The Government’s radical reform of the way welfare to work services will be delivered in the future.
What is it?
The Work Programme replaces all the existing welfare to work programmes including Flexible New Deal (FND), Pathways to Work and the Future Jobs Fund (FJF). There is a considerable amount about the Work Programme that is being learned as we go. There is uncertainty for example about the level of demand for clients ‘furthest from employment’ and whether or not there are the number of jobs or opportunities in the market place to sustain the regular ‘placing’ of clients in employment !
Fundamentally, however, the Work Programme is based upon a ‘payment by results’ system which means that the full payment to an organisation will only be obtained once an eligible client has retained employment or be on an apprenticeship for two years. The financial objective of the programme is that the payments made should be cancelled out by the savings made in benefit payments to the claimants taking part.
There is a three stage payment for the programme:
- Attachment fee: This is paid to a Prime contractor (see below) when a client is allocated to them. The payment amount varies dependent upon the needs of the client and will reduce over the first three years of the programme. By the fourth year it will cease completely. In year 1, the majority of successful Primes are looking at making an upfront payment to organisations within their supply chain of between £100-£300.
- Job Outcome fee: This will be paid to delivery organisations once clients have been in work or on an apprenticeship for a set period of time. For most clients this is six months, for those with greater needs it is three months. For almost all clients the attachment fee is in the order of £1,200, but for those with the greatest need it may reach £3,500. Again the total available sums will vary regionally and be dependent on the price which individual successful Primes have contracted with DWP.
- Sustainment payment: This is a payment made every four weeks to delivery organisations who keep a client in work. For the majority of clients this will continue for a further year, but for those in the most need it continues for a further 18 months or two years. The level of this fee will range from £115 and £370 per quarter; again depending on the overall contract price negotiated between the successful Prime contractor and DWP in a specific Work Programme lot or Contract Package Area (CPA).
Work Programme clients have been grouped into seven payment bands based upon their age and the benefits they are claiming. The detailed schedule of these payments and bands can be found on the DWP website. It needs to be remembered that these fees are maxima against which contractors have bid and that evidence to date suggests that most, if not all, of the successful Prime contractors across the country have submitted bids below the maximum sums which DWP had indicated may be available!
Structure and Prime Contractors
The Government has set up a tiered and, nominally at least, a competitive approach to delivery of the Work Programme. Jobcentre Plus will be responsible for determining when claimants will be referred to the programme.
The programme will be financed ‘at risk’ by organisations designated as Prime Contractors. Prime contractors are required because the scheme is a ‘payment by results’ system and therefore largely a payment in arrears system. The Primes are the organisations taking the main risk and therefore their contract management will be heavily weighted towards achieving results. All Prime contractors are expected to retain a % of management fee to account for the up-front risk and management input they will make to the programme.
The Primes will subcontract part or all of the delivery of the client support. They will be looking for subcontractors who can deliver end to end support (i.e. from assessing a person through to helping them sustain a job) as well as other ‘specialist’ organisations able to help with particular clients or elements of the ‘customer journey’ .
Work Programme contracts have been split into lots or Contact Package Areas (CPAs) to promote an element of competition between Prime Contractors. In some areas the boundaries between CPAs have been akin to recognised regional or sub-regional areas but in other cases they have not. For example the East Midlands is a complete contract but London has been divided along East and West lines into two CPAs. In each CPA at least two or three prime contractors will be allocated equal shares of eligible clients with whom they must work.
Involvement in the Work Programme will be compulsory for people who have been claiming Job Seekers Allowance (JSA) for six months. Refusing to participate in the programme will result in the loss of benefits on a sliding scale from losing JSA for three months for the first refusal, up to loss of three years of JSA for the third refusal.
People claiming Incapacity Benefit (IB) or Employment and Support Allowance (ESA) will be reassessed for their fitness for work. Studies suggest between 50% and 75% could be transferred onto JSA.
We estimate that around two thirds of the people eligible for the Work Programme will be social housing tenants and that almost a half of all tenants will be eligible.
What's happening now?
Now that the successful bids have been announced a great deal of preparatory work has been undertaken to resolve issues pertaining to TUPE, the establishment of offices, recruitment of staff, organisation of local supply chains etc.
Although still new, the programme has been progressing very effectively so far and is clearly benefitting from being delivered by locally-based civil society organisations that have considerable experience and expertise in delivering employment support services in their respective localities and of supporting a range of different client groups successfully back into employment.
Almost a thousand referrals have already been made and the focus is quickly moving from initial referrals to gaining actual job outcomes, with the first jobs now being secured.
For further information please contact :
Lynsey Boother, Senior Apprenticeships Adviser