uploads/whyinvest2final.pdf 24 http://www.homeoffice.gov.uk/publications/alcohol-drugs/drugs/drug-strategy/drug-strategy-2010?view=binary 25 http://www.dwp.gov.uk/newsroom/ministers-speeches/2010/02 06 10.shtml 26 http://www.nta.nhs.uk/uploads/joint-workingprotocolwithjcp.pdf

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 126 Work and Pensions Committee: Evidence London where a provider might need to engage with all six primes and potentially deliver according to six different models. 36. More generally, the current lack of transparency within the Programme makes it difficult to assess the extent to which specialist support is being offered. From our work with front-line substance and homelessness agencies, we have a significant degree of concern that specialist services are not being offered to a large extent, a concern echoed in DWP s initial qualitative evaluation of the Programme. 27 37. The evaluation referred to above includes the suggestion that referrals to non-supply chain providers are common, possibly because they are in effect free of charge to the Work Programme provider. Whilst we recognise that the Work Programme is explicitly designed to co-exist with other services, member agencies of both DrugScope and Homeless Link have raised concerns that they are, in effect, subsidising the Programme through their own activities and funding. 38. With regard to the drug sector in particular, the potential move to a PbR model could include training or employment as outcomes; approaches to treatment and recovery are currently being piloted in eight locations. DrugScope believes that if Work Programme providers work more closely with treatment providers, this model can provide additional leverage. Currently, some effective coordination and communication takes place at a local level, but it is extremely inconsistent, even within CPAs. 39. A cause for concern is the apparently disproportionate use of sanctions on the most vulnerable. DrugScope and Homeless Link accept that the Programme is, once joined, mandatory and that as such, conditionality and sanctions will remain part. However, Homeless Link s research indicated that 22% of homeless people on the Work Programme had been sanctioned, the corresponding figure from DrugScope s survey being 44%, the second in particular being substantially above the norm for the Programme as a whole. Many of the people sanctioned reported that the reasons related to causes such as appointments they hadn t been informed of, clerical error, or appointments they had had to move due to other commitments, eg a meeting with probation or an appointment with a healthcare provider. 40. Some of the personal barriers and characteristics that disadvantage people in the job market may make it difficult to engage in a structured programme, and consequently the duty to consider any additional vulnerability before requesting a sanction should be extended from Employment Support Allowance (ESA) claimants to JSA Early Access customers. 41. From discussions with agencies around the country, we also believe that sanctions are having unintended consequences that go beyond the policy intent due to sanctioned claimants receiving incorrect or incomplete information about eligibility for housing benefit when sanctioned. It appears that people are not routinely informed that they may still be eligible for housing benefit, meaning that their accommodation may be put at risk, or if in a hostel, they may be unable to move on due to arrears. Services in the homelessness and substance misuse sectors have a role in ensuring their clients receive accurate welfare benefit advice, but we believe that DWP and in particular Jobcentre Plus could do more to reduce, for example, the risk of homelessness and ultimately destitution. 42. In order to better understand the barriers an individual may face and the support needs they have, Programme provider diagnostic tools should aim to capture more information than they currently do. Where prime contractors have shared their diagnostic tools, the quality is variable. A consistent pattern is that barriers that may appear to be difficult to discuss, including substance use, housing needs and mental health are approached obliquely. Surveys by DrugScope and Homeless Link both indicated a pattern in which up to 50% of respondents felt that their provider had not taken full account of issues including substance use, accommodation, mental health, physical health, debt and offending history, with particularly low satisfaction around mental health needs. The Level of Service Provided to Claimants in Different Payment Groups 43. As above, DrugScope and Homeless Link have concern that clients of their member agencies are often seen infrequently by Programme providers and that a substantial minority report low levels of satisfaction that their support needs and barriers have been thoroughly assessed. 44. In some cases, the level of service has been so low that one conclusion could be that diagnostic tools, rather than being used to identify barriers and develop an action plan, are in fact being used to triage customers out of the building, leading to the frequently referred to problem of parking those furthest from the job market off the Programme and without employment support. Conversely, DWP s Research Summary referred to above 28 confirms that some providers may be concentrating resources on those nearest the job market. 45. In any active intervention of this sort, it is inevitable that a significant proportion of customers will fail to find employment, and that some of those people may be such a distance from the job market that providers will need a different kind of incentive to work with them in the likely absence of a job outcome payment. In the case of people with significant histories of drug and/or alcohol use or with histories of homelessness and rough sleeping interim outcomes using a distance travelled methodology would add value and improve 27 http://research.dwp.gov.uk/asd/asd5/summ2011 2012/821summ.pdf 28 http://research.dwp.gov.uk/asd/asd5/summ2011 2012/821summ.pdf

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 127 their prospects of eventually moving into paid employment, even if beyond the two year duration of the Work Programme. The black box approach specialist support, innovation and monitoring 46. It would not be abandoning black box principles for DWP to require of providers that they make more specific minimum service offers. 29 Whilst some minimum service offers have reasonable levels of specificity, others do not, and appear to be aspirational in nature. An example would be to reframe we will keep in regular contact with you with a more robust commitment to do so at particular intervals and by specified means. We note that in comparable systems elsewhere, including in Australia, national minimum standards apply. 47. The black box approach was broadly welcomed as a means of driving innovation and shifting the focus from process to outcomes. In reality, whilst DrugScope and Homeless Link are aware of and take an interest in some genuinely exciting and innovative provision, many areas of Work Programme activity eg CV preparation, confidence and motivation, assisted job search, interview coaching and so on seem strongly reminiscent of the type of support provided under predecessor initiatives. 48. A concern about the black box approach is that good practice and innovation is not yet being shared for beneficial purpose. Commercial considerations may tend to make providers reluctant to share information about successful services; DWP has an over-riding interest in finding a balance between being fair to its suppliers and disseminating effective practice. There is the risk in designing black box models that some necessary control is surrendered there should be a balance in the levers DWP retains to achieve policy objectives. 49. As referred to above, DrugScope and Homeless Link have learned from their respective surveys and conversations with their member agencies that often, those furthest from the market are not receiving a tailored and personalised service at all, but only very intermittent contact. Without firmer minimum offers to hold providers to, there is the risk that the black box becomes a mechanism that hides a poor quality service. 50. We acknowledge that the emphasis on black box has shifted at various points, most recently being referred to by Mark Hoban MP, Minister of State for Work and Pensions as a perspex box 30 we would welcome a commitment by DWP to promote effective practice and to support the Work Programme brand through greater transparency. Regional Variations in Job Outcomes 51. This lies beyond the areas of expertise of DrugScope and Homeless Link, although we have noted that broadly speaking the Programme fares worst in areas that have been particularly badly affected by the economic downturn of the last four years. Responses to both surveys indicate that some Programme participants feel that they are not getting support to become self-employed or to establish a social enterprise. Further support around enterprise and innovation may be useful in generating vacancies in a locally depressed job market. 7 December 2012 Written evidence submitted by the Employment Related Services Association 1. Introduction 1.1 The Employment Related Services Association (ERSA) is the trade body for those delivering or with an interest in employment related services. ERSA represents 17 of the 18 prime contractors for the Work Programme, covering over 95% of the market by contract value, alongside a large and growing number of subcontractors. ERSA s membership spans the private, voluntary and public sectors and it is this diversity that gives ERSA the authority to speak on behalf of the entire welfare to work sector. 1.2 This response has been developed following extensive consultation with ERSA s membership. It is informed by qualitative evidence from all members, plus quantitative evidence collected from all 18 of the Work Programme prime contractors in November 2012. This included data on referrals, attachments, job starts, job outcomes and sustainments for all monthly cohorts up to and including September 2012, broken down by payment group, provider and contract package area (CPA). An analysis of this information is attached to this submission for information. 1.3 The response covers the main areas of focus of the inquiry, including the differential payment model, the prime contractor model, level of service to participants, the black box approach and the possibility of regional variations. 2. Work Programme Performance Statistics 2.1 The Government published official statistics for the Work Programme on 27 November 2012. These show that just 31,000 jobseekers have stayed in work for at least three or six months out of 878,000 referrals. 29 http://www.dwp.gov.uk/docs/provider-minimum-service-delivery.pdf 30 Comment to meeting of Work Programme stakeholders, 7 November 2012.

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 128 Work and Pensions Committee: Evidence However, the Committee is asked to note that official data is likely to be of limited use to the Committee as it only covers the period up to the end of July 2012 and reports on job outcome and sustainment payments alone. This means that government data, in effect, only captures information on jobseekers who started work through the Programme up to the end of January 2012. The figures do not give information on participants who were referred to the Programme up until January 2012, but who have achieved a job outcome since that date, or information on participants joining the programme after January 2012 who have since entered employment. 2.2 The Committee will therefore note that the period for which the government outcome data covers is in reality June 2011 to end January 2012. This was the start up period for the Work Programme, which was marked by huge TUPE flows, and which also coincided with the double dip of the recession. The ERSA data shows clearly that the seasonal dip that is always experienced by the industry in December, started earlier in 2011 and was deeper than is usual, indicating the recessionary affect. 2.3 In recognition of the limited use of the official Government statistics, and to aid the industry in understanding its own performance levels, ERSA has been collecting its own performance information from across all 18 prime contractors. Of particular interest to the Committee will be its job start data (the number of jobseekers who have entered a job). This shows that 207,883 people on the Work Programme have found work up to the end of September 2012. The figures show considerable month on month improvement with the industry placing 10,000 people into work in February 2012 and more than 22,000 people into work by September 2012. This indicates continuous performance improvement across 2012 and promises better job outcome statistics in future government releases. 2.4 It is worth the Committee noting the misapprehension that underpins the assertion that Work Programme is worse than doing nothing. 31 This is based on an estimation that 5% of the total number of referrals would have found work without support from the Work Programme (the so-called non-intervention rate) compared to the actual overall performance figure of 3.2%. These non-intervention rates then fed into the setting of a minimum performance levels by the Government. However, it must be noted that the non-intervention rates were based on a set of assumptions made in 2010. Although the methodology underpinning these assumptions has never been publicly shared, the industry is aware that they did not take into account variations in geography or time and were overoptimistic about economic growth in 2011and 2012. The Office for Budget Responsibility (OBR) forecast at the time the non-intervention rate was set predicted economic growth in 2012 to be 2.6%. 32 However, the latest OBR figures predict that the economy will contract by 0.1% in 2012. 33 The 5% nonintervention rate should therefore be treated with a great degree of caution. 2.5 Not only is the performance measure sensitive to changes in the economy, but it is also sensitive to fluctuations in referral numbers. Performance is measured by dividing the total number of job outcomes by the number of people who are referred in the same period to develop a percentage ratio of those who have achieved sustainable employment. One of the implications of this is that more referrals will tend to bring down performance figures. In the first year of the Work Programme there were 780,000 referrals, some 175,000 above DWP initial forecasts, which have made it harder for providers to hit their targets. Furthermore, referrals have varied significantly over time and between different CPAs, which has had had a bearing on performance metrics, regardless of the individual performance of providers. Providers operating in multiple CPAs have reported perverse incidences whereby their best performing CPAs appear to be performing poorly due to an increase in referrals. Conversely, a fall in referrals will in effect improve a provider s performance regardless of the quality of support in helping participants into sustained employment. 3. The Differential Payment Model and Jobseekers on ESA 3.1 ERSA believes that the differential payments model, which is central to the design of the Work Programme, is an improvement on previous schemes and has the potential to give providers access to additional resources. However, it relies heavily on benefit type as a means for determining into which payment group a jobseeker should be placed and therefore what resources a provider potentially can achieve to help that individual into sustainable employment. Whilst it can be reasonably assumed that most people on Employment Support Allowance (ESA) will be further from the labour market than those on Jobseeker s Allowance (JSA), this is not always the case. Providers report that a significant proportion of those on JSA also have a health condition, which has sometimes previously been undiagnosed. 3.2 The Committee should note that the financial realities of managing payment by results contracts means that providers look at the overall amount of resource available to support jobseekers. Put simply, if a provider works with nine jobseekers falling into the ESA ex-incapacity Benefit category (who may have been unemployed for a long period) and manages to get three of those into work, they will have a total of 40,650 to cover the cost of working with all nine, meaning they have in effect 4,516 to spend on each jobseeker. This is considerably lower than the 13,550 figure that is often quoted. 31 See Iain Duncan Smith s Work Programme worse than doing nothing, Daily Telegraph, 27 November 2012, http://www.telegraph.co.uk/news/politics/9706074/iain-duncan-smiths-work-programme-worse-than-doing-nothing.html 32 OBR forecast, June 2010, http://budgetresponsibility.independent.gov.uk/wordpress/docs/junebudget_annexc.pdf 33 OBR forecast, December 2012, http://cdn.budgetresponsibility.independent.gov.uk/december-2012-economic-and-fiscaloutlook23423423.pdf

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 129 3.3 782,000 individuals, or 89% of the number of referrals to the Work Programme, have been referred via only three of the nine payment groups, including JSA 18 24, JSA 25+ and JSA Early Access. 34 The scope of barriers faced by individuals in these Payment Groups is extremely varied. JSA 25+ alone comprises 44% of total referrals, or 390,000 individuals, and can include jobseekers with many different needs. The advantage of the black box means that providers have the flexibility to respond to those needs, but they are still constrained by the amount of resources available. ERSA believes that in the development of future programmes, providers and the Government should work together to develop more sophisticated segmentation tools that can accurately determine a person s distance from the labour market and in turn, provide the evidence needed to develop a more sophisticated differential payment model. 3.4 The Committee will note that performance for participants on ESA has to date been lower than for participants on JSA. This was anticipated given the wider challenges for jobseekers on ESA in the labour market and the length of time it is likely to take some ESA jobseekers to achieve sustainable work put simply, they were less likely to achieve a job outcome in the short period to which the official government figures relate, thus justifying the decision to allocate two years to work with jobseekers. However, it also likely that this group will have been more disadvantaged than others by the recession which is a concern. This is reflected in DWP figures that show only nine per cent of people in the Work Related Activity Group (WRAG) were in employment 12 18 months after making their claim. 35 However, the Committee should note that referrals to the Programme of jobseekers on ESA have also been far lower than anticipated and therefore it may be too soon to make judgements on ESA performance. The Committee should also note ERSA s job start data which shows that 10% of referrals of Payment Group 6 (ESA Flow) referred in June 2011 have now found work. 3.5 ERSA is aware that there may be a danger on any employment programme of some level of gaming, regardless of who is delivering support. However, the term parking is subjective given that providers will work with jobseekers in different ways and that jobseekers respond to different types of support. Furthermore, parking should not occur given that all providers are signed up to delivering minimum performance standards. 3.6 At present, evidence for parking is anecdotal rather than conclusive. ERSA would caution against using the official statistical data as evidence for parking given that performance is building in the pipeline and it is less likely that those furthest from the labour market would achieve a job outcome in the short period of time to which the data relates. ERSA analysis of the people who entered a job in September 2012 shows that people who were referred at the beginning of the Work Programme are still being found employment over a year later, indicating that people referred in earlier cohorts are still being supported into work. In addition, the Programme is showing a strong growth in subsequent (ie, second, third, etc) job starts, which indicates that when people have not managed to enter into a sustainable job, they are being helped again into another role. The number of short term jobs in the economy and the impact on both jobseekers and providers is proving a significant factor in the Work Programme. 4. The prime contractor model 4.1 Work Programme prime contractors use a network of supply chain partners to deliver support tailored to the needs of jobseekers. This model gives providers flexibility to adjust to changing circumstances. However, the model has presented challenges for some subcontractors given their reliance on prime contractor for referrals and information. 4.2 One persistent problem has been the low level of referrals of jobseekers on ESA partially due to problems with the Work Capability Assessment. Prime contractors were anticipating 30% of referrals to be ESA and therefore developed supply chains with partners who were in the best position to provide support, many of whom are from the voluntary sector. In reality, referrals have been closer to 9% and therefore ESA referrals have not flowed down to partners as expected. 36 4.3 ERSA has been working closely with the market to strengthen the relationships between employment services providers. Relationships are working well where prime contractors are sharing performance data with their supply chain, ensuring essential information is communicated to subcontractors in a timely fashion and that subcontractors are supported in building their capacity. 37 However, there are also challenges including the cuts the third sector is experiencing overall, the challenges of a payment by results model and the variation in referrals from that the Government set out in its tender documentation. 5. The Level of Service Provided to Participants 5.1 All prime contractors have developed Minimum Service Delivery statements that are communicated to jobseekers by Jobcentre Plus before referral. Providers are under an obligation to ensure that jobseekers are aware of what service they should expect on the Work Programme. 34 DWP statistical release, 7 November 2012 35 DWP, Work Capability Assessment Independent Review Year three, November 2012, pg. 35. http://www.dwp.gov.uk/docs/ wca-review-2012.pdf 36 DWP statistical release, 7 November 2012 37 For further information please see the ERSA, ACEVO, NCVO report, Perfect Partners: strengthening relationships within employment services supply chains, July 2012

