Getting value for money for public services and building “an economy that works for everyone” were key themes of the chancellor’s speech to the Conservative Party conference earlier this month. The government will look to deliver both pledges simultaneously through welfare-to-work services. A particular focus will be disabled and long-term unemployed people for whom employment outcomes are woeful. Although last week’s labour market statistics painted a positive picture of the jobs’ market, this will be no mean feat, as commentators expect a slowdown in job creation in the coming years.
This raises the stakes for the success of the government’s Work and Health Programme, which will replace the Work Programme and Work Choice in 2017. The government is currently procuring the contracts for this outsourced service. As the Work Programme shows, getting this process right is crucial for its success.
The procurement, which has run since April this year, involves a two-stage competition. First, bidders will compete to be appointed to a ‘framework’. Second, those on the agreement will get the chance to compete for contracts for the programme. The Department for Work and Pension’s aim is to “create and maintain a competitive and sustainable market” to achieve value for money for employment services. In the longer term, getting the competitive process right can create a wide pool of providers itching to compete for services.
Sadly, DWP’s current approach is unlikely to deliver a wide base of competitors. The framework, announced this month, will have a maximum of five bidders per region. This is well below the Work Programme’s 9 to 17 bidders.
This is just the start of the problem. Information on the programme is scant. The funding model is unlikely to be announced before providers compete for their place on frameworks. With tight margins, inappropriate payments models (of the type that led to ‘parking’ harder-to-help claimants on the Work Programme) could lead to suppliers dropping out when contracts are released – further reducing competition. One in six Work Programme bidders withdrew their interest when contracts were released.
Another crucial plank of “an economy that works for everyone” is the devolution agenda. This, DWP argued, would play a key part in the Work and Health Programme – with areas such as Manchester and London co-designing programmes. This could help commissioners tailor services to local labour markets. Yet it is not clear how this will fit in with Work and Health Programme regions, which cover wider areas than these. The National Audit Office has found that local areas are finding it difficult to engage with DWP over devolution deals. With the procurement speeding ahead, lack of clarity here will undermine providers’ ability to work with local areas to construct competitive bids.
Clarity fuels competition during complex procurements. Previous DWP programmes have been chastised by the NAO and Public Accounts Committee for failing to provide important information throughout the procurement process. Repeating these mistakes would thwart DWP’s intentions to deliver employment services that would for all.
