Worse than doing nothing – that was Labour’s damning indictment of the coalition’s flagship Work Programme following the publication last week of the Public Accounts Committee (PAC)’s report on the scheme. The Work Programme’s performance so far has been ‘extremely poor’, declared Margaret Hodge MP, as only 3.6% of people referred to the programme moved off benefit and into work – amounting to less than a third of the government’s 11.9% target. ‘In fact, performance was so poor that it was actually worse than the department’s own expectations of the number of people who would have found work if the programme didn’t exist,’ said the chair of the PAC.

The Coalition launched the Work Programme in April 2011 to help long-term unemployed people move off benefits and into sustained employment. The payment-by-results model – estimated to cost between £3 and £5 billion over five years – was the brainwave of then employment minister Chris Grayling, with providers being paid for taking on a jobless person, finding them a job and then ensuring they keep it. Ministers at the time declared the Work Programme to be a ‘boost for the “big society”’, with voluntary sector groups, as well as private contractors, being offered the chance to deliver the Programme.

This has proved to be yet another dollop of coalition rhetoric, however, as last week’s figures painted a picture of the Work Programme as a chaotic, expensive failure. Whilst the DWP was keen to defend the scheme, stating that the report presented a ‘skewed picture’ and the programme is in fact ‘transforming tens of thousands of lives’, shadow work and pensions secretary Liam Byrne MP labelled the government’s handling of the Programme figures ‘farcical’, and criticised the DWP for its lack of transparency.  Frances O’Grady, the TUC General Secretary, said the programme had ‘spectacularly underachieved’, having ‘failed those in greatest need, especially unemployed young and disabled people’ and Len McCluskey, Unite general secretary, called for the programme to be abandoned: ‘What will it take for this government to finally accept that their workfare programme simply does not work?’

‘Creaming and Parking’
The PAC said it shared the concerns of commentators that providers are concentrating on creaming off job placement bonuses from the easiest cases, and sidelining clients who require more time and investment, a process known as ‘creaming and parking’.

Richard Johnson criticised this approach in the Guardian last week, arguing that such cherry-picking by the ‘prime’ welfare-to-work providers is having a negative impact on their subcontractors – mainly charities and third sector organisations which are best equipped to help vulnerable people with more complex needs into work – and this has the knock-on effect of costing the state more in the long-run.

 ‘With every day of unemployment, your chances of getting stuck there increase, and other associated problems start to appear, such as poor mental and physical health. The 70% who are parked will go on to cost far more, in basic benefits as well as across a whole range of other public services.’
Richard Johnson

Such ‘creaming and parking’ seems to me to be an inevitable – albeit cynical – consequence of a payment-by-results model.  As Johnson points out, those who won the most contracts in