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 130 Work and Pensions Committee: Evidence 5.2 However, there is variation between the prime contractors in terms of the Minimum Service Level statements, with some very detailed and specific, whilst others are more thematic. In future commissioning exercises, ERSA would support an examination of measures to bring about greater consistency and visibiliy. However, it is vital this does not tie provider hands or become a meaningless tick box exercise. 5.3 The Committee is asked to note that the Minimum Service Delivery standards are just that minimum standards. The type of service provided can vary greatly between jobseekers depending on their differing needs and the different delivery models of providers. The opportunity now exists to undertake some level of sharing of good practice, while understanding that the Work Programme has been set up on essentially competitive lines. 6. The Black Box Approach 6.1 In the past, employment programmes were sometimes too prescribed and did not allow providers to take into account the specific barriers an individual may face in gaining employment. The programme design of the Work Programme allows providers to develop flexible interventions, tailored to the needs of jobseekers and is an advance on predecessor programmes. Furthermore, jobseekers are on the programme for a maximum of two years allowing providers to gain a fuller understanding of the sorts of barriers an individual faces and an opportunity to try out different interventions. 6.2 A number of ERSA members are now collecting information detailing the level of need amongst participants, including literacy and numeracy levels and the prevalence of health related conditions. This in turn helps providers take advantage of the black box in order to develop more effective solutions to help jobseekers. In essence this means the industry better understanding what interventions help particular types of jobseekers at different points along the journey back to work. 6.3 However, the industry has faced a number of challenges since the Work Programme went live that has affected the drive for innovation. This means that the first six to nine months of the programme s live running was dominated by the TUPE flows between providers and the efforts of setting up a programme in areas where a substantial number of providers had no previous footprint. However, contract length means that providers are able to make adjustments to their models and supply chains and to experiment more as they gather greater information. ERSA expects this to increase over the life of the Work Programme. 6.4 The Work Programme operates under a tight financial model and so combining funding and services delivered and commissioned by other government departments, agencies and levels of government will be a key way to introduce more innovation to Work Programme delivery and help increase the quality of support to jobseekers. This makes logical sense given the impact a sustainable job may have in up-skilling the workforce, reducing reoffending, improving health outcomes, reducing crime and benefiting local communities. 6.5 Government has made some headway with this by introducing a ninth customer group onto the Work Programme for prison leavers as well as introducing employment and reoffending pilots that reward providers for not only getting somebody into work but also reducing reoffending. 6.6 Far more could be done to link skills funding to the Work Programme. Providers report that many jobseekers on the Work Programme struggle with numeracy and literacy skills. Some providers have been able to access resources within their own organisations or form partnerships with training providers. However, the existence of parallel commissioning processes for employment and skills is undeniably a barrier to join up of service delivery in these areas. 6.7 Better co-ordination between local authorities and Work Programme providers is another area that would allow for more innovation. There are examples of this happening, for example by pooling together Work Programme funding and Community Budget funding to reduce worklessness. However there can be mistrust between providers and councils. In future provision, we would recommend that local authorities are given a more central role before or at the commissioning stage which would help to lay the foundations for more innovative partnerships. 6.8 Of particular concern is the level to which voluntary sector providers of local services previously accessed by jobseekers have been hit by public sector funding cuts. In some cases, those voluntary sector organisations have understandably looked to Work Programme providers to provide payment for their services given that this is a payment by results programme. However, the finances of the Work Programme were predicated on the Work Programme payment structure being able to be combined with other funding streams. If those other funding streams are drying up it is highly unlikely that the Work Programme finances will be able to replace them. 7. Regional Variations 7.1 ERSA has undertaken analysis of performance data to see whether regional economic variations are evident. The picture is complex. Performance is lower in some of the former industrial areas in the North of England vis-a-vis many CPAs in the South, as might be expected. However, there are some CPAs which cover some areas of depressed economic activity that are doing better than might have been expected. In addition,

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 131 some CPAs that cover predominantly rural areas for instance are faring better than other CPAs covering urban areas, although this is not a uniform picture. 7 December 2012 Background Written evidence submitted by G4S 1. G4S Welfare to Work is one of the largest and most successful prime contractors on the Work Programme, operating contracts in the following areas: South East (Kent, Surrey and Sussex). North West (Greater Manchester, Cheshire and Warrington). Yorkshire and Humber (North East Yorkshire and The Humber). 2. G4S operate a unique 100% sub-contracted model through a network of both large and small sub-contractors. Across our three contract areas, we have 20 main sub-contractors eight from the private sector, seven from the public sector, and five from the voluntary sector. 3. The official performance data released in November 2012 showed that G4S is the top-performing prime contractor in all our contract areas: Kent, Surrey and Sussex Job Outcomes achieved by G4S: 900 Job Outcomes achieved by competitor: 820 Greater Manchester, Cheshire and Warrington Job Outcomes achieved by G4S: 880 Job Outcomes achieved by two competitors: 710 and 590 North East Yorkshire and The Humber Job Outcomes achieved by G4S: 460 Job Outcomes achieved by competitor: 310 4. G4S is one of the most successful Work Programme providers at a national level. According to Inclusion, G4S are ranked 5th out of the 18 prime contractors. A separate ranking by the Spend Matters website ranked G4S joint 1st out of the 18 providers in terms of comparative performance across our contract areas. Summary 1. The Work Programme incentivises providers to help as many people as possible into sustained jobs. There is no creaming as most jobseekers sent to the Work Programme have been unemployed for at least nine months despite receiving the support of Jobcentre Plus. Almost all require considerable additional support to find work. Parking is a concern when the amount of funding available is insufficient to meet a jobseeker s needs. The differential payments model helps to direct resources towards the harder to help jobseekers. In the short term, the payment model could be improved by incorporating the length of time that someone has been on benefits in addition to the type of benefit they are claiming. In the long term, we support the development of a tool that assesses each jobseeker s needs rather than relying on benefit type or length of claim. Cycling remains a concern but this can be resolved by adapting the referral mechanism for jobseekers joining the Work Programme. 2. G4S s performance on the Work Programme to date shows that our pure prime contractor model is working better than direct delivery models and mixed models. Our delivery model has had a positive impact on our sub-contractors by providing support, advice and guidance as well as clearly dividing the responsibilities between prime and sub-contractors. 3. Our fully sub-contracted delivery model makes us well placed to deal with the varying needs of jobseekers from different claimant groups. Minimum service delivery standards formed part of our bid and are published so that we can be held accountable to them. We believe that the DWP s monitoring and complaint procedures are already very rigorous. 4. Although the black box approach does present some challenges, it offers the best way of ensuring that jobseekers in each payment group receive personalised interventions rather than a rigid, tick-box set of inappropriate activities and actions. 5. Competition is a vital part of the Work Programme, but in order for it to drive up performance DWP must act on comparative underperformance by prime contractors in each area. There are clear regional variations in Work Programme performance, which is likely to be largely the result of variations in labour markets. Geographical variations are best controlled for by looking at the relative performance of prime contractors in the same contract area. One way of improving provider performance in difficult geographical areas would be to introduce a regional element to the differential payment mechanism.

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 132 Work and Pensions Committee: Evidence The Differential Payments Model 6. The Work Programme is still in its early stages but is showing encouraging signs. Our modelling suggests that 45% of Work Programme jobseekers will be placed into sustained jobs over the lifetime of the Programme. 7. The Work Programme represents good value for money for the taxpayer. Calculations published recently showed that the Work Programme currently costs 2,097 for each job secured as opposed to 7,495 on the Flexible New Deal, 7,857 on Employment Zones and 3,321 on the New Deal programmes for Young People and those aged 25 and over. 8. All providers must work with the finite resources that are available through the Work Programme when supporting jobseekers. Providers must therefore make decisions about how to allocate those resources. The Work Programme is set up in such a way that providers are incentivised to place the most jobseekers possible into work. The differential payments model tries to direct more resources towards jobseekers claiming certain benefits on the basis that they might be harder to help. 9. We do not believe that there is widespread creaming of jobseekers on the Work Programme. By its very nature, Work Programme providers only get referred jobseekers after they have typically received 12 months of full support from Jobcentre Plus (JCP). The support from JCP ensures that the easiest to help jobseekers will have found employment already, meaning that it is only the hardest to help who are referred to the Work Programme. 10. Similarly, the notion of parking can be misunderstood. It is important to be realistic about the range and complexity of barriers to work facing those who start on the Work Programme (eg long term physical health issues). It will not be possible to find sustainable employment for every single jobseeker on the Work Programme. The additional money available to support jobseekers claiming Employment and Support Allowance (ESA) is certainly a welcome innovation, but the Work Programme is still operating on less funding than previous programmes. This guarantees that the Work Programme will be efficient in terms of the level of success it generates for the amount of taxpayers money invested in the scheme. However, it will also mean that providers may not have sufficient resources to support jobseekers with the most severe barriers to work. 11. The differential payments model in its current form, in which jobseekers are placed into payment groups on the basis of which benefit they are claiming, is only a proxy (and a loose one at that) for the likely difficulty in finding sustained employment for each individual. This system is not ideal as it does not take into account the complexity of their needs. For example, a jobseeker who has been in receipt of Jobseeker s Allowance (JSA) can be just as hard to help as an ESA claimant, yet a job outcome for an ESA claimant triggers a much larger payment. 12. An alternative proxy would be to use benefit type alongside the amount of time someone has been claiming that benefit. In our submission to the previous Select Committee inquiry into the Work Programme in 2010, we made the following recommendation: A balance should be struck between a highly personalised classification system able to account for the huge diversity of barriers facing jobseekers and a practically viable system that places jobseekers into clear and identifiable groups without being too time-consuming or impractical. G4S believes the best proxy at present is the type of benefit that each jobseeker has been receiving and how long they have been receiving it. Those who are harder to help often receive higher benefits for longer periods of time relative to other jobseekers. This simple system for allocating jobseekers to payment groups which could be incorporated into the existing differential payments model represents the best compromise (at least in the short term) between complexity and personalisation. 13. In the longer term, G4S support the development of an assessment tool that attempts to understand the severity of each jobseeker s needs at the outset in order to place them into the most appropriate payment group. This system has been used in Australia for many years through the Jobseeker Classification Instrument. This tool places every jobseeker on a scale based on the severity of their needs (which also determines how much money a provider receives for supporting them into employment). Even a more sophisticated tool such as this is still only a proxy for individual needs. That said, the potential improvements it could offer in identifying needs and barriers while ensuring providers have the right level of resources to help each individual should provide the necessary impetus for trialling such a tool. 14. Another point related to the differential payments model is the issue of cycling. Under the current model, jobseekers are usually referred to the Work Programme once they reach a certain threshold in the time they have spent with JCP (normally 9 12 months). Cycling refers to a situation in which jobseekers begin claiming benefits at JCP and then enter employment (and in doing so cease claiming benefits), only to fall out of work shortly afterwards and begin the process of claiming benefits again. This is a major concern because it means jobseekers can have multiple periods of unemployment without ever staying out of work for nine months continuously (which is when they would normally join the Work Programme). As a result, thousands of disadvantaged jobseekers are being denied access to the Work Programme. 15. One possible solution to cycling is to alter the mechanism by which jobseekers join the Work Programme. For example, rather than specifying that a jobseeker must spend 9 12 months continuously with

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 133 JCP, the referral point could be changed so that any jobseeker who has been claiming JSA for, say, nine out of the last 12 months automatically joins the Work Programme. This mechanism would ensure that jobseekers who are not entering sustainable work would get access to the personalised support available on the Work Programme. The Prime Provider Model 16. G4S use a pure prime contractor model on the Work Programme. The success of this model is demonstrated by the fact that we are out-performing all our competitors in each region where we deliver the Work Programme (see Background section for further details). 17. We believe that the impact of our model on sub-contractors is positive. We provide rigorous performance management and extensive support for our sub-contractors with the aim of driving up the performance of our whole supply chain. This includes offering sub-contractors the potential reward of growing their organisation through being sent additional jobseekers if they perform well. Our performance management also incorporates Performance Improvement Plans for any subcontractor that under-performs. Should a sub-contractor not place enough jobseekers into employment over an extended period of time, despite intensive support and guidance from our team, we would consider removing them from our supply chain. By only partnering with the most effective sub-contractors, our supply chain will place more jobseekers into sustained employment. 18. Having a single organisation managing and coordinating a range of sub-contractors also creates clear dividing lines in terms of responsibilities. This in turn allows the sub-contractors to focus on what they do best delivering high-quality frontline services while the prime contractor provides the necessary support to drive better performance. A pure prime contractor model also promotes fair competition as it avoids the situation seen on previous programmes when prime contractors withheld jobseekers from their sub-contractors to keep hold of more funding (which inevitably had an enormously detrimental impact on the sub-contractors): Our experience has been of a genuine partner able to add value through their supply chain management expertise, committed to quality, challenging us to surpass our best but recognising and rewarding our achievements. - Jerry Stokes, Chief Executive of Work Solutions (a G4S subcontractor in the North West). The Level of Service Provided to Participants in Different Payment Groups 19. Our fully sub-contracted model makes us well placed to deal with the varying needs of jobseekers from different claimant groups. Our sub-contractors are drawn from the public, private and voluntary sectors, and have the necessary expertise to provide a tailored service to each jobseeker. We selected a number of sub-contractors as a direct result of their expertise in helping more disadvantaged jobseekers. For example, Richmond Fellowship one of our top performing providers was selected due to its excellence at supporting people with mental health problems. Our diverse supply chain ensures that frontline services are not overly rigid, which makes it better suited to helping different claimant groups. 20. We believe that the minimum service delivery standards have been specified in sufficient detail. All providers were evaluated on the appropriateness of their minimum standards as part of the bidding process. Not only were our minimum standards included within our bid (which is now available online), the Department for Work and Pensions (DWP) also published providers minimum standards as a separate standalone document on their website. 21. Central to our delivery of the Work Programme is our situational approach. This means that for every jobseeker on the Work Programme, our sub-contractors advisors tailor their support to each individual s circumstances. Such a flexible approach ensures that our advisors provide bespoke support to jobseekers from different claimant groups and do not follow a one size fits all approach. An overly prescriptive, rules based attitude to minimum standards would undermine this situational approach, as it might force advisors to adhere to certain actions or activities that do not help each individual jobseeker. 22. We recognise that DWP monitoring is an essential part of the Work Programme, not least to combat potential abuses such as fraud. Our experience shows that the current system for monitoring providers is very rigorous. Our three Contract Directors have review meetings with Regional Performance Managers on a monthly basis. We have bi-annual review meetings with senior DWP officials to discuss our performance at a national level. Each month, we meet with local Compliance Monitoring Officers in all our contract areas to ensure that we are complying with the contractual standards for issues such as claiming payments. DWP s Provider Assurance Team also visits our operations on an annual basis to conduct a comprehensive review of our policies and procedures. On top of all this, we have just been through the Merlin Assessment to assess the quality of our supply chain management. 23. The complaints procedure implemented for the Work Programme has proved to be equally robust. Providers are expected to spend time and effort trying to resolve any complaints from their jobseekers. If providers are unable to satisfactorily resolve the complaint, it is passed to the Independent Case Examiner. To date, 165 complaints have been made to G4S out of over 60,000 jobseekers. We have resolved, to the satisfaction of the complainant, 156 of these ourselves. Of the nine issues that have been passed to the Independent Case Examiner, none have been upheld.

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 134 Work and Pensions Committee: Evidence The Black Box Approach to Service Delivery 24. G4S believe that the black box approach is fundamental to the success of the Work Programme and that, despite some criticism, the Government should remain committed to it. We recognise that the black box approach presents some challenges. For example, it can lead to a perception that not enough is being done. However, the black box approach has far fewer problems than a prescriptive, box ticking approach seen under earlier outsourced programmes. 25. The black box offers the best way of ensuring that jobseekers in each payment group receive personalised interventions. It gives our subcontractors the freedom to deliver in such a way that, with their expert local knowledge, is most likely to support a jobseeker into work. It also allows advisors to offer a tailored service to all jobseekers which forms part of our situational approach and our commitment to understanding the varying needs and circumstances of every jobseeker. NCDA delivers across a wide range of sectors so the black box approach allows us to be flexible with our service to customers depending on their individual and specific needs. The black box approach of the contract enables us to deliver a service that meets contractual requirements and fits in with the NCDA ethos, which is to provide a client focused service. Penny Shimmin, CEO at NCDA (a voluntary sector subcontractor in the South East) Regional Variations in Job Outcome Statistics 26. G4S believes that competition is a vital part of the Work Programme, but in order for it to drive up performance DWP must act on comparative under-performance by prime contractors in each area. Conversely, providers that are demonstrating particular success at helping jobseekers into sustainable employment should be rewarded with additional referrals through an increase in market share. If a provider is consistently failing to perform at the same level as their geographical peers, the Government should have no hesitation in terminating their contract and passing their customers to the most successful existing provider in that area (or to a new provider). 27. Competition is also important for encouraging providers to find new and innovative ways of helping jobseekers. With the potential reward of an increase in market share alongside the threat of having a contract removed, providers are compelled to find novel ways of improving their service to jobseekers. 28. There are clear regional variations in Work Programme performance. Our Yorkshire and Humber operations are achieving around 45 50% fewer Job Outcomes than our operations in the South East and North West. This is solely due to variations in the respective labour markets. Geographical variations are best controlled for by looking at the relative performance of prime contractors in the same area. For example, in Yorkshire and Humber we are ranking 22nd out of the 40 Work Programme contracts around the country in terms of converting referrals to Job Outcomes. However, the other prime in the same area is ranked 38th. 29. One way of improving performance in difficult geographical areas would be to introduce a regional element to the differential payments. For example, the Government could pay more for a job outcome in Yorkshire and Humber than in London. 7 December 2012 Letter to Committee Chair from Sean Williams, Managing Director, G4S Employment Support Services As requested by the Committee during the hearing on 6 March 2013 please find below further information regarding the responses to our customer survey, which was completed earlier in March. Regarding the number of customers who partook in the survey, 1,484 customers responded. As mentioned at the Committee hearing, the overwhelming majority, some 63.5% stated that they were either very well supported or quite well supported by their Work Programme Advisor. 15.3% answered Not Sure to this question. G4S s internal Quality Review Group will explore in detail the underlying reasons for any areas where we need to improve our service to those we are supporting into work. This will include identifying any regional or provider anomalies or trends across all three contract areas which we manage. Actions will be identified by mid-april after which I will provide you with a further update as to any improvements that we will be implementing support the 21.2% who do not feel supported well enough. In addition to this, I will be contacting Jane Ellison s office to offer a visit to one of our South East providers. This offer is open to any member of the committee, or any other Parliamentary colleagues, should they wish to visit. 19 March 2013

