The Work Programme – progress but still lots to do

Nov 28, 2012

Today’s announcement that the Work Programme – the Government’s flagship support programme for the long-term unemployed – will undoubtedly produce some bad headlines. Stories of failure often get more attention than success, and the soundbite ‘the Work Programme isn’t working’ is often too compelling to resist. But is it the case?

In truth, it is too early to say. The Work Programme will last five years and it will take time for a clear picture to emerge. Headlines saying ‘just one in twenty have found work’ are misleading. This measure of ‘Job Outcomes’ relates to claimants who have entered and held a job for up for up to six months. But many have not been on the Programme long enough to be counted. A new cohort of clients – including people leaving Incapacity Benefit – often have ingrained problems that can take over a year to fix. Contractors have a tough job assisting claimants who Jobcentre Plus have failed to find employment for and who will often have been left without significant help for up to a year. Even were the economy growing more quickly, it is not realistic that these claimants could have entered work this soon.

In fact there are many reasons to be positive about the Work Programme. Unlike its predecessors, the private contractors delivering it are only ‘paid by results’ – so the taxpayer only pays if they succeed and not for simply having ‘bums on seats’ in poor quality training sessions. The focus is on sustaining people in a job, not simply getting them into any job which they might leave after a single day, as previously. This is an innovation which would be welcome in Jobcentre Plus, which, though successful at getting people ‘off benefits’, has a very poor record of dealing with ‘cyclers’ who fluctuate frequently between work and employment. Our research indicates that just 36% of those who leave Jobseekers Allowance within 6 months of claiming are still in work eight months’ later. Giving Work Programme providers flexibility to innovate without government interference has already produced results as the cost of getting someone into a job has fallen from £7,495 under its predecessor to just £2,097. These are all welcome reforms and we can be optimistic that the performance of the programme will continue to improve, with over 200,000 people having found a job already.

This does not mean that the Work Programme is perfect however. The main barrier to improvement is that claimants are largely grouped into categories based on the primary benefit they receive rather than their barriers to work. This means that contractors can be paid too much for a claimant who it is easy to find a job for, and too little for those with significant problems. Other systems, such as in Australia and the Netherlands, recognise this problem and base financial incentive around a claimants’ barriers to work. This must be a key aspect of future Work Programme reform. There are other problems: the programme was set up when projections for economic growth were much higher than they are today, and there are little means of changing targets to reflect this. Rewards for contractors are too inflexible to reflect variations in labour market and there are big issues around integrating the programme with the introduction of Universal Credit, how to help former claimants progress in their jobs and support those who do not find work. We at Policy Exchange will be looking at ways to resolve these in an upcoming report. Nevertheless, despite these problems, the Work Programme is doing a very important job: helping some of the most vulnerable in our society back into work and out of a life on benefits. That remains a cause worth fighting for.

Author

Ed Holmes

Ed Holmes
Senior Research Fellow for Economics & Social Policy, 2009-2013 Read Full Bio
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