Government’s flagship Welfare-to-Work scheme – failing the ‘harder to help’ by design?
The Work Programme is Government’s flagship welfare-to-work initiative and uses non-state providers to support long-term unemployed people into paid employment under a payment by results funding regime. Within such quasi-marketised systems the problem of inequitable and/or inadequate treatment of claimants with multiple or complex needs (typically referred to as ‘parking’) is notoriously pervasive and difficult to mitigate. Such claimants are especially vulnerable to being parked when schemes also operate a light touch minimum standards and monitoring framework, face tight performance targets and costs pressures, and/or are dominated by for-profit providers – all of which apply in the case of the UK Work Programme.
Policy makers, however, have suggested that the Work Programme is explicitly intended to close the ‘performance gap’ between disadvantaged and easier-to-help claimants. To counter tendencies for providers to neglect those participants whose barriers to work are greater the Department for Work and Pensions relies on a differential payment structure with nine payment groups each with different outcome payment levels for providers. These payment groups are based relatively simplistically on claimants’ prior benefit type alone and from the outset there has been criticism that these groups are overly crude and a poor proxy for distance to the labour market, hiding more than they reveal. With income for providers following payment groups the concern is that perverse incentives are built into Work Programme, leaving ‘harder to help’ claimants inside each payment group vulnerable to being under-supported relative to claimants with simpler employment support needs. Our research set out to explore claimant variation within payment groups and hence whether they are likely to mitigate provider incentives to ‘cream’ and ‘park’.
Our analyses used detailed survey data (Understanding Society) to build a statistical model predicting which participants enter the sustained employment needed to trigger a Work Programme job outcome payment. Our analysis leads to two important findings for policy makers to consider as they think through the next phase of Work Programme commissioning. Firstly, under the current payment group model the probabilities of participants entering paid work vary more within payment groups than between them – contrary to the government’s intention, the payment groups seem more likely to design in rather than design out ‘creaming’ and ‘parking’. Secondly, whilst statistical profiling of claimants is by no means perfect, and will never be a single cure for risks of creaming and parking, they can offer part of a sensible, joined-up response: it is possible to use the information that we have – or could easily collect – about claimants to better predict which participants are likely to enter sustained work. Thinking about payment groups according to claimant need offers claimants a better chance of receiving the level of support that they need, policy makers a better chance of realising performance targets, and taxpayers a better chance of seeing value-for-money. We outline in the paper a possible way to do this.
Irrespective of the outcome of the 2015 election DWP Ministers will be considering the future of the Work Programme. Despite the difficulties that Work Programme has faced there is broad cross-party agreement on the scheme’s overarching design principles and, indeed, some good reasons for such a design approach. But there are also various real concerns with Work Programme performance and claimant experiences so far and several ways in which policy makers will be looking to make changes and improvements. The disappointing performance of ESA claimants is perhaps the area attracting the most noise, and rightly so. Work Programme Leavers schemes separate ESA claimants back out into their own separate scheme and such an approach has obvious potential for the Work Programme itself. Our work however suggests that whilst the focus is right (current Work Programme design is not delivering as desired for ESA claimants) simple segregation on the basis of benefit groups is unlikely to be the best solution. We need to move beyond a fixation with benefit types and to instead think about employment support designed in a personalised way around the individual needs of each claimant, whatever their benefit group.