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 135 Written evidence submitted by mental health organisations: the Centre for Mental Health, Mind, and the Scottish Association for Mental Health (SAMH) 1. Introduction 1.1 The Work Programme works with an unprecedented number of benefit claimants, with vastly different circumstances, barriers, prospects and needs, within a single back-to-work scheme. It is therefore absolutely vital that the programme is able to identify these circumstances, recognise these barriers, and support these needs. 1.2 People with mental health problems make up a significant proportion of people on the Work Programme. People with mental and behavioural disorders accounted for 44% of claims for the old Incapacity Benefit (IB). 38 For the new out-of-work disability benefit, Employment and Support Allowance (ESA), 32% of claims are primarily for mental health problems. 39 Many people on Jobseeker s Allowance (JSA) may experience depression and anxiety, linked to their unemployment. It is therefore essential that the Work Programme is able to adequately cater for this user-group. We agree that returning to work can be an important step in someone s recovery from a mental health problem. However, it is vital that any back-to-work programme does not jeopardise this recovery through inappropriate conditionality or insufficient support. 1.3 This submission is built upon information we have gathered from people with mental health problems who have received back-to-work support and from Work Programme providers. 2. Key Concerns 2.1 Work Capability Assessment (WCA): The WCA, which determines the payment a provider receives when someone finds work, is an insufficient assessment tool to determine levels of support needed. 2.2 Pricing Categories: The current pricing categories are too broad. As a result there are people in the same group who have vastly different needs. Those whose needs are less time intensive are prioritised. The impact of contracting based on such broad categories is driving providers to focus less on participants who face greater barriers to work. 2.3 Focus on Outcomes: The exclusive focus on outcomes (finding work) fails to recognise the importance of progress made by people on the Work Programme. If payments were also made on progress, specialist providers would be more incentivised, and have more resources, to work with people facing the largest number of barriers to getting back into the workplace. 2.4 Conditionality and Sanctions: The disproportionate emphasis on conditionality and sanctions presupposes that people who are out of work do not want to get back into work and fails to help build people s confidence. 2.5 Specialist training and Integrated services: The Government must ensure that that all staff are appropriately trained in mental health problems and that providers have more mental health experts. The Government should also ensure that Work Programme providers are given the financial incentives to work with health and social care services to offer clients integrated health and employment support. 3. The Work Capability Assessment 3.1 The WCA decides which people are eligible for ESA, and if so whether they are placed in the Work- Related Activity Group (WRAG), where they are required to start preparing for a return to work, or placed in the Support Group where any preparation would be voluntary. 3.2 It is therefore essential that the WCA works properly in assessing needs. 3.3 However, overwhelming evidence from people who have undergone the WCA shows that it is unfit for assessing people with mental health problems. Between October 2008, when ESA was introduced, and May 2011 (the most recent figures available for condition-specific appeals data), 43% of Fit for Work decisions for applicants with mental and behavioural disorders were appealed and 41 percent of these appeals were successful. 40 3.4 We regularly hear from people who have received zero points on the WCA and are declared Fit for Work who then have the decision overturned after a long and distressing appeals process: 3.5 I wasn t asked any questions about my illness or how I was coping. Even though I volunteered information none of my responses were documented in the subsequent report. It was decided that I was completely fit for work having scored O on the medical assessment. 3.6 One of our local Minds in South East London, which runs a welfare advice service, reported that they frequently receive referrals from the Jobcentre. Referrals are made up of clients on the Work Programme, but 38 DWP, Statistics tabulation tool (Benefit Caseload National Statistics (WPLS) data), http://83.244.183.180/100pc/tabtool.html (statistics run up to February 2012) 39 DWP, Main health condition reported by Employment and Support Allowance claimants, by employment situation immediately before claim, http://statistics.dwp.gov.uk/asd/asd1/adhoc_analysis/2012/esa_claimants_health_from_work_final_20121101.xls 40 DWP, Employment and Support Allowance: Appeal Outcomes (Tables), http://statistics.dwp.gov.uk/asd/asd1/adhoc_analysis/ 2012/ESA_Appeal_Outcomes.xls

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 136 Work and Pensions Committee: Evidence who the Jobcentre believes are currently unfit to participate in back-to-work activities. The local Mind will help the client to appeal the decision of the WCA. In the last three months they have received 10 12 of these types of referrals. 3.7 We have also heard from Work Programme providers that they spend a significant amount of time helping people appeal the decision of the WCA rather than offering them back-to-work support because providers felt the decision was incorrect. 3.8 For more details about our concerns about the WCA, please see our joint submission to the third Harrington review, which was recently passed onto the Clerk of the Committee. 3.9 As a result of these problems with the WCA, people are getting inadequate support or being forced to undertake activities with which they cannot cope. 3.10 For people placed in the WRAG, the point at which they are referred to the Work Programme is largely set by the functional prognosis from their WCA. Initially people in the WRAG were referred to the Work Programme three months before this date. This period was then extended to six months and is now being extended to twelve. We are concerned that there will be a lack of adequate assessments put in place to ensure that people are actually well enough to properly engage with back-to-work-support so far in advance of the date that the WCA has decided that they will be better. 3.11 We have heard from significant numbers of people experiencing high levels of stress and anxiety as a result of the WCA. This results in them feeling much less positive about engaging in back to work support and less likely to return to work sooner. We have also spoken with Work Programme providers who described how negative experiences of the WCA can make participants less likely to positively engage with back to work support. They also told us that that information passed onto them about someone s health condition from the WCA offers little to no insight into their mental health problems and the support they require. 4. The Work Programme 4.1 Pricing Work Programmes providers receive a higher level of payment for securing work for people on ESA than those receiving JSA. A higher payment is made for clients on ESA in the Support Group than those in WRAG. 4.1.1 Given the complex and intangible nature of many mental health problems and the tendency for conditions to fluctuate over time, finding sustainable employment for a client in these groups is a huge challenge. We therefore support the policy of paying providers more for finding work for people in these groups in order to reflect the additional costs associated with placing and supporting clients. 4.1.2 However, that there is one payment level for all ESA WRAG claimants results in a very broad group of claimants within one price band. A person s mental health diagnosis is not a good predictor of their employability or the barriers they face to getting work. We have spoken with sub-providers, specialising in helping disabled people to find sustained employment, who reported that such broad categorisation and payment structures forces them to focus on clients whose needs are less complex as payments do not cover the amount needed for clients with more complex needs, despite that fact that this goes against the values of their organisation. 4.1.3 The system needs to be better able to reward providers according to their clients personal needs and barriers. 4.2 Greater Focus on Progression 4.2.1 Currently providers can claim a job outcome payment after a participant has been in a job for three to six months. After receiving a job outcome payment, providers can claim sustainment payments every four weeks when a participant stays in work. 4.2.2 The current system fails to recognise the progress that specialist providers are making with participants who have mental health problems, but who may not yet have gained employment. These participants face greater barriers to work and often need a considerable amount of support in building work skills. However, the current payment structure fails to recognise this important work that specialist providers are performing. 4.2.3 We welcome a payment structure which would reward, not simply the outcome of employment, but also the progress made by clients with more complex needs. This payment structure would make it much more viable for small specialist providers to work with clients, who have complex needs, over a longer period of time and better support their return to work. 4.3 Conditionality and Sanctions 4.3.1 The majority of people with mental health problems on ESA are placed in the WRAG and are required to participate in back to work support. They face sanctioning if they do not participate. We are increasingly concerned that the system is characterised more by coercion rather than by a genuine attempt to support individuals into the workplace.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 137 4.3.2 Significant numbers of people have described to us the negative impact threats of sanctioning have upon their return to work: 4.3.3 I got a nasty letter which said my benefit was at risk because I didn t attend an appointment and I had to give a really good explanation within a week or my benefit would be cut. It quoted all these regulations I broke. I freaked out because I couldn t understand what I hadn t done. It turns out there was a mistake. 4.3.4 I was made very anxious and sleepless by what I perceived as threatening letters and terms from Jobcentre Plus and A4e. I became depressed because I could see that my hopes to return to work were being made unrealisable by this route. 4.3.5 These comments demonstrate how sanctioning is detrimental to people s mental health and weakens their ability to successfully engage with back to work support. Supporting this evidence, the Employment Related Services Association (ERSA) analysis of Work Programme statistics at the end of November 2012 showed that there are better job outcomes for people claiming ESA who voluntarily participate in the Work Programme. 41 4.3.6 The only international evidence on the impact of conditionality on people with mental health problems found that the system does not incentivise job searching or work-related activity; rather it leads to a loss of income as sanctions are applied, with a consequent risk to the person s health: Rather than creating behavioural change, sanctions imposed on unresponsive groups are punitive. 42 4.3.7 We have also heard from Work Programme providers who find the policy of sanctioning detrimental to their engagement with clients with mental health problems. Currently sub-providers are required to report to the Jobcentre if clients fail to engage with any element of back to work support. They explained that often this means they are forced to report clients for sanctioning whom they feel had a legitimate reason for not fully engaging with back to work support. Whilst they can submit details of mitigating circumstances to the DWP, they felt that this policy often weakened their relationship with clients. 4.3.8 Furthermore, the focus on sanctions as a tool for encouraging people in the WRAG to engage with support presupposes that people with disabilities do not want to work, and that the principal barrier in not doing so is their motivation. Significant numbers of people have described to us how this approach has led them to feel increasingly stigmatised, further disengaging them from back to work support. One person stated: 4.3.9 I always feel that benefits treat me as if I am lying all the time, they assume I m like some others and trying to avoid work. 4.4 Barriers to Successful Employment Outcomes 4.4.1 Whilst people with mental health problems have one of the lowest employment rates among disabled people (at 27% for depression and anxiety, and 14% for more severe conditions, compared to 46% for disabled people as a whole), they have the highest want to work rate among benefit claimants. 43 The Government should therefore focus on external barriers that people with mental health problems face in employment, including workplace discrimination. One claimant we spoke to commented: 4.4.2 My objective for the last 11 years in unemployment has been to find appropriate work for my condition and qualifications that would make claiming state benefit unnecessary. Such dictatorial and penalising attitudes would increase my levels of anxiety and depression and would be counterproductive, replicating what happened with my last employer. 4.4.3 Fewer than four in ten employers would knowingly employ someone with a mental health problem 44 and 40% of employers view workers with mental health issues as a significant risk. 45 A 2011 Populus poll of 2,006 adults in employment found that of those who disclosed a mental health problem, 22% were sacked or forced out of their jobs, 46 demonstrating that many of the fears that people have about re-entering the workplace are well founded. The Work Programme should therefore also consider external barriers and the Government should focus on resolving workplace stigma and discrimination. 4.4.4 People have also described to us how activities were focused on getting people any form of work, rather than the most appropriate forms of work: 4.4.5 Support was only really to get me into a job, however unsuitable, in order to tick a box and provider to get money in and achieve targets. 41 The ERSA Analysis of Work Programme Job Start Data and Work Programme Briefing, November 2012. 42 Meara E and Frank R, 2006, Welfare Reform, Work Requirements and Employment Barriers. National Bureau of Economic Research, Cambridge MA. 43 Social Exclusion Unit (2004), Mental Health and Social Exclusion. 44 DWP (2001) One Evaluation. 45 Shaw Trust (2010) Mental Health: Still The Last Workplace Taboo? 46 Populus survey for Mind, in 2011, interviewed 2,006 adults in employment. Data have been weighted to be representative of all GB adults in terms of gender, age, SEG and region. Of the 2,006 interviewed, 516 had experienced a mental health problem while in employment and 294 had told their boss. Press release retrieved from: http://www.mind.org.uk/news/5053_workers_ face_the_sack_for_admitting_they_feel_stressed.

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 138 Work and Pensions Committee: Evidence 4.4.6 Whilst we know that work based on a person s preferences and accessed with the right kind of support can be a vital part of recovery from a mental health problem, we also know that inappropriate work can be worse for someone s mental health than not working at all. 47 Often the Work Programme does not account for the skill and experience that someone might have, and people are offered lower paid roles which require less experience. This approach does not support aspiration or wellbeing. 4.4.7 Work Programme providers also reported to us that at present, due to cuts to other services, they spend significant amounts of time assisting people with issues such as housing and health. These issues should also be recognised as key in helping someone re-enter the workplace, and greater focus and resources should be allocated by government to help providers address multiple needs. 4.5 Work Choice 4.5.1 We would also recommend that more people with mental health problems are referred to Work Choice, the Government s specialist employment programme. Participation in Work Choice is voluntary, which we believe, and is reflected in the ERSA recent analysis of Work Programme statistics, is a basis through which to successfully work with people facing multiple barriers and ensure their sustain return to the workforce. 48 Work Choice however, is limited to 115,000 placements over the lifetime of a five year contract and only 14% of all referrals to Work Choice so far have been ESA claimants. 49 5. Mental Health Expertise and Integrated Support 5.1 Specialist Mental Health Training Many of our supporters have commented that there is a lack of understanding of mental health among Work Programme providers: Comments include: 5.1.1 She said of depression things like if I felt a bit down then I should really just make more of an effort to do stuff even if it is a chore. It s lovely having your feelings being made light of. 5.1.2 When I eventually got to see a disability specialist the first thing he said was he didn t understand my diagnosis and was going to get an occupational therapist to reassess me when I turned up to an appointment it seems pretty clear that no thought has been given to me between appointments or even before the appointment as the advisor [had] look on her computer to refresh her memory of what my diagnosis [was]. 5.1.3 We also heard from providers who described how, with greater funding could recruit extra staff to coordinate health and social care with back to work support. They described that this approach would be more sensitive to the multiple needs people with mental health problems face and better support their transition into the workplace. 5.2 Individual Placement Support (IPS) Model 5.2.1 There is clear evidence that employment support is most effective for people with mental health problems if it is integrated with health care. The IPS approach, which is used in secondary mental health care, is twice as likely to enable people with severe mental health problems to enter competitive work than any other type of work programme. 50 Advisers who understand mental health help the person to identify what barriers they face, how they might overcome them, and what work they would like to do. The adviser proactively seeks out employers who might be well suited to the person s abilities and needs. The individual and their employer are then supported within the workplace for as long as required. 5.2.2 Participation in IPS is voluntary, so conditions and sanctions are not necessary. As already discussed recently published Department for Work and Pensions (DWP) figures show that there are better job outcomes for people claiming ESA who voluntarily participate in the Work Programme. We believe that voluntary participation coupled with specialist support for people with mental health problems, demonstrating to people that the system was genuinely designed to help them, would result getting far larger numbers of people back into sustained employment. 6. Recommendations 6.1 The Government should ensure that the WCA is fit to properly identify the needs and barriers that people with mental health problems face in the workplace. 47 Butterworth, P, Leach, L, Strazdins, L et al 2011, The psychosocial quality of work determines whether employment has benefits for mental health: Results from a longitudinal national household panel survey, Occupational and Environmental Medicine, vol. 68, no. 11, pp. 806 812. 48 The ERSA Analysis of Work Programme Job Start Data and Work Programme Briefing, November 2012. 49 See November 2012 data: http://statistics.dwp.gov.uk/asd/workingage/wchoice/wc_nov12.pdf. 50 The Centre for Mental Health, The Work Programme, supporting individuals with severe mental health conditions into work, http://www.centreformentalhealth.org.uk/pdfs/work_programme_providers_briefing2.pdf (accessed 19/11/2012).

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 139 6.2 The principle focus of Work Programme providers should be on demonstrating to clients that the back to work process is a positive one, rather than using sanctions to enforce involvement. Discussions about sanctioning should not take place until it is clear that the client does not want to engage with back to work support. 6.3 Any conditionality should take account of the individual client s circumstances and needs, and should not result in any negative impact on the clients mental health. 6.4 The ambitions and expectations of the client should be central to any programme designed to help them back to work. 6.5 The Work Programme should function to ensure that providers are properly incentivised to cater for the needs of all clients, including those with greater levels of need and barriers to the workforce. 6.6 The Government should ensure that external barriers including workplace discrimination are tackled in order to guarantee successful long-term employment of people with mental health problems. 7 December 2012 1.0 Summary Written evidence submitted by The Pluss Organisation 1.1 This evidence on the delivery of the Work Programme is from the perspective of The Pluss Organisation, a national specialist provider of disability and health condition employment services. 1.2 The initial performance data makes it clear that people furthest from the labour market are benefitting least from the Work Programme. Whilst the Programme promises to achieve eventual success with high volume payment groups that include people who are relatively job ready, 51 the contractual structure and commercial imperatives of the programme mean that we believe it will continue to fail to meet the employment related needs of people with significant disabilities and health conditions. 1.3 It is the view of Pluss that the needs of people with significant disabilities and health conditions will be best met by a specialist disability programme that is separate from the Work Programme. We also believe that this approach is appropriate for other disadvantaged groups whose needs are not being met by the Work Programme. This may include: people with substance misuse issues, homeless people, people over 50 and care leavers. 1.4 The optimum delivery model for such a specialist programme will feature specialist prime providers and supply chains of practitioners who have developed proven employment methodologies to help disadvantaged groups furthest from the labour market. 1.5 A black box approach should be used alongside contractual requirements that ensure an equitable service is delivered to all and is not dependent on the distance an individual is from the labour market. 2.0 Introduction 2.1 Pluss is a Social Enterprise and the largest Social Firm in the UK. It has over 40 years experience as a specialist provider of disability employment services. As well as running DWP and local authority employment programmes, it delivers employment opportunities through a range of service-based and manufacturing social enterprises, with approximately 50% of its 600 employees having a disability. 2.2 Pluss is the best performing Work Choice 52 provider in the UK in terms of job entry outcomes. We work with over 1,000 employers and 5,000 disabled customers annually to secure employment opportunities and develop career choices. 2.3 Pluss has been involved in the procurement and delivery of the Work Programme in a number of ways which we have detailed below: 2.4 Pluss are a founding member of Disability Works UK (DWUK), a consortium of eight major national third sector disability organisations which offers Work Programme prime providers specialist disability and health condition services for their customers. As such, Pluss personnel were involved in detailed negotiations with a significant number of potential Prime providers throughout the Work Programme bidding process, which resulted in DWUK securing subcontracted Work Programme delivery. 51 http://research.dwp.gov.uk/asd/asd5/summ2011 2012/821summ.pdf. 52 The DWP s specialist disability and health condition employment programme.

