PAC warns of Work Programme risks

16 May 12
The ‘quick’ introduction of the Work Programme has created a new set of risks that must be addressed, the Public Accounts Committee has warned.

By Richard Johnstone | 16 May 2012

The ‘quick’ introduction of the Work Programme has created a new set of risks that must be addressed, the Public Accounts Committee has warned.

The Department for Work and Pension’s programme is designed to help the long-term unemployed into lasting jobs. Across Britain, 18 main contractors are working on results-based contracts to get people back to work. Over the next five years, the DWP expects it will help up to 3.3 million people, at a cost of between £3bn and £5bn.

In an examination of the programme, which replaced almost all other welfare-to-work initiatives in June 2011, MPs said the government had ‘done well’ to introduce it in 12 months. But chair Margaret Hodge added: ‘The quick introduction threw up risks that have to be addressed.

‘Major projects of this nature need to be thoroughly planned. In this case, the programme was not piloted, the design and development phases overlapped and the business case was devised after the decision to go ahead was taken.’

The programme’s use of payment-by-results contracts, designed to transfer the financial risks to providers, brought with them ‘new risks’, the PAC said.

It wanted assurances that harder-to-help claimants were not being ignored by contractors ‘cherry picking’ job seekers who needed little support, the committee stated. Both the department and prime contractors should show that more people were in work as a result of the programme than would have been if it had not existed, it added.

The PAC also called on the department to seek assurances on a range of other issues. These include whether the sub-contractors working for each prime firm were being treated fairly and receiving the number of cases and funding they were promised. This assurance was especially vital for charities, the MPs said.

Reliable data on the performance of the programme would not be available until autumn 2012, some 15 months after it started, the MPs warned. The government would need to ‘assure itself and us’ that no improper payments had been made to contractors before these effective monitoring systems were in place.

Hodge warned that the scheme’s value for money would depend ‘on more than whether the contractors meet their contractual targets’.

She said: ‘We need to be assured that significantly more people are in work than if the programme had not existed and that wider social benefits are being delivered in practice.

‘The department must also be alive to the impact the difficult economic conditions may have on the Work Programme, and demonstrate that in the face of changes in the number of referrals it can still hold prime contractors to the delivery promises they made.’

According to the DWP, almost 520,000 people had received support in the first eight months of the programme.

A spokeswoman said: ‘We are disappointed at some of the inaccurate comments made about the scheme. For the first time we require providers to set out minimum standards for participants along with a complaints system to make sure they are treated fairly.

‘Every job outcome payment through the programme is fully validated. We are convinced the scheme offers jobseekers the best chance of getting into work at far better value for money than previous schemes.’

• Yesterday, employment minister Chris Grayling announced he was terminating a Mandatory Work Activity contract in the Southeast with welfare-to-work providers A4E after concluding that to continue working with them presented too great a risk. This follows an internal investigation of the DWP’s commercial relationship with A4E amid concerns that the company might have claimed payments for MWA participants who did not take part in the programme.

No evidence of fraud was found, but investigators uncovered inadequate documentation, non-compliance with guidance and some erroneous claims on the Southeast contract.

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