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 140 Work and Pensions Committee: Evidence 2.5 Pluss were offered a number of end-to-end specialist contracts. These were declined as they were deemed to be extremely high risk. Specifically: The expectation was that Pluss would be responsible for cash flowing the contract. Our detailed modelling showed that for a typical contract size of 5 million (over seven years) there is a negative cash flow of 150,000 and, whilst positive cash flow was achieved by the end of year three, this was temporary with further losses expected in later years. 53 Achieving even the temporary break-even point was dependent on meeting very challenging targets with a customer group who faced multiple and complex barriers to entering and sustaining employment. Pluss had no control over the referral process. There was, therefore, a major risk that we would only receive customers who the Prime regarded as being too far from the labour market to warrant resource allocation in their mainstream provision. None of the Prime providers offered any meaningful assistance with cash flow and, with the Prime s top sliced management fee varying from a minimum 12.5% up to a maximum of 50%, Pluss would be left with insufficient funding to provide an effective service. 2.6 Pluss entered into an ad hoc spot purchase arrangement for specialist services with a prime provider. This arrangement proved to be unsatisfactory due to customer volumes being undefined, despite an agreement during negotiations that volumes would be specified. After considerable efforts to demonstrate the nature and value of our services to both the Prime s managers and frontline staff, no referrals had been received after 12 months. We therefore withdrew from the contract. 2.7 Pluss personnel remain embedded into another Prime s front line delivery staff, where they offer a specialist service for people with disabilities and health conditions using tried and tested supported employment techniques (as far as possible within the confines of the contract). This has met with some degree of success, with job entry levels for the hardest to help groups being higher than the typical levels stated in the recent DWP performance data. (However, it is important to note that they are not as high as those being achieved by Pluss delivery of Work Choice). The current commercial arrangements for this contract are based on full cost recovery of staff salaries. The Prime has indicated that this arrangement is not sustainable and has offered a more risky outcome-related arrangement in which Pluss takes a significant proportion of the cash flow risk. This proposal has been declined by Pluss. 3.0 The Differential Payment Model 3.1 Pluss believes that the concept of a differential payments model is an improvement on previous schemes and offers the potential for additional specialist resources and support to help those furthest from the labour market to find and keep a job. However, there are problems with the way that this differentiation has been applied in the Work Programme. The result is that it has not incentivised providers to deliver enhanced levels of services to those with higher needs. 3.2 The commercial imperative of a highly end-loaded payment by results programme has made creaming and parking inevitable. What is more, differential payment is applied in relation to payment groups of customers, meaning that creaming and parking occurs within each payment group. The only way to avoid this effect would be to differentiate payment for each customer based on a sound assessment of their individual needs. The evidence of creaming and parking is contained in the recent DWP Work Programme Performance data 54 and information provided by ERSA. 54 Analysis undertaken by Pluss indicates that the best case current job start performance for the ESA payment groups is 11% (Volunteers and Flow) and 4% (ex-incapacity Benefit). As a comparison, the Work Choice programme, which is directed at individuals further from the labour market, is achieving an average of 22% (Pluss achieves 34% in Devon and Cornwall). The Work Programme is therefore clearly failing the most difficult to help groups. 55 3.3 In practice, the Work Programme groups do not effectively distinguish between those who need only a little support and those who need more intensive interventions. The programme relies heavily on benefit type to define a customer s payment group and hence the support available. This means that a significant minority of people in Jobseeker s Allowance (JSA) groups with disabilities and/or health conditions will not receive the help they need. (For example, in the recent performance data, 54 27% of people in the JSA 25+ payment group had a disability indicator ). 3.4 Pluss also believe the current Work Capability Assessment (WCA) is adding to this problem. Until the WCA becomes fit for purpose, people will continue to be placed on the wrong benefit which will impact negatively on their chances of accessing appropriate support. 53 This was predicated on ESA referral levels that to date have not materialised. The negative cash flow and losses that have materialised as a result of low referral numbers are in fact far worse than our initial predictions. 54 http://www.ersa.org.uk/ Work Programme Job Start Data, November 2012. 55 Note table 4 in the ERSA report does not give an accurate representation of the Job outcome performance for a number of the ESA payment groups because the sample sizes are insufficient to draw any statistically meaningful conclusions about the total ESA referral populations for specific groups.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 141 3.5 When Primes were establishing supply chains, targets were set for each payment group. The low targets set by the Primes for the harder to help groups at an early stage demonstrated that they never had any intention to invest significant resources into these groups and take advantage of the relatively higher payments that were available. For example, the job outcome expectation for the ESA (Employment Support Allowance) ex-ib group was between 9% and 13%. From the outset, Primes were focusing on more job ready customers with service delivery strategies that involved parking hard to help customers. It is against this background that specialist providers confirm they are not receiving sufficient referrals for their subcontracts to be viable, which is leading to a consequential loss of expertise from the sector as services are withdrawn. Unsurprisingly, in the first 12 months, only 330 people across all of the ESA payment groups secured employment, representing only 1% of the job outcomes delivered by the Work Programme, 56 and our analysis shows that the probability of achieving a short job outcome is halved if a person has any type of disability. The Work Programme is effectively locked in to a culture of delivering an effective service only to work ready customers. 3.6 From a financial standpoint, the primary purpose of the Work Programme was to generate savings by helping people achieve long term sustainable employment. This is particularly significant for customers in the ESA groups who can potentially spend many years out of work. In comparing the Work Programme with specialist disability programmes, the direct cost may be less for the Work Programme, but on current performance, it is not generating the anticipated social return on investment (which includes benefit savings and tax revenue). It is therefore not providing the same value for money as Work Choice. In the ESA ex-ib category, where current performance indicates that job starts will be no more that 4%, every job is carrying the cost of 25 attachment fees. This makes the Work Programme relatively expensive compared to Work Choice which has an average performance across all providers of 22% and more than 30% for the best performing providers. 4.0 The Prime Provider Model 4.1 Pluss believes that when the Work Programme model was designed the contract value and size were established to give Prime providers the required critical mass to finance the provision, mitigate the risk (across the supply chain) and absorb variation in customer flows. This is not how current delivery models work. From the perspective of a third sector provider, the model contains two significant flaws: 1. The balance of risk within supply chains has produced unviable subcontracting arrangements; 2. Ineffective engagement and use of specialist providers means that harder to help individuals do not receive an effective service. 4.2 The balance of risk 4.2.1 Subcontracting arrangements have generally involved the Prime passing down DWP terms and conditions to an end-to-end supply chain (typically with a 20% management fee). A number of Primes act as managing agents with no front line delivery, locating a significant level of risk with subcontractors. 4.2.2 Primes generally have a number of subcontracts within a CPA which are split on a geographical basis. This means the risk is further increased for a subcontractor through a decrease in the potential number of attachment payments that are available and a reduction in potential sustainability payments. 4.2.3 For providers holding specialist end-to-end contracts, risk is compounded further by the fact that they only receive referrals for the most difficult cases. 4.3 Use of specialist providers 4.3.1 The original intention of many of the Primes was to use a specialist supply chain to help the hardest to help cases. The development of this supply chain has been very limited which is due in part to the very low level of referrals from the ESA payment groups. 4.3.2 Pluss experience is that there is reluctance on the part of Primes to pay a reasonable rate for a specialist end-to-end service. We believe this is partly caused by the belief of a number of Primes that the third sector could and should deliver a free service as they are being supported by charitable donations and other funding sources. 4.4 Pluss believes that the best option to support the hardest to help groups is a separate programme run by specialist primes. Such a programme, run alongside the Work Programme, would yield a higher social return on investment. It would enable the Work Programme to concentrate on delivering outcomes for those closer to the labour market and would mean that the harder to help groups would have an effective service underpinned by an appropriate level of expertise and experience. 5. 0 Minimum Service Level Standards 5.1 Analysis of the Minimum Service Delivery offers 57 made by the winning Primes demonstrates that customers are subject to a postcode lottery in the service they are guaranteed. 56 http://research.dwp.gov.uk/asd/index.php?page=wp 57 http://www.dwp.gov.uk/docs/provider-minimum-service-delivery.pdf

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 142 Work and Pensions Committee: Evidence 5.2 Each of the Primes commits to offering: An action plan (with little clarification around process or content); Job search activity; A service which is personalised or tailored (ill-defined); and Regular contact (varies between daily and 4 weeks no assurance that the contact will be faceto-face). 5.3 At one end of the scale, CDG offer a long list of specific, time-bound commitments for CPA 4 across a five stage customer journey with a focus throughout on health and disability-related barriers and how these will be addressed. At the other end, Ingeus (CPAs 1, 2, 3, 5, 6, 8 & 16), Reed (CPA 3), ESG Holdings (CPA 15), Avanta (CPAs 5, 7 & 10), EOS (CPA 14), Pertemps (CPA 14), Serco (CPAs 15 & 17), Best (CPA 16) and Rehab (CPAs 12 & 13) make no reference at all to health or disability. 5.5 There are a series of good practice examples from individual Primes. These include a commitment to provide: Referral conversion rates to attachments (Maximus, CDG, JHP); Pre-programme engagement with one-to-one mentoring (CDG); A named advisor (Seetec, Working Links, G4S, Prospects); Maximum travelling times to the service via public transport (A4E and EOS); Specialist health assessments (A4E, CDG); and Time-bound voluntary activities as part of the action plan (CDG). 5.6 What is striking, however, in offers which exist to form the bedrock of delivery guarantees, is the lack of consistency, the vagueness of many of the commitments and the dangers implicit in a universal service for a diverse customer group for many of whom the process will not be suited. 5.7 Pluss believes that the current set of minimal service level standards will not ensure that those with greatest need will get an appropriate level of service. In reality, this is not possible with a high volume, high case load (in excess of 100 per advisor) programme such as the Work Programme. 6.0 Black Box 6.1 The reality of the Work Programme procurement process is that the high risk, end-loaded commercial arrangements have stymied innovation and led to the implementation of broadly similar delivery models amongst the Prime providers and their supply chains. These approaches requiresthe providers to focus on jobready customers to maximise outcomes. 6.2 The intention to use specialist providers to help those furthest from the labour market hasn t materialised to any great extent for the reasons described above. As a result, the more difficult to help customers seem to have been parked in pre-work streams where there is evidence of relatively little investment in resources to support them. 6.3 Pluss are concerned that current delivery does not feature evidence-based approaches which customers with mental health and learning disabilities will most benefit from the Individual Placement and Support (IPS) model endorsed by the Centre for Mental Health 58 and the supported employment model endorsed by BASE and others. 59 Our concern is that many people in these cohorts are quickly being parked on to train and place activities, (where place is sourcing a job), in group settings which are cheaper and easier to deliver than more suitable place and train methods. Pluss believes that this is likely to be both de-motivating and in some cases harmful to vulnerable people in the harder to help payment groups. 6.4 Recovery in a mental health context is unique to the individual. Under the IPS approach holistic assessment are seen as crucial to establish the nature of the customer s mental health condition and all relevant factors that create or exacerbate barriers to work. This is done in two stages, first examining general factors that may impact on work, and then reviewing specific work-place barriers. The assessment involves a measure of well-being which can be repeated to demonstrate progress which is most often captured in Recovery Star or Work and Social Adjustment assessments. IPS s seven key principles include focusing on paid employment of an individual s choice, not sheltered work or lengthy job preparation, and support that continues once the person gets a job. 6.5 For customers with learning disabilities, Supported Employment is the most appropriate approach (accepted by Department for Work and Pensions, Department of Health and???). This addresses specific needs and uses: vocational profiling, job matching through direct engagement with employers, job analysis, in-work job coaching, on the job training that maximises people s potential to acquire skills, and the development of natural workplace support which is un-intrusive as possible and fades over time. 58 http://www.centreformentalhealth.org.uk/ 59 http://base-uk.org/

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 143 6.6 Pluss believes that the expertise to deliver services to harder to help groups lie predominantly with third sector providers and are best utilised through a separate specialist disability programme that concentrates its delivery on these harder to help groups. 7.0 Regional Variations in Job Outcome Statistics 7.1 Pluss has had over 40 years of delivering employment programmes in areas of extreme rurality where there are significant cost implications of delivering programmes to isolated communities. The situation is exacerbated by poor labour market conditions where jobs can be seasonal and short term, making difficult delivery conditions even more challenging. The practice of splitting funds across two Prime supply chains can result in neither of them delivering an effective service in these areas. Pluss recommends that for rural area delivery should be apportioned on a geographical basis and carried out by one supply chain. 7 December 2012 Written evidence submitted by Rehab Group 1. Introduction 1.1 Rehab Group welcomes this opportunity to contribute to the Work and Pensions Committee s inquiry into how the Work Programme is working for different user groups. We feel the information contained in paragraphs 20 26 will be of most interest to the Committee. 1.2 Across the UK, Rehab Group provides services to more than 60,000 disabled people, people who are unemployed and others who are marginalised. Rehab Group is involved in the Work Programme in the following ways: 1.3 Rehab JobFit is a third sector-led partnership of the Rehab Group and Interserve which delivers training, support and employability services across the UK. The partnership is unique because of the distinctive strengths and experience of both organisations. Rehab Group s extensive experience in supporting a wide range of customers to realise their full potential enables the achievement of a real step change in people s lives to deliver a better future. Interserve, as one of the UK s largest employers, brings a wide variety of sustainable job opportunities as well as extensive supply-chain management expertise. Rehab JobFit delivers the government s Work Programme and Mandatory Work Activity Programme in South West England and Wales. Through its supply chain of 18 subcontractors, Rehab JobFit has worked with over 40,000 customers helping over 9,000 into employment since April 2012. 1.4 TBG Learning is the Rehab Group s training division operating across the UK. It works with unemployed people of all ages, from many different backgrounds who have many different reasons for being unemployed. Whether they re looking to find their first job, have been made redundant from an industry they ve worked in for many years, or have been out of work due to illness, disability or social circumstance, TBG Learning provides a tailored, individualised approach to employment support including help with employability or job search, completing one of its training courses, or undertaking a work placement with a local employer so they can build up their confidence and gain some on the job experience. TBG Learning is involved as a supply chain partner as part of Rehab JobFit. 1.5 This submission will address some of the themes highlighted in the Work and Pensions Committee s call for evidence. 2. Themes: The differential payments model including: The extent to which it is incentivising providers to help all participants and thereby addressing creaming and parking, how effectively the model reflects claimants relative needs; and variations in job outcomes between the different payments group. 2.1 The principle of a differential model is sound. It has motivated those driven by revenue and profit to spread their attention across the full profile of referrals. In theory, the differential model could, in fact, motivate a provider to focus on the harder to help as they command the greatest fee. This would be directly opposed to the concept of creaming and parking which suggests working with those who are easiest to help and parking those who are harder to help. 2.2 However, the measurement and ranking of customers in some ways undermines the potential benefits of the differential pricing model. The Department for Work and Pensions (DWP) has included Minimum Performance Levels (MPL) in its contract with providers but only makes reference to three different customer profiles (PG1, PG2 and PG6). This influences how people s needs and abilities are measured and ranked and is therefore the focus of the provider. This impacts negatively on the principle of differential payment and can encourage creaming and parking 2.3 The funding model does not fully reflect the needs of the customers. While it offers a higher price for people who are harder to help, the price is based on the benefits classification of the unemployed person rather than on his/her assessed needs. For example, Jobseeker s Allowance (JSA) Early Access Customers, a group of claimants who often face many and complex barriers to workforce participation, attract the lowest fee because of their benefits classification. This is despite the fact that they are among the customers with the

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 144 Work and Pensions Committee: Evidence highest support needs. It would be more appropriate to establish a more needs based, individualised funding model which recognises the person s specific employment support needs. 2.4 In summary, the differential model structure is sound in principle; however, in practice it does not ensure that the needs of the customer are matched with the appropriate level of supports to ensure the person achieves their goals and moves on to long-term employment options. 3. Theme: The prime provider model including: Its impact on sub-contractors; and the extent to which it helps ensure that participants receive services tailored to their particular needs 3.1 The Prime Contractor model has some positive benefits for sub-contractors. It allows smaller providers to participate and gives scope for capacity building for smaller, local providers. A good, effective prime provider can help sub-contractors to learn from each other. It also gives sub-contractors access to programmes which are tried and tested for the benefit of the customer. 3.2 However, there are some less positive impacts for subcontractors. The prime provider model has enabled DWP to effectively transfer the risk associated with operating a programme like the Work Programme to the prime providers. This risk is then transferred to the sub-contractors who must bear this risk without necessarily receiving the same level of reward as the prime contractor, on the basis that the prime contractor retains a management fee. 3.3 In order to provide for more complex needs, the prime provider should engage with specialist providers who can provide for the person s individual needs in a way that is contractually stronger than it is currently. There is some evidence that this is not happening universally. Some third sector contractors have reported that in some cases, prime providers have promised to refer customers to them but in many cases did not, leading to the charge that these specialist providers were referred to in the bid documents but were not intended to be active members of the supply chain. Sub-contractors, particularly, third sector organisations, should also be assisted to develop capacity to deal with more complex needs, thereby utilising the expertise built up by charity organisations through the social entrepreneurship they so typically demonstrate. 3.4 The prime provider model is still very useful as a means of keeping focus on the delivery of outcomes for customers by applying effective performance management tools and applying a business like approach to contractual compliance and delivery. 4. Theme: The level of service provided to participants in different payment groups including: whether minimum service delivery standards have been specified in sufficient detail by providers and DWP; and the rigour and effectiveness of DWP s monitoring and complaints procedures 4.1 There is a need for greater acknowledgement and acceptance by DWP of the diversity of support needs amongst customers who are referred to the Work Programme. As the basis of measurement, the minimum performance levels dictate the priorities of providers. Unfortunately, because the MPLs only consider three categories of customer this measurement is limited in impact. The MPL approach could be enhanced by setting minimum levels of outcome achievement for each customer group, or for JSA and ESA as total groups, thereby ensuring that anomalies arising from the uneven profile of referrals across different contract package areas (CPAs) do not disadvantage any provider or all providers in different CPAs. 4.2 DWP s monitoring is strong and it consistently and regularly monitors performance. 5. Theme: The black box approach to service delivery including: whether it is proving to be effective in fostering innovative and personalised interventions for claimants in all payment groups; and DWP s role in monitoring this. 5.1 The black box approach is good. It allows providers to deliver what they feel is best for the customer groups that they service. However, there are some drawbacks. 5.2 For example, the Welsh Government has determined that the definition of black box is anything that an unemployed person needs to get work within the Work Programme and consequently they will not allow a customer on the Work Programme to access other programmes funded by, for example, the European Social Fund (ESF). There are many examples of customers in Wales being disadvantaged as a result of this interpretation of the black box. Here are some examples, directly from staff working on Work Programme delivery in Wales, of how this has impacted on people s outcomes provided through Rehab JobFit s supply chain: 5.3 A Work Programme customer applied for a job online as part of his job search activity, only to be informed that he was not eligible as Jobs Growth Wales is ESF-funded. The customer met all criteria for the position advertised. 5.4 A gentleman was working with this organisation to overcome his barriers which were literacy, numeracy and self-confidence. The customer had a history of mental illness, he had been with this organisation for a few months and there were definite improvements to his life. The customer was informed that he would be required to join the Work Programme and as a consequence this meant that he would have to leave the programme he was in because it was ESF-funded. We were approached by the customer s mother who pleaded with us to let

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 145 him stay where he was as she could already see the decline in his overall wellbeing. Unfortunately this was not possible however, we did arrange a 1 to 1 meeting with MIND to try and source a voluntary placement. 5.5 One customer thought he had a job. He then came into the office to say he wasn t eligible to start at the garage that day due to it being under the Jobs Growth Wales funding and he was on the Work Programme. 5.6 Another customer was referred to Kaleidoscope by Jobcentre Plus (JCP) to complete Track Safety Licence but came onto Work Programme before he got his appointment with them. Due to being on the Work Programme, he was told that he was no longer eligible even though he was referred previously. 5.7 Three customers with learning disabilities who were in receipt of Disability Living Allowance needed a job coach which could have been sought from Quest previously, but this isn t accessible for customers on the Work Programme. 5.8 A customer was referred to the Work Programme although he had already advised JCP that he had a Jobs Growth Wales opportunity, he was referred to us anyway and after 6 months of issues and complaints to deal with he has finally been taken off Work Programme and has now taken up the Jobs Growth Wales opportunity. 5.9 Another less impactful drawback of the black box relates to its interpretation by sub-contractors, many of whom initially saw the black box approach as an opportunity to continue providing services in the same way as they had previously done and some of those practices did not work as effectively as possible. At this stage in the Programme, providers are aware of what works and doesn t work and change is beginning to take place; however, this change could have commenced earlier had the black box not been interpreted so loosely, including permitting the way things were done in the past. 6. Theme: Regional variations in job outcome statistics: Including whether competition between providers is driving up performance in contract package areas where the economy is particularly depressed; and how provider performance could be improved in these areas. 6.1 There is currently no competition between prime providers in contract package areas. In general they work independently of each other and because referrals are sent alternately to each of the two providers in a CPA, there is never any need to compete with the other provider. 6.2 It is understood that performance at the end of year two will potentially shift some market share between providers. In the case of Rehab JobFit there is also no competition between subcontractors as each provider is solely assigned to a specific JCP area. 6.3 There are regional variations in performance and therefore it is more appropriate to measure each provider within their CPA rather than comparing them to the full group of 18. For example, compare providers within Wales, or within the South West and so on. It seems unfair that performance in London, which in effect has its own strongly performing micro economy, is compared with the North of England, Wales or Scotland. 6.4 In relation to improving provider performance in areas where the economy is particularly depressed there is only one solution job creation. If the economy in a particular CPA is impacting on the number of jobs available and, therefore, on the Work Programme s performance, there is very little that DWP can do to help improve the provider performance. Local job creation initiatives are the only solution. 7 December 2012 1. About Scope Written evidence submitted by Scope 1.1 We all want to live in a world of opportunity to be able to live our own life, play our part and be valued for the person we are. At Scope we re passionate about possibility. It inspires us every day and means we never set limits on people s potential. We work with disabled people and their families at every stage of their lives. From offering day to day support and information, to challenging assumptions about disability and influencing decision makers everything we do is about creating real and lasting change. We believe that a world where all disabled people have the same opportunities as everyone else would be a pretty incredible place for all of us. Together we can make it happen. 1.2 We welcome this opportunity to submit written evidence to the Work and Pensions Select Committee inquiry into the experience of different user groups on the Work Programme, and share the Government s vision of supporting disabled people to fulfil their potential. 1.3 Scope has previously delivered one end to end Work Programme contract as part of the wider Disability Works UK (DWUK) consortium, who will be submitting a separate response to the Inquiry. Scope has now withdrawn from delivering the Work Programme end to end because of a lack of appropriate referrals, an issue we explore further below. However, as part of DWUK, we are currently exploring options for delivering a specialist intervention service for Tier One and Tier Two contractors.

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 146 Work and Pensions Committee: Evidence 2. Executive Summary: 2.1 Recently published performance statistics show that the Work Programme is failing to support disabled people into work. 1 The disabled population as a whole on the programme are not reaching job outcomes, and those coming onto the programme as Employment Support Allowance (ESA) claimants are particularly lacking in support. 2.2 As such, Scope has serious concerns that the group of disabled people who are furthest from a job are receiving the least support. This is compounded by performance issues on other disability-specific employment schemes like Work Choice, 2 and the on-going failures of the Work Capability Assessment (WCA) which mean many claimants are being placed onto inappropriate programmes. Taken together, these issues mean that a large number of disabled people fall between the gaps of programmes and so lose out on vital back to work support. 2.3 To resolve these problems, Scope s recommendations for action are: 2.3.1 Introduce a Distance from Work Test: A Distance from Work test should be introduced as an extra module in the WCA so that disabled people s actual readiness for work situations is given equal consideration to their functional limitation, and the real barriers to employment are recognised and supported. 2.3.2 Introduce an Employment Support Plan: The Government should implement greater links between Work Programme and other employment support schemes for disabled people by creating an Employment Support Plan, collaboratively produced by the claimant and Jobcentre Plus (JCP), which acts as a gateway mechanism and provides disabled people with a roadmap for their welfare to work journey. 3. Recommendations for Action: 3.1 Scope believes that meaningful work and volunteering can give disabled people the opportunity to be more financially independent and socially engaged, and can boost confidence and self-esteem. We are clear that many disabled people do require support to access the labour market and get the most out of work, so welcome the existence of employment support schemes like the Work Programme. 3.2 However, the Work Programme is failing to deliver for disabled people: in spite of making up a third of all referrals onto the programme, disabled people account for only one in five of the total job outcomes. In light of this poor performance, and the lack of a joined-up employment offer across Government, Scope recommends a mix of short and long-term interventions to improve the way disabled people are supported into work. 3.3 As such, our recommendations for action are: 3.3.1 Introduce a Distance from Work Test: A Distance from Work test should be introduced as an extra module into the WCA so that disabled people s actual readiness for work situations is given equal consideration to their functional limitation, and the real barriers to employment are recognised. 3.3.2 Many providers are already carrying out tests such as this as part of the referral and attachment process, so introducing a Distance From Work test within the DWP-owned parts of system would not lengthen the time claimants spend going through the process. Rather, by creating a test that measures actual work-readiness, there would be positive impacts such as supporting the right first time agenda within the WCA, in addition to improving disabled people s experience. 3.3.3 Introduce an Employment Support Plan: The Government should implement greater links between Work Programme and other employment support schemes for disabled people by creating an Employment Support Plan, collaboratively produced by the claimant and JCP, which acts as a gateway mechanism and provides disabled people with a roadmap for their welfare-to-work journey. The core objective of the Employment Support Plan would be to ensure that the appropriate employment options are offered to disabled people following their WCA, and to allow the right decision about which programme to enter to be made. 3.3.4 In turn, this would ensure a more appropriate match between claimants and schemes, which would give providers a clearer sense of the claimants coming onto their programmes; ensure lower appeals rates which would save money and boost claimant flow; and improve disabled people s experience of the scheme, reducing their uncertainty and fear about what will happen after they have been found fit for work. In addition, a DWP evaluation of the Work Programme showed that many participants actively wanted greater involvement in the development of their own plans, and many felt that this would improve their engagement in the programme. 3.3.5 Where similar plans have been used in other areas of disability care and support such as transitions planning for young people, or personalised care planning for adults it has been shown to increase buy-in from all involved, ensure support is effectively targeted, and improve outcomes. 3 The Employment Support Plan also has the potential to link into these wider support programmes, such as by introducing employment support into statutory transitions services

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 147 4. Factual Information 4.1 The Work Programme performance statistics released on 27 November 2012 show disappointing outcomes for disabled people on the scheme. 4 Overall, the data indicate that the stated policy objective of the Work Programme to support those furthest from work is not currently being met. 4.2 Scope analysis of the data shows that in total 267,490 disabled people were referred to the Work Programme during the first 14 months. This means that around a third of all participants on the scheme have some form of impairment. 4.3 For this group there were only 6,120 job outcomes, around a 2.2% outcome rate. The rate of sustained employment is lower, with only 3,940 disabled people remaining in work long enough to trigger a sustain payment. 4.4 This means that despite making up over a third of all referrals onto the Work Programme, only one in five of the total job outcomes through the scheme were for a disabled person. 4.5 This pattern is seen across the whole programme: those who require the most support are least likely to have found a job. For ESA claimants, who typically require a higher level of support, only 1.3% of participants achieved a job outcome 1,070 outcomes from a total of 78,640 referrals. For ESA claimants who were previously on Incapacity Benefit some of the furthest from work on the whole programme figures from the DWP tabulation tool shows that only 30 people achieved a job outcome, an outcome rate of 0.3% for that group. 4.6 There are a range of structural reasons why the Work Programme is not delivering appropriate support for disabled people. Although the payment by results model incorporates differential payments to encourage more support for those furthest from work, a DWP qualitative evaluation of the programme found that providers business models continue to be built around placing a high volume of easy to place clients. 5 This means that there is currently minimal investment in specialist disability interventions. Although some contractors are beginning to provide these services, there is little evidence to suggest that this is translating into outcomes. 4.7 But we know that specialist interventions can deliver job outcomes for disabled people. For instance although there continue to be performance issues with Work Choice notably around the length of time providers have to work with claimants the scheme has delivered overall outcomes rates of 11%, which is a noticeable improvement on the Work Programme. 6 4.8 Yet many of the group of disabled people furthest from work are not currently able to access Work Choice. The programme has a limited number of places, and there remains no clear gateway mechanism linking entry onto the scheme with entry onto the Work Programme. Further, only 14% of Work Choice participants are from the ESA group, raising even further concerns about the absence of support for this group. 4.9 In conclusion, the Work Programme is failing to support disabled people into work, especially those with the greatest support needs. Yet there are even more serious concerns about employment support for this group across the Government s overall employment support strategy. 4.9.1 This means that there is a large group of severely disadvantaged disabled people currently claiming ESA, many of whom want to do meaningful jobs, but who are falling through the major gaps in provision between Work Programme and Work Choice. Scope would strongly welcome changes to the structure of employment support such as those outlined above that would provide better and more coherent support for the disabled people in this group. 7 December 2012 References 1 Work Choice: Official Statistics, November 2012 2 Personal Budgets: Taking Stock, Moving Forward, Think Local, Act Personal: 2011, available online here: http://www.thinklocalactpersonal.org.uk/browse/sdsandpersonalbudgets/implementing/?parent=8615&child= 9094 3 Based on Scope analysis of Work Programme performance statistics, using the DWP Tabulation Tool 4 DWP, Work Programme evaluation: Findings from the first phase of qualitative research on programme delivery, 2012 5 Work Choice: Official Statistics, November 2012

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 148 Work and Pensions Committee: Evidence Written evidence submitted by Shaw Trust and Careers Development Group (CDG) Executive Summary 1. The Work Programme is a much needed evolution in the delivery of welfare to work services. The flexibility offered through the black box approach to delivery; the longer duration of the customer journey at two years compared to an average of 6.5 weeks on predecessor programmes like New Deal; and the opportunity for staff to work with customers on a one to one basis has resulted in the Work Programme being the most bespoke and tailored welfare to work programme to date. In a recent survey, 80% of Shaw Trust and CDG s Work Programme delivery staff felt that the Work Programme enabled them to deliver a more individually tailored service than previous welfare to work programmes. 2. Although the Work Programme has brought much needed enhancements to the delivery of welfare to work services, further refinements including moving towards a differential payments model based on customer need, rather than their barriers to work could lead to even more customers finding and sustaining work through the contract. Additionally, a realignment of funding of the Work Programme for harder to help payment groups could also lead to further job outcome successes. By redistributing a small proportion of funding away from sustainment payments and towards the attachment phase- especially for harder to help groups like Employment and Support Allowance (ESA) customers, more funding could be spent on delivering tailored interventions to these customers, while retaining the payments by results funding structure of the Work Programme. Ensuring that the ESA customers furthest from the labour market are able to participate in alternative specialist provision, such as Work Choice, could also contribute to raising the job outcome achievement rate for this group of customers. 3. Although variations in contract performance on the Work Programme can be attributed to the differences in delivery between Work Programme providers, it is also important to acknowledge the impact of regional socio-economic factors on contractual performance. In particular, the level of deprivation and the competition for jobs in each CPA (Contact Package Area) have a demonstrable impact on contractual performance. 4. Shaw Trust and Careers Development Group welcome the opportunity to submit evidence to the Work and Pensions Select Committee s inquiry in relation to the experience of different user groups on the Work Programme. Our evidence focuses on areas of Shaw Trust and CDG s direct delivery experience as both a prime provider and a subcontractor. Introduction to Shaw Trust and CDG 5. Shaw Trust and CDG is a newly merged charity comprising leading welfare to work charities Shaw Trust and the Careers Development Group. Both charities have over thirty years of experience of supporting unemployed and disabled people to achieve employment, independent living and social inclusion. In 2011 12 the combined organisation supported 46,595 customers from over 190 delivery centres nationally. 6. Shaw Trust and CDG is one of only two third sector prime contractors of the Work Programme in the UK. The charity delivers the Work Programme as a prime contractor in the London East Contract Package Area. The charity also operates as a subcontractor to a range of different prime contractors in the London West; Thames Valley, Hampshire and the Isle of Wight; Surrey, Sussex and Kent; Gloucestershire, Wiltshire and the West of England; Coventry, Warwickshire, Staffordshire and the Marches; and North Yorkshire and the Humber CPAs. 7. Shaw Trust and CDG additionally delivers a range of specialist contracts to support disadvantaged groups towards and into employment in the UK. These include 17 Work Choice prime contracts for people with severe health problems and disabilities, the new DWP Day One Support for Young People contract to support young people into work experience and employment, as well as operating a range of social enterprises which generate stepping stone employment opportunities for the hardest to help. 8. The charity has extensive experience of delivering the Work Programme s predecessor contracts: New Deal, Pathways to Work and Flexible New Deal as both a prime contractor and a subcontractor. Such a wealth of delivery expertise ensures that Shaw Trust and CDG are best placed to comment on the experience of different service users on the Work Programme to date. Differential Payments Define customers by need and not by benefit claimed 9. Shaw Trust and CDG welcome the differential payments model offered by the Work Programme. Throughout our 30 year history of delivering employment focused services to unemployed and disadvantaged customers, we know that some individuals need more intensive support over a longer period of time than other beneficiaries that we work with. The Work Programme s differential payments model reflects this diversity of need, and is intended to offer the funding needed to support some of the most disadvantaged customers participating in the Work Programme into and through sustained employment. 10. However, despite the Work Programme s differential payments model delivering a necessary evolution in welfare to work delivery, Shaw Trust and CDG would like to see this model evolve further in future welfare

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 149 to work commissioning. In particular, future differential payments models should assign payment not on the type of benefit claimed such as Jobseeker s Allowance (JSA) or Employment Support Allowance but on the specific barriers and level of disadvantage that each individual faces to getting into work. 11. Shaw Trust and CDG s survey of Work Programme delivery staff revealed that in the experience of our front line teams the barriers that people face in getting back into work are specific to each individual and not to any one payment group. 60% of staff stated that they did not feel that the payment group a customer is allocated to on the Work Programme accurately reflects how easy or difficult each customer will be to get into work. For example, staff reported that mental and physical health problems affect customers in all payment groups, and not just the three ESA payment groups and the Incapacity Benefit and Income Support payment group. Similarly, barriers to work such as homelessness, or a lack of access to affordable childcare, are not exclusive to just one payment group. 12. The published Work Programme statistics add additional weight to the need for a further evolution of the differential payments model. The statistics highlight that the most disadvantaged JSA payment group JSA Early Access outperforms perceived easier to help payment groups. Lower outcome payments are paid for helping these perceived easier to help groups into work such as the JSA 25+ customers. According to the published figures in November 2012, Work Programme providers have been paid for job outcomes for 4.9% of JSA Early Access claimants, compared to 3.4% of JSA 25+ customers. 60 13. A future differential payments model linked to barriers and not payment type could utilise best practice from the Australian Job Seeker Classification Instrument (JSCI) model. The JSCI is used by Centrelink staff (Australia s equivalent to Jobcentre Plus) to comprehensively assess customers barriers to work before they are referred to a provider for employability support. The JSCI assesses whether customers possess common barriers to employment such as basic levels of literacy and numeracy or health problems, alongside a more holistic range of socio-economic factors which may affect an individual s ability to move into employment. These include the locality in which someone lives, such as a rural area with few jobs or an area of multiple deprivation, whether an individual suffers from intergenerational disadvantage, and any transport related barriers an individual may face. 61 Benefit claimants are then placed into four different streams, according to their identified difficulty to move into work. Providers are paid ten times as much funding to support customers on their journey into work in stream four the most disadvantaged stream, compared to stream one - the stream with the most job ready customers. 14. Such a comprehensive measure of individuals needs could be used to enhance both providers and Jobcentre Plus (JCP s) delivery of employability services on future programmes, such as the next phase of Work Programme. Shaw Trust and CDG are currently developing a new in-house assessment tool Springboard to support our Work Programme prime contract delivery in the London East CPA. Springboard will not only identify Work Programme customers barriers to employment, but will assist our Employment Advisors by suggesting the most appropriate intervention delivered in-house or by a menu partner to tackle that barrier. This enhancement to the charity s Work Programme delivery will ensure that every single Work Programme customer will receive the right tailored support at the right time in their journey back into employment. Realigning the payment pattern for the hardest to help 15. Shaw Trust and CDG also have further concerns regarding the current Work Programme differential payments model. By tying a minimum of 80% of the contract s funding to the achievement of sustained outcomes in year one, moving to a 100% in year four of the contract, the ability of providers to purchase tailored interventions to support the most disadvantaged customers could be affected. This could particularly impact on the three ESA customer groups on the Work Programme, which have not performed as robustly on the contract to date as customers in other payment groups. 62 16. To date, Shaw Trust and CDG has invested in supporting ESA customers by providing specialist interventions to tackle their barriers to work, such as condition management support from menu partner Expert Patients, and specialist support for people with hearing difficulties and disabilities from Clarion. For ESA customers who need home visits or are unable to travel, specialist Engagement Advisors provide intensive individualised support to customers on an outreach basis or from customers homes. 17. However, further tailored support could be provided to ESA customers if the Work Programme payment structure for these groups was realigned. By redistributing a proportion of the funding for job outcomes or sustainments to the attachment phase, or by creating a series of transitional funding triggers for achieving distance travelled targets, more funding would be allocated earlier on in ESA customers journeys into work. This would enable providers to invest more heavily in tailored interventions which support customers in managing their health conditions, and pave a realistic and sustainable path back into employment. It would 60 For Work Programme performance statistics, please see DWP s Work Programme Tab Tool page: http://research.dwp.gov.uk/ asd/index.php?page=wp 61 Department for Education, Employment and Workplace Relations (2009), Review of the Job Seeker Classification Instrument 62 For Work Programme performance statistics, please see DWP s Work Programme Tab Tool page: http://research.dwp.gov.uk/ asd/index.php?page=wp

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 150 Work and Pensions Committee: Evidence also retain the payments by results financial incentive on the Work Programme, which is a fundamental policy objective of the current government. 18. Additionally, we would urge the Department for Work and Pensions to carefully evaluate the appropriateness of the Work Programme for some groups of ESA customers, particularly those with return to work prognoses of over six months. A more specialist programme, such as Work Choice, which offers customers intensive support tailored to each individual s pace of development, coupled with distance travelled outcomes like participation in supported employment as part of an individual s journey back into sustained mainstream work, could be better suited to the barriers and employability needs of ESA customers further away from the labour market. Creaming and Parking 19. Shaw Trust and CDG agree fully with the findings of DWP s first piece of qualitative research into the Work Programme. This initial report emphasises that at this stage of the contract, it is too early to evaluate whether creaming and parking is occurring in delivery. 63 20. In particular, we would caution against using the published job outcome data on 26 November 2012 as evidence to conclude whether creaming and parking is occurring. Providers have two years to support a customer to prepare for and to secure employment on the Work Programme. The DWP data published on 26 November 2012 shows only the job outcomes paid for by DWP between June 2011 and July 2012. This means for the JSA 18 24 and JSA 25+ payment groups the majority of Work Programme participants a job outcome would have needed to have been secured by February 2012 to qualify for a job outcome payment in this data period. The job outcome data therefore underestimates achieved performance. 21. As the Work Programme progresses, and the first cohort of customers in June 2011 complete the Work Programme in June 2013, a clearer picture of both performance and any potential creaming and parking may be revealed. However, reviewing Shaw Trust and CDG s job start data for the London East prime contact for the June 2011 cohort to date reveals that 14% of job starts for this cohort have been achieved one year after contract commencement. This suggests that Shaw Trust and CDG are effectively working with the Work Programme customers furthest from the labour market, and supporting them into employment. Acknowledging the Causes of Regional Variations in Job Outcome Statistics 22. Although Shaw Trust and CDG fully acknowledges that the published Work Programme performance, showing paid job outcome data until July 2012, does highlight variance in performance between providers, it is also important to acknowledge the wider range of social and economic factors which have an influence on job outcome achievement in each CPA. 23. Shaw Trust and CDG s own analysis of the published data reveals that both the level of deprivation in each CPA and the competition for jobs in each CPA have a tangible impact on Work Programme contracts performance to date. For example, Shaw Trust and CDG s prime contract in London East is located in the most deprived Work Programme CPA in the country. Eight of the sixteen local authorities in the CPA are in the top twenty most deprived local authorities in England according to the Indices of Multiple Deprivation 2010. 64 This includes having the top three most deprived local authorities in the CPA: Hackney, Newham and Tower Hamlets. Shaw Trust and CDG s prime contract is ranked 23rd out of the 40 prime contracts in terms of performance achieved to date. In contrast, the least deprived CPA in the country: Thames Valley, Hampshire and the Isle of Wight achieved the best performance in the published Work Programme results. The charity is also a subcontractor in this CPA. 24. Similarly, the London East CPA has the highest competition for jobs 65 out of all CPAs across the UK. Data from June 2011 July 2012 shows that there are 9.6 benefit claimants per JCP notified vacancy in the CPA. There are just 3.5 claimants per job in the top performing CPA, Thames Valley, Hampshire and the Isle of Wight, with the lowest level of benefit claimants per job in another top performing CPA: Coventry, Warwickshire, Staffordshire and the Marches. 25. This evidence firstly emphasises the danger of comparing CPAs on a national level, as the unique labour market and demographic factors specific to each CPA have a bearing on contract performance. As per the Work Programme s original design, a comparison of the performance of providers within each CPA is therefore the fairest and most effective gauge of contractual performance, as the two or three providers within each CPA face the same challenges to performance as each other. 26. Additionally, our data analysis suggests that regionalised performance targets, which potentially evolve in line with labour market conditions, could be of benefit in future welfare to work contracts. Setting providers uniform targets could result in targets being missed in areas of the country where the labour market is not 63 Department for Work and Pensions (2012), Research Report 821, Work Programme evaluation: Findings from the first phase of qualitative research on programme delivery. 64 The Indices of Multiple Deprivation are published by the Department for Communities and Local Government: https://www.gov.uk/government/publications/english-indices-of-deprivation-2010. 65 Competition for jobs is calculated by dividing the total number of Jobseekers Allowance claimants and Employment and Support Allowance claimants (i.e. claimants ready for work) in a CPA by the number of JCP notified vacancies available in the CPA.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 151 buoyant, as well as national factors such as the recent double dip recession where economic growth for 2012 has fallen to -0.1% compared to the 2.6% originally forecast by the Office of Budgetary Responsibility at the time of Work Programme bid submission not being factored into contractual performance. Equally, national minimum performance levels could also result in providers in more economically buoyant CPAs not being set realistically stretching performance targets. Linking performance to locality could again be benefitted by a differential payments system linked to individuals barriers to work rather than benefit type. By identifying where in the country the most disadvantaged benefit claimants are, and providing more funding to these areas accordingly, providers can not only develop more targeted and bespoke service delivery models, but taxpayers money could be saved by more effectively tailoring job outcome payments to level of need. This would acknowledge that the average JSA claimant in the least deprived local authority in England in Hart in Hampshire faces very different challenges on their journey back into work than a claimant in the most deprived local authority of Hackney. Conclusion 27. Shaw Trust and CDG fully supports the Work Programme. The Work Programme offers a much needed evolution in service design by enabling delivery staff to work with customers more flexibly and for longer than predecessor programmes. When evaluating the Work Programme s effectiveness to date, regional socialeconomic factors which impact on performance such as the level of deprivation and competition for jobs, should be fully acknowledged. 28. Further enhancements to the Work Programme could involve a redistribution of the funding structure towards more disadvantaged customer groups. This would ensure that providers have the funding up front to invest in developing and delivering tailored interventions to tackle customers barriers to work. Any future evolutions in service design should consider linking differential payments to customer needs and not benefit type, as well as retaining specialist employability provision to prepare customers with disabilities and health problems for the workplace. 7 December 2012 Written evidence submitted by Single Parent Action Network 1. Summary 1. Single Parent Action Network (SPAN) has interviewed single parents across England about their experience of the Work Programme (WP) and is sharing findings for this inquiry. 1.2 Given their experience of the WP, we are not surprised that single parents fair less well than the average WP user, nor that their satisfaction with the programme is low. 1.3 The evidence illustrates three realities: That the WP does not take adequate account of their need to care for their children as well as participate in the programme; That single parents are too often denied appropriate flexibility in the work that they are expected to obtain; and Their experience of the programme is characterised by a lack of clarity over rules to which they are required to abide and a lack of predictability about the services that they should expect to receive. 1.4 All these findings are evidence of a lack of fairness and consistency in the treatment of single parents and help explain why the service is not achieving success. If the scheduling of participation clashes with caring responsibilities, if the provisions that allow single parents to balance working hours with caring responsibilities are ignored, if there is little co-ordination with Jobcentres and scant information on how to seek advice or redress, the programme will not work. 1.5 We propose simple recommendations with the potential to improve the service: building on the need to accommodate caring responsibilities; respecting rights and working on realistic expectation of working hours; and bringing clarity and consistency to the Programme. 2. Context 2.1 Single parents are a significant user group on the Work Programme making up 7.4% (62,333) of all attachments between June July 2012. 66 In terms of long-term employment outcomes single parents do worse than jobseekers overall. Out of the 31,240 jobseekers who have moved into longer-term work 1,650 were single parents (3.7% for all clients compared to 2.7% for single parents). 67 2.2 SPAN is a Bristol based charity and directly works with single parents. We also operate nationally, helping membership groups and individual members. We have a national online forum called One Space. In 66 DWP November 2012 http://statistics.dwp.gov.uk/asd/index.php?page=wp 67 Gingerbread analysis of DWP data www.gingerbread.org.uk/news/180/work-programme

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 152 Work and Pensions Committee: Evidence March 2012 we published an analysis about single parents transferring onto the Work Programme. 68 We have followed this up with a more comprehensive study, funded by Oxfam UK, looking at the experience of single parents nationally. This submission contains results from this study; the full report is scheduled for publication in January 2013. This submission is the first time these results have been shared. 2.3 We concentrate on two areas of the Inquiry: first the level of service provided; and second the effectiveness of the black box approach to service delivery. 3. Background Requirements for single parents to become jobseekers 3.1 There are 2 million single parents (9 out of 10 are women) the majority are already in employment (59%). Both the previous and current Government want to further increase this number. Since 2008, 400,000 69 single parents have moved from Income Support to job seeking requirements. What makes single parents preparation and seeking requirements different? 3.2 Single parents on Jobseeker s Allowance (JSA) are subject to the same requirements as other jobseekers showing they are available and seeking work. Like all jobseekers those that are longer term unemployed are transferred onto the WP. However, it is recognised that as well as being a jobseeker single parents have responsibility for children. The Welfare Reform Act 2008 contains a provision to protect the wellbeing of children. 70 There are also Lone Parent Flexibilities 71 such as the ability for a single parent to ask to restrict their hours of work. 3.3 Like all public sector organisations, the DWP (including Jobcentre Plus) and contracted services under the WP are subject to the public sector equality duty. 72 Services should be designed to take account of the particular needs of single parents. 4. A. The Level of Service Provided to Single Parents on the Work Programme The source of our evidence 4.1 During the second half of 2012, SPAN used national and local networks to advertise for single parents on the WP who were willing to be interviewed in order to share their lived experience of the programme. 4.2 Sixteen single parents across England were interviewed, eleven from different regions and four from London. The ages of the single parents children ranged from five to 15 years. The time spent on the WP ranged from one week to one year. Two single parents have left the WP, one into work and one has come off benefits. Satisfaction levels with the WP were low, averaging 3.5 out of 10. More details are set out in Appendix A. Accommodating single parents and their children 4.1 WP offices cater for all types of job seekers including ex-offenders and there is divergence as to how Providers will accommodate single parents and their children particularly in school holidays. 4.2 Three single parents were told before the school summer holidays they should not bring their children to the WP (SP s 3, 10 and 14). Three single parents (SP s 4, 6 and 15) were initially turned away from the Work Programme during school holidays. SP4 was told that she could bring her child in for her weekly job search meetings but on arrival was told he could not be there for health and safety reasons. SP15 first appointment at the Work Programme was in half term and she was turned away for the same reason. SP6 was told on arrival with her child in the school holidays that she should not do that. She was then told to leave her child (aged nine) in a room on her own (something her daughter did not like) whilst she had her appointment. For subsequent appointments she paid a neighbour to look after her child. The same single parent was offered employability training but then this was withdrawn because it clashed with the school holidays and childcare was not provided. 4.3 Consideration around term time appointments for single parents varied. SP6 and SP4 initially thought the Provider was fitting appointment times in with school pick-up but this flexibility diminished over time. SP4 was recently offered appointment and training times without negotiation. When she attended a workshop she had to pay for her child to attend the school breakfast club. SP11 was given an appointment time that clashed with school drop-off. When she tried to change the appointment she was told she must come in or lose her benefit. SP15 was offered an advanced job-seeking course but the hours were 9am 4pm and so she would not be able to pick up her youngest child from school (aged nine) so was unable to attend. 68 SPAN, Is the Work Programme Working for Single Parents? Analysis of the Experience of Single Parents Moving onto the Work Programme, March 2012, http:span.org.uk/publications 69 Grayling C, PQ, March 2011 and figures from DWP report 736 May 2010 p11. 70 Section 31. 71 Set out in regulations. 72 s.149 of the Equality Act.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 153 4.4 This contrasted with some good practice. SP2 was informed by the WP that childcare costs were covered, while SP5 and 13 said their advisers made sure appointments were during school hours. 4.5 SP12 was told that courses arranged by her Provider would be held in the school day and she did not need to attend the WP during the school summer holiday. Both SP9 and 1 were positive that their Providers agreed to change appointment times because they clashed with school pick up times. In addition SP9 was also told that if her child was ill that she could rearrange an appointment. Poor coordination between Jobcentre and the Work Programme 4.6 DWP research has found that there can be poor co-ordination between Jobcentre Plus (JCP) and the WP for all groups. 73 Our findings support this with over half of the parents (8) reporting a lack of co-ordination. 4.7 For two parents this meant receiving no back to work support from either organisation. SP1 had one appointment in three months. The WP cancelled her next appointment and she has not been given an appointment since. SP8 was suspended from the WP for being late for an appointment. For four months she has not been offered any back to work support. Both parents informed JCP about their situation but were told they were the responsibility of the WP. 4.8 The parents who had a more positive experience appreciated knowing what the WP would involve. Their Providers gave induction training, setting out practical support (like money towards interview clothes or childcare) and details of services that they could access (such as training). It also worked well where the JCP offered support to single parents before transfer and could inform them about what the WP would involve. For instance, SP12 had an interview before transfer with a Lone Parent Adviser at JCP to go through a new Jobseeker s Agreement. 4.9 The WP and JCP could be inconsistent concerning the application of the lone parent flexibilities. All claimants should have a Jobseeker s Agreement, which should be applied by JCP and the WP. This was not always the case. For instance, two single parents (SP4 and 6) were told by the WP to apply for jobs that went against their Jobseeker s Agreement. SP4 had been told to apply for jobs where she would have to work Saturday and Sunday even though her Agreement specified work between Monday and Friday. 4.10 SP14 felt she had two people to please in her job search. In addition she was given inconsistent messages from the two organisations. JCP had agreed under Lone Parent Flexibilities that she did not have to sign on during the school summer holidays. She was then offered her first appointment at the Work Programme on the first day of her child s school holiday. They insisted that she attend and she was threatened with a sanction. 4.11 The WP has inherited some inconsistent practice in the application of Lone Parent Flexibilities from JCP. The DWP s own commissioned research report (2011) found that the majority of single parents were not aware of the specific flexibilities, a proportion had been told they were allowed to only look for work that was during school hours only (12%) or have the availability and costs of childcare taken into account when working out their availability to work (8%). 74 4.12 This lack of consistency from JCP led to a number of single parents having unrealistic Jobseeker s Agreements. The WP s task of helping these parents move into sustainable work may be impeded. For example, SP9 s Agreement includes that she must work the hours from the moment she drops her child off at school to the moment she picks her up, allowing no time for her travel to a place of work. 4.13 There was also evidence that flexibilities were not necessarily applied to the single parents that might have the greatest needs. SP8 has a child in primary school with an educational statement. He needs support including being taken to and from school and would struggle in an after-school childcare setting. She had left work two years earlier because of the need to support her son. Her Agreement specifies that she must apply for full-time hours because there were not many part-time jobs available and this was applied at JCP and the WP. Recommendations 4.14 SPAN believes this evidence supports six recommendations. (i) There needs to be better account taken of single parents responsibilities to care for their children whilst on the WP. Clearer provision for term time appointments and certainty as to how single parents will be accommodated in the school holidays. (ii) Single parents should be given the same opportunities to train and develop as other jobseekers, so training needs to be scheduled at times when single parents can attend. (iii) Work Programme Providers should pay for childcare when it is needed for single parents to attend appointments or training. 73 DWP, Work Programme Evaluations: Findings from the first phase of qualitative research on programme delivery, November 2012 74 DWP, Lone Parent Obligations supporting the journey into work, Research Report 736, May 2011, Page 86

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 154 Work and Pensions Committee: Evidence (iv) (v) (vi) At present no figures are kept for the reasons why sanctions are threatened or applied to single parents on the Work Programme. 75 In order to show that single parents are treated fairly these figures need to be collected and published. Account needs to be taken of Lone Parent Flexibilities and these need to be consistently applied on the WP. JCP should make sure that before a single parent transfers that a lone parent specialist is available for the parents final interview before transfer and that a Jobseekers Agreement is drawn up that reflects a claimants caring responsibilities. Better co-ordination is needed between JCP and the WP. In particular single parents should be made aware of how they can complain and have the support of JCP (including access to specialist Lone Parent Advisers). 5. B. The Black Box Approach to Service Delivery Flexibility on the Work Programme 5.1 For three of the single parents the flexibility around support and attendance at the WP was positive. SP13 valued the support she was given by her really brilliant adviser. Her appointments were every two weeks because it was recognised that she knew what she was doing. The Provider then gave her substantial practical support including sending out flyers for her and paying membership of a regulatory body for her qualification to help her move into work. They also paid her train fare to attend a job interview in another city. 5.2 SP15 s adviser was trained in Human Resources and was really useful at helping her with her CV and referring her to appropriate agencies to find work. She had to attend once a month but was in regular email and telephone contact. The WP offered more support when it was needed such as when she was going for an interview. SP5 thought her adviser was really nice. She was offered courses although it was made clear these were optional. She felt her Adviser recognised her skills (as a qualified teacher) and did not push her into low skilled work. 5.3 However, the gaps in appointments left some parents feeling abandoned by the WP. SP3 attends every two or three months as they don t feel there is much they can do for me. She has a degree and postgraduate qualification and was told, they cannot cater for all kinds of needs. SP12 and 16 had infrequent contact with their advisers. 5.4 There was concern about the lack of training or its poor quality and that it was geared at a basic level. SP8 and 11 were told that there was no money for training on the WP. SP14 was only offered a course in food hygiene (she is a qualified teacher). SP4 wanted to improve her basic skills in Maths and English and found a course at her local college only to be told that the WP appointments must come first and she could not attend. 5.5 Single parents wanted predictability in the services they received including specialist support to go through a better off in work calculation. This was raised as an issue by SP4, 6 and 12. These parents (and SP10) also raised concern about not having access to the specialist support of a Lone Parent Adviser (they had valued this at the Jobcentre). Recommendations 5.6 SPAN believes this evidence supports four recommendations. (i) Single parents need some basic predictability about the services and support that they will be getting under the WP. It needs to be made clearer what activities are mandatory or optional. (ii) The WP should have specialist advisers for single parents including those that can help with better off in work calculations (iii) The good practice of WP Providers should be shared to show how tailored support could work better for single parents. (iv) Single parents are likely to have been out of employment for a significant time and require a wider range of training courses on the WP to enable them to compete in the job market. 75 Parliamentary Question about single parents on the Work Programme and Sanctions, Kerry McCarthy MP, 21 May 2012.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 155 APPENDIX 1 INFORMATION ABOUT INTERVIEWEES How satisfied Ages of Work Programme How often do you with the Single Parent dependent How long on WP? Provider Area attend? WP? 76 1. 11 and 15 3 months Avanta, East Once 2 Sussex 2. 10 and 13 1 week A4E, East Once 3 Midlands 3. 14 1 Year Progress, Bristol Every two or three 0 months 4. 11 9 months A4E through Varied between 1 Knowsley Works, Liverpool once a fortnight to 4 times in one week. 5. 12 9 months A4E, Varies. 7 London 6. 9 9 months ESG and Sencia, First every two 1 Staffs weeks and now every week 7. 11 and 12 One Year Ingeus Wardwick, At first once a 6 Derby fortnight but recently less often. 8. 10, 15 and 16 6 months Reed, London Once a month but 1 suspended from WP 9. 10 6 weeks G4S delivered by Every two weeks 9 Pertemps, but flexibility Eastbourne 10. 12 5 months Sarina Russo Every fortnight 0 Coventry 11. 5 3 months In Training, Once a month 3 Leicester 12. 9 (Twins) and 8 months Prospect, London Not consistent 2 12 13. 8 5 months Ingeus, London First once a week 9 and then once a fortnight 14. 13 and 16 4 months Ingeus, Varied but 1 Nottingham attended 4 times in the 4 months 15. 9 and 13 2 months Kennedy Scott, Once a month 6 Harpenden 16. 10 8 months G4S, Varied three times 5 Scunthorpe over period 7 December 2012 Written evidence submitted by Social Firms UK Summary This submission covers evidence provided by Social Firms UK members who are Work Programme subcontractors or specialist providers. Creaming and parking remains common practice. Lack of, or inappropriate, referrals mean that individual s needs are not being met. DWP Merlin Standard and monitoring (if it happens) is ineffective. The cumulative effect of creaming and parking, lack of referrals and lack of support for subcontractors by prime contractors, lack of accountability through the black box system, and DWP s laissez faire approach has resulted in at least two of our members going out of business. This means that there is less specialist provision available to meet the needs of people furthest from the labour market. Incompatible arrangements between the Work Programme and ESF (European Social Fund) funded employment support mean the individual jobseekers lose out. 76 1 the least satisfied, 10 most satisfied.

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 156 Work and Pensions Committee: Evidence 1. Introduction 1.1 Social Firms UK is a charity and the national support body for social enterprises that focus on employing, or creating employment opportunities for people facing the most significant barriers in the labour market. This might be because the individual has one or a combination of the following: a learning disability, mental health problems, sensory impairment or other disability, a prison record, drug or alcohol habit, or experience of homelessness. 1.2 We have consulted our members about the issues raised in this enquiry and this response reflects the views and experience of those who are or have been involved in the Work Programme. Involvement has been as end to end subcontractors or as specialist providers. 1.3 It is important to note that, for a variety of reasons, only a minority of our members are currently involved in the Work Programme. Our members may not to be involved because: their business focus is on employment rather than job readiness; the arrangements offered by the prime providers are not acceptable; the financial risk is too high; and they have been involved but limited referrals and the restrictions cash flow have eventually led to closure. 2. Differential payment/creaming and Parking 77 2.1 Following the recent announcement of the Work Programme s performance it s clear that with so few people staying in work, the programme is not meeting claimants needs. All our respondents confirmed that creaming and parking happens regularly. 3. The Prime Provider Model/Impact on Subcontractors/Tailoring Provision to Individual Need 3.1 Tailoring provision to individual need depends very much on how providers higher up the contracting change carry out their duties, and in particular, whether individuals are referred to appropriate specialists. Our members who are specialist providers have said that they have experience of inappropriate referrals or even no referral at all. So people needing specialist help are not getting it and in some cases are only getting the minimum service of one meeting a month, with requests for additional/specialist help being refused. 3.2 The cumulative effect of creaming and parking, lack of referrals and lack of support for subcontractors by prime contractors, lack of accountability through the black box system, and DWP s laissez faire approach has resulted in at least two of our members going out of business. These organisations were well established specialists, who had been working very successfully for several years to support people furthest from the labour market into work. Specialist support and expertise has now been lost, and the people providing it became unemployed themselves. Not only has the Work Programme been less successful than other programmes in getting people into work, it has actually created unemployment. 4. Rigour and Effectiveness of DWP s Monitoring and Complaints Procedures 4.1 This response covers: Prime provider monitoring through the Merlin standard; Ongoing monitoring; and Handling/support for people leaving the Work Programme for health reasons. 4.2 In general, while our members who are involved in Work Programme consider that the Merlin Standard is a welcome development, they remain unconvinced that it is being effectively applied and consider that it lacks teeth. For example, given that all prime providers have now been awarded the standard, one wouldn t expect a contract offer to be withdrawn on day one of delivery due to a disagreement that had been highlighted at the start of the contract negotiations and which the subcontractor had been told would not affect the subcontract offer. This highlights the need for the Standard to cover the tendering and post tendering discussion stages. It could also help to overcome the strong suspicions held by several members that some Prime Contractors used third sector organisations as bid candy. 4.3 Some of our members have experienced a degree of improvement in their relationships with and the support they receive from their contractors over the course of the contract, but there is still a lot to do. Others have not received any support above the bare minimum. They all thought that prime contractors should provide more support. None had experience of DWP monitoring. 4.4 Social Firms UK has written to Ministers at the Office for Civil Society about the model and its impact on third sector subcontractors, and our members have written individually to DWP ministers. The responses received have been polite but along the lines of nothing to do with us, it s a contractual matter and 77 Creaming refers to prime and tier 2 contractors giving preferential treatment to people who are more likely to find and stay in work. Parking is where people facing more barriers to work are only given a minimum level of service.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 157 organisations shouldn t enter into contracts that don t suit them. This kind of response does little to counter the criticisms that DWP s monitoring lack teeth. 4.5 A particular issue raised by one member was how slow administrative systems had a detrimental impact on people leaving the Work Programme due to ill health. They report that when a woman became mentally ill while on the Work Programme and had to be hospitalised, service from the prime provider was suspended immediately but it took a year to move her off that system so that she could get the support and benefits she needed given her health problems. 5. Regional Variations and Competition between Providers 5.1 A particular issue raised by two members (one in Wales, the other in North East England) is the interplay between the Work Programme and other into work support initiatives that are funded under the European Social Fund. It would appear that concerns about double funding are leading some providers to withdraw services, thus leaving individuals more isolated and with less support than they had before joining the Work Programme through no fault of their own they ve fallen between two stools. This is an administrative nonsense which needs to be resolved urgently with clear guidance issued to all providers. All publically funded support needs to work together in the interest of the individual, and consequently society. 7 December 2012 Written evidence submitted by the Social Market Foundation Summary This is an evidence submission from the independent think tank the Social Market Foundation (SMF). The SMF has many years of experience of analysing employment programmes and this note draws on a range of past analysis and thinking. Creaming and parking are not unique to either the Work Programme nor other employment programmes with private providers. Parking is always the result of scheme design. Any effort to ascribe prices to individual jobseekers will result in parking (or, less pejoratively, efforts to get the most job outcomes for the least public money), but there are ways to design schemes that avoid this outcome, if it is considered to offer poor value for money. The prime provider model prevented small organisations from bidding for Work Programme contracts on the grounds that providers with small balance sheets would be unable to bear substantial outcome risk. This was sensible. However, the lack of regulation of the sub-contractor relationship is resulting in subs facing more risk than primes. This inefficient allocation of risk is bad for innovation and diversity in the supply chain. Ultimately it is bad for jobseekers. Initial SMF analysis shows that there is disparity between the best and worst prime contractors in the first year of the Work Programme. On average, the best provider in each region appears to have secured 60% more jobs than the worst during year 1. This is a promising sign that competition will work to improve performance. It also gives impetus to the idea that a relative payment system for providers would represent a sensible reform of the Work Programme to prevent it draining spending on employment services at the time they are most needed. Creaming and Parking 1. Concerns about so-called creaming and parking of welfare to work clients are not new. The Flexible New Deal (FND) was criticised for its flat-rate outcome payment scheme, which encouraged providers to identify which clients were easiest to help into work and focus their efforts prominently on them, to the cost of harder to help clients. However, it is important to recognise two things about creaming and parking. (a) (b) First there is no reason to believe that it is more prevalent among private providers than in Jobcentre Plus. The first six months of the JSA (Jobseeker s Allowance) regime under the remit of JC+ effectively parks all jobseekers, since most will move back into work quickly and of their own accord. Another way to view this is getting the maximum job outcomes for the minimum expenditure. But, whether it is considered to be a technique that offers good or bad value for money, it is one that is reflected in both the public and privately provided parts of the system. Second, parking is not inevitable in a payment by results scheme. It is, instead, the result of the payment schedule designed by the commissioners. If parking is going on in the Work Programme, it is either the result of poor policy design or of deliberate efforts to maximise the number of jobs achieved for a given amount of money (note this may not be the same as achieving good value for money). 2. The differential payments model under the Work Programme seeks to mitigate the parking problem through assigning different payments to (nine) different client groups. However, there is growing concern that creaming and parking persists under this scheme too.

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 158 Work and Pensions Committee: Evidence 3. This is not surprising for two reasons. First, while there are more payment bands under the Work Programme than under FND, there is also a much more diverse range of jobseekers. Most adult JSA claimants therefore still offer providers a uniform outcome payment as part of payment group 2. But second, previous SMF analysis suggests that any attempt by commissioners to attach different prices to different clients how ever granular the assessment will not remove incentives for creaming and parking. 4. This is because no amount of statistical evidence can fully predict who in any given group of people will be easier or harder to get into work. Some determining factors will be almost unobservable. For example, the motivation levels of different jobseekers varies, but that characteristic is impossible to set a price for. As a result, compared to broad payment group characteristics, providers will always have privileged information their clients, and can therefore refine this judgement on the client s employment prospects identifying the best and parking the worst prospects as soon as they meet them. The black box system in place under the Work Programme has the virtue of encouraging providers to do whatever they need to in order to get the most jobs for the least money. But it also has the consequence of heavily encouraging parking. 5. If it is believed that parking does not offer good value for money in the long term, there is a way to tackle it within the payment by results system. The SMF has suggested a system of graduated outcome payments, under which providers are paid at increasing rates as they get more of their caseload into work. In previous research, the SMF has argued that the Department for Work and Pensions (DWP) could make a minimal outcome payment at the time when the client moves into work. At fixed intervals, the DWP would calculate additional top-up payments according to the proportion of a given cohort of jobseekers whom contractors succeeded at getting into work. So long as the payment schedule accurately reflects the cost of finding a full cohort of jobseekers sustained work, it will provide the necessary incentives for profit-making providers to work with all clients. This approach avoids the need for government to set prices for given individuals, which will either afford too little or too much resource compared to that needed to get them into work. 6. The SMF recommends that the Committee examine the feasibility of introducing such a system into the next iteration of the Work Programme. The Prime Provider Model 7. The Work Programme design raises real concerns for the viability of the (predominantly) voluntary and community sector (VCS) organisations subcontracted by prime providers to deliver the scheme. 8. Small organisations were effectively prohibited from bidding for Work Programme prime contracts if they had turnover of less than 20 million. This restriction was, not unreasonably, imposed on the grounds that smaller organisations do not have sufficiently large balance sheets to bear the financial risk of an outcomebased payment scheme on this scale. 9. However, no such restrictions apply to prime contractors in their dealings with sub-contractors. The scheme therefore effectively devolves a huge degree of outcomes risk to sub-contractors anyway. Indeed the risk borne by the sub-contractors is if anything greater than that borne by primes for three reasons: (a) Sub-contractors are dealing with small numbers of people, while primes diversify their risk by having thousands of clients. This means the former are vulnerable to statistical blips. (b) Sub-contractors, particularly in supply chains where the prime provider provides front-line employment services, tend to get the hardest-to-help clients. In many cases these may be the jobseekers who have been parked by primes. (c) Sub-contractors may face more precarious financial terms than those offered by DWP. Prime contractors are able to benefit from the guaranteed referral fees that come with new clients, but evidence from the National Council for Voluntary Organisations (NCVO) suggests that this security isn t necessarily passed down the chain. 10. NCVO has already highlighted worrying signs that Work Programme sub-contractors are bearing a large amount of financial risk. While primes were designed to be risk-bearers in the Work Programme, there is much evidence to suggest that they are in fact cascading risk onto others. 11. The SMF suggests that the DWP should therefore set limits to how much outcome risk is passed on to sub-contractors if it wants to ensure that there remains a viable sub-contracting tier.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 159 12. Related to this is the question of the Work Programme s suitability in a persistently weak labour market, when outcome risk is highest. The design of the Work Programme means that the scheme ends up cutting the funding of frontline services at the very point when unemployment is mounting. During economic stagnation, when job outcome payments slow to a trickle, the only response for a firm or charity that doesn t want to go bust is to cut costs and hence services just when people need them most. This perverse outcome raises the question of whether a relative performance payment mechanism would be a better way to re-engineer the Work Programme to avoid such consequences, while maintaining competitive pressure on providers to work for their jobseekers (see below). Regional Variations 13. There is substantial variation in provider performance across contracts and across Contract Package Areas (CPA) in the Work Programme. While we have not yet been able to analyse the performance of providers relative to their local labour market conditions, the SMF has looked at the variation in provider performance over the first 12 months of the scheme. These figures should be interpreted with some caution since variation in performance may well diminish as volumes increase. Nevertheless, there are some interesting points to draw out. 14. Chart 1, below, shows provider performance, with contracts grouped by provider. On these early figures there are five providers averaging above 2.5% ESG, Ingeus, Maximus, EOS and G4S with another distinct group between about 2% and 2.5%. There are then five providers whose performance is at or below 1.5%. 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Chart 1 YEAR 1 PROVIDER PERFORMANCE Ingeus Maximus ESG G4S Avanta EOS-Work Ltd Serco A4E Reed in Partnership Working Links CDG Pertemps Seetec Rehab Jobfit Newcastle College Group JHP Group Prospect Business Employment Services

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 160 Work and Pensions Committee: Evidence 15. Chart 2 shows a distribution of the performance of individual contracts (ie not grouped by provider). The distribution ranges from Prospects operating in Devon, Cornwall, Dorset and Somerset CPA, to Ingeus operating in the East of England and attaining performance over 4%. All contracts are well short of the minimum performance level expected by DWP. Indeed all contacts are well below DWP s do-called non intervention level of 5%. This throws huge doubt on the worth of these benchmarks. No. providers 8 7 6 5 4 3 2 1 0 0.75=<x<1.0 1.0=<x<1.25 Chart 2 DISTRIBUTION OF CONTRACT PERFORMANCE Provider Year 1 performance distribution 2.5=<x<2.75 1.25=<x<1.5 1.5=<x<1.75 1.75=<x<2.0 2.0=<x<2.25 2.25=<x<2.5 Performance band (percentage points) DWP 2.75=<x<3.0 3.0=<x<3.25 3.25=<x<3.5 3.5=<x<3.75 3.75=<x<4.0 4.0=<x<4.25 4.25=<x<4.5 4.5=<x<4.75 4.75=<x<5.0 5.0=<x<5.25 5.25=<x<5.5 16. Perhaps most interestingly, there is very significant variation in performance between providers operating within the same CPAs. The SMF s analysis indicates that within the first 12 months, the performance of the best provider in each CPA was around 60% higher than that of the worst. In other words, the best providers are getting 60% more people into sustained employment than the worst. Again, these figures should be treated with caution: that discrepancy is likely to fall as volumes rise. Nevertheless, it indicates that there are important performance differences between providers with similar clients. Where these differences persist, the laggards will either have to improve or be replaced. There is consequently good reason to think that competition is helping to sort the good from the poor providers and therefore to give jobseekers a better service. 17. This local variation in performance also lends weight to the idea that providers might more effectively be paid on their performance relative to each other, rather than relative to an arbitrary benchmark. This approach would be particularly effective at sustaining investment in frontline services at a time when the labour market is weak exactly the point at which effective services for the most disengaged jobseekers are vitally important. 10 December 2012 Written evidence submitted by Timpson Given the millions of people in the United Kingdom with some form of criminal conviction, we at Timpson believe that people deserve a second chance. This is not only a great way of helping people but also of getting people to work for us. The programme effectively started some eight years ago when, during a visit to HMYOI Thorn Cross, Managing Director James Timpson came across a young man who so impressed him with his attitude and personality, that James gave him a guarantee of an interview following his release. This person so impressed at the interview that he has remained in our paid full-time employment ever since. The appointment of a Timpson Foundation Ambassador, Dennis Phillips, enabled us to adopt a proactive approach in our dealings with the prison authorities. Dennis therefore actively interviews prisoners from a pool of some 80 prisons with a view to employing them on release, offering work experience, ROTL, or placements in the Timpson Foundation Academies. Dennis has since been joined by another colleague, such are the numbers nationally, and we have supplemented the support to Foundation colleagues with the appointment of a trained counsellor.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 161 Alongside this recruitment stream, Timpson have a number of prison-based Academies and workshops, the first of which was set up in HMP Liverpool in 2008 and now has between 12 14 prisoners being trained at any one time, in Timpson core services of shoe repairs, engraving and watch repairs (no keys there). With a training academy and a workshop at HMP Blantyre House (12 prisoners) and a prison workshop at HMP Forrest Bank (20 prisoners), prisoners get the benefit of learning skills that can be immediate applied upon release by seeking a position with Timpson. Whilst there is no guarantee of a job, there is a guarantee of an interview for employment and a work-trial or trial period. All the ex-offender has to do is sufficiently impress his Area Manager and he is in. Given our near-1,000 nationwide branch network, we can easily accommodate prisoners who want to work in their home areas or those that need to relocate to a brand new geographic area to start their lives over again. We have in place a pre-release plan for Foundation colleagues, which include considerations for housing needs and finding out about family support on the outside. The three areas which most prisoners on release struggle with are: housing, family and friends, and a job. Our experienced view is that, without those three key areas covered, re-offending takes place. The re-offending rate of our Foundation colleagues is very low. They are very low. Dennis on his pre-release plan actively works with housing associations and financial institutions to ensure offenders have full support on release. Employing directly on release (following an interview) with Dennis and or the local Area Manager, and employing directly from the Academies, has proved to be very successful for Timpson. Approaching 80% of colleagues from prison are still with us some six months after joining. We estimate that about 20% leave us for other work. Whilst we have no way of tracking, our estimates are that around 20% re-offend, which of course stacks up very well against the national statistics for re-offending. For those colleagues we take on via the ROTL system, we have a 90% retention rate. One particularly interesting area is the opportunities Timpson is able to offer female ex-offenders, who seem to be attracted to the Max Speilmann part of Timpson Group. Now, Timpson have a training Academy at HMP New Hall, Wakefield, where graduates are offered a work trial on release. To-date, we have 235 Foundation colleagues, 142 of which are in our full-time paid employment. Such is the success of the Timpson Foundation that we have started to recruit ex-offenders for other retailers as well. We accept that, despite someone coming through our prison training academies, it may well be that the exoffender is better suited to a different type of employer (retail/warehousing/hotels etc). 21 February 2013 Written evidence submitted by Transport for London (TfL) OVERVIEW OF PARTNERSHIP BETWEEN TFL AND THE PRIMES TfL opened a dialogue with the Primes in mid-2011 following the award of the London contracts. As TfL s supply chain skills and employment programme already had a clear forecast of future employment activity across contracts we were able to develop a demand led approach to working with the Primes. A Memorandum of Understanding (MOU) was developed with the six Primes to establish a 12 month pilot based around a single employer offer for TfL suppliers. Under the MoU requirements from TfL suppliers would be channelled through a single point of contract within TfL s Supplier Skills Team and then referred out to the Primes. The pilot went live in January 2012 for 12 months. All six Primes agreed to work together as one, foregoing individual company processes to agree to sign up to a collective approach for TfL and its Suppliers. Each Prime has a nominated Operational and Strategic lead for engagement with TfL and six weekly meetings occur at both operational and strategic level. TfL s partnership with the Primes works to create a coherent offer to TfL and its suppliers by providing one central point of contact to the work programme through the position within the Supplier Skills Team. A Work Programme Coordinator (WPC) post is fully funded by the six Primes and embedded within TfL. This position operates as the brokerage function between vacancies arising in the supply chain and the six primes as referral agents ensuring that the recruitment process runs smoothly for both TfL suppliers and also Work Programme candidates. This position is being funded initially as a pilot and is now moving into its second year of delivery. Current Process for Work Programme recruitment: TfL works with its suppliers to identify vacancies and obtain relevant job descriptions, person specifications and salary range. TfL supplier commits to providing time and a steer along with access to vacancies. Buy in to the Work Programme is essential before recruitment begins. Supplier holds information session which are attended by the Primes and facilitated by the WPC this is an opportunity for the Primes to fully understand the business requirements and request any further information necessary to prepare work programme candidates for the process.

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 162 Work and Pensions Committee: Evidence The Primes submit candidate details as agreed through to the WPC who then invites all successful candidates to a supplier assessment day. Employer holds assessment day this provides the opportunity for Work Programme candidates to find out more about the vacancies and the company and also be assessed in particular areas where appropriate for the roles. Successful open day candidates are then invited to interview. WPC coordinates all feed back for every candidate at each stage to the relevant primes and within agreed timescales. WPC monitors candidate retention with employers on a quarterly basis over a 12 month period. Year 1 Outputs: 112 job starts for work programme contracts across 12 TfL suppliers. 5 March 2013 Written evidence submitted by Wheatsheaf Trust 1. Introduction Wheatsheaf Trust is a charity based in Southampton that has been supporting deprived local communities with employment, training, and social inclusion initiatives for 15 years. We have six Employment Access Centres spread across five local authorities in urban South Hampshire. We have three main divisions adult services, youth support, and intensive work with families. Our activities are funded from various sources, including charitable trusts, local authority grants, and various Government Departments (via Prime Contractors). 2. Summary The Work Programme (WP) derives from an original intention to enlarge the employable workforce at a time of labour and skills shortages by engaging those furthest from the labour market. It is less relevant, though still useful, at a time of high unemployment. The best providers will make all aspects of their services available to all client cohorts regardless of their payment group. Contractual terms are harsh but clear. Wheatsheaf Trust went into it with its eyes open, a strong cashflow, and a careful assessment of the risks, which are considerable. We are comfortable with the principle of payment by results. At a time of severe constraint on public funds it would be hard to argue for anything else. To date, our performance is roughly as we predicted, though just below the national MPL. It is too early to make any really useful assessment of long term success. The Work Programme is not really suitable for small, financially insecure groups who have few other sources of income unless the Prime Contractor is, unusually, prepared to take most of the risk. Because of the competitive nature of the Work Programme and the harsh commercial realities, there is a risk of increasing competition for job vacancies between the different providers and Jobcentre Plus. The IT security requirements have been extremely expensive, burdensome, and difficult to operate. They have also reduced our overall efficiency. There is a serious risk that DWP, and local communities may lose high-performing local subcontractors if the Prime Contractor loses market share or has its contract terminated through under-performance elsewhere in the CPA. 3. Differential Payments 3.1 The broad principles of differential payments are correct. However, there are a large number of people who have been wrongly assigned to the Jobseeker s Allowance (JSA) groups, so in practice the differentials do not often align with the amount of work required by different categories of disadvantage. 3.2 The very best providers will not discriminate against any client group, but provide support tailored to individual needs and aspirations. At Wheatsheaf Trust, this approach extends to blindness as between different funding contracts, so WP clients have access to support funded by other contracts and vice versa. We take pride in the fact that our clients do not need to know which government programme they are on, or even if they are on one at all. This approach only works where an organisation has a spread of funding sources. 3.3 Considered as financial levers in the current labour market, the WP differentials are not wide enough to discourage creaming and parking. More to the point, the 104 week time on Programme is too short to encourage providers to put in the necessary long term support required by those furthest from the labour market. Wheatsheaf Trust has long experience of working with the very long term workless, and we have examples of people who took three, four, or more years of careful support before successfully getting a job.

cobber Pack: U PL: CWE1 [O] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Work and Pensions Committee: Evidence Ev 163 Under WP rules, providers principally motivated by profit will, quite sensibly, not waste resources on anyone unlikely to get a job in two years. 4. Prime Provider Model 4.1 On financial and contractual matters, we feel, perhaps unusually, that our WP Prime Contractor (PC) has dealt reasonably openly with us. They were willing to re-negotiate substantial parts of the sub-contract, resulting in a seven page letter of variation which addressed some of our concerns. We have been surprised at how few other subcontractors appear to have pushed their Primes to soften the contractual terms. 4.2 The financial terms of business with the PC are pretty harsh. Wheatsheaf was fortunate to have reasonably healthy cash reserves in June 2011 and a greater tolerance for risk than most other small subcontractors. Other than a top-sliced attachment fee, no cash flow support is offered by our PC and in the first financial year of the WP we took a cash loss of about 130k (on a 1.5m turnover). 4.3 Management information from the PC is very poor. Perhaps because of some very public criticism about earlier data loss, they have an obsessive fear of giving us any useful figures to judge comparative performance with the rest of the supply chain. Orally, they tell us that we are their best performing subcontractor, and also out performing their own direct delivery hitherto (though this is still very early to be assessing overall performance). However, they do not give us even our own performance data in writing or electronically. Our staff have to sit with them in front of a laptop, are given a brief look at our own numbers, and are then sent away with no chance to analyse comparative performance against either other subcontractors or the contract as a whole. 4.4 The black box approach does not filter down to subcontractor level. The PC s concerns about earlier poor publicity leads it to try to micromanage our own delivery even though we can outperform its direct delivery. 4.5 I do not believe that DWP is aware of how massively inefficient and wasteful of resources the procurement process was for subcontractors. I suspect that the Department thinks it has saved a lot of administration and bureaucracy by restricting the number of Prime Contractors and issuing fewer and larger contracts. Although there may have been a saving of administrative effort at DWP itself, the result has been to push all of the bureaucracy and complication down the food chain. 4.6 By way of illustration, we had to produce expressions of interest (in some cases quite detailed and all in different formats) for 45 PCs at the Framework stage, and then went on to write detailed bids with nine different Primes at the final bid stage. All of the PCs had different requirements, did not stick to the DWP template for submitting information and due diligence details, and between them absorbed something like 30 40 days of our senior management time. Inevitably, the vast majority was abortive because all of them were bidding for the same contract and in effect we had to write nine different bids to get the same piece of work. We estimate that the total cost of winning the WP subcontract was circa 140,000, but at least we were successful. If we had not won, all that cost would have been abortive. This wasted effort will have been replicated across the voluntary sector in the UK (and also in small commercial providers) and will be paid for either in the increased price of future bids or in reduced spending on other current service provision. 4.7 A major concern is whether, in the event that a prime contractor has its contract withdrawn, DWP will do anything to protect those frontline delivery agencies who are still continuing to perform against their subcontracts. I have been trying to get an answer to this question a fairly obvious one for some two to three years now, ever since the prime contracting system first started to appear. DWP has chosen to put all its investment into large, sometimes multi-national companies, and has squeezed successful local providers like ourselves out of the direct contracting market. Given the massive investment we have had to make, and the potential damage to long-term local capacity, the Department should take some responsibility to protect subcontractors from the consequences of a failure of government policy. 4.8 We have tried to get answers from ministers and civil servants as to whether the existing subcontract would simply be novated to the new prime contractor on the same terms, or whether we would have to negotiate new terms. If the latter, a new PC could easily feel in a very strong position to negotiate harder terms, given the vulnerability of subcontractors. Even if the terms remain the same, there will be considerable disruption in transferring the work. All the prime contractors have different reporting systems, web-based claims mechanisms, and security requirements. We are working with four different Primes on various government contracts at the moment, and it is already causing us difficulty trying to reconcile their various systems with our own management information systems. Working with a new PC will require yet further investment, which we can ill afford after the demands of cash flow in the first year of the contract. 5. Level of Service 5.1 Wheatsheaf Trust was established specifically to work with socially excluded people and those furthest from the labour market. We have pioneered a number of new approaches over the last 14 years (long before it occurred to DWP to commission this type of work) and focus on providing holistic, individualised support tuned to people s specific needs and aspirations. The Work Programme is not friendly to this approach, and we do not expect it to cover our costs when working with the most marginalised people. We use other Government

cobber Pack: U PL: CWE1 [E] Processed: [17-05-2013 14:02] Job: 028832 Unit: PG07 Ev 164 Work and Pensions Committee: Evidence contracts, local authority grants, and charitable income to ensure that anyone who walks through our door gets the best possible service to improve their economic and social wellbeing. 5.2 The Work Programme was effectively inherited from the last Government and designed to meet the needs of the 2008 labour market. It is considerably less relevant to a situation where there are 2.6 million unemployed and only 450,000 vacancies in the economy. When employment levels were high, the main economic problem was bringing into the labour market new sources of employable talent which was excluded from finding work for reasons of disadvantage, discrimination, or caring responsibilities. At a time when there are around five or six unemployed people for every single vacancy, the practical financial incentive is overwhelmingly biased towards parking the most disadvantaged. Wheatsheaf Trust uses a spread of funding streams to ensure that this does not happen, but providers more reliant on WP income are finding it difficult to avoid, as the chance of recouping the investment in the more challenging clients is even smaller than three years ago. 6. The Black Box Approach 6.1 The principle of the black box is absolutely right, and something for which we have been arguing for many years. Payment by results, as long as the outcome is sufficiently clearly defined, is the correct approach and commissioners should not concern themselves with matters other than performance, quality of service, and value for money. It has been our experience over many years of deficit-funding approaches (such as ESF (European Social Fund) or SRB) that funders who focus on outcomes rather than the detail of how money is spent will always in the end get better value for money providing that the delivery agency knows what it is doing. 6.2 In practice, the main fault of the WP system is that the Black Box, as noted above, does not penetrate down the supply chain. We have a long and successful record of getting people, particularly those with high disadvantage, into work and training opportunities and the process is merely hindered by the imposition of complex, one size fits all, systems of management information, IT security, and form filling. In the Work Programme, DWP is a unique position to confirm whether or not outcomes have been achieved and should do more to minimise the amount of paperwork and other evidence required to substantiate a job outcome. 7. Regional Variations 7.1 The Committee s request for submissions asks, whether competition between providers is driving up performance. In one respect, our experience is almost the opposite. In Southampton, we have put in a considerable amount of work over the last five or six years, alongside Jobcentre Plus and the Local Authority, to get all the agencies working in the employment and skills arena to co-operate, particularly in approaches to employers. Because providers are now in direct competition with each other for outcome payments and with Jobcentre Plus for the few available vacancies, this co-ordinated approach is falling apart and employers are already getting frustrated with a number of multiple approaches from different agencies chasing their vacancies. 7.2 On regional variations generally, the Trust operates in only one CPA, and we do not feel we have any useful comment to offer. 7 December 2012 PEFC/16-33-622 Printed in the United Kingdom by The Stationery Office Limited 05/2013 028832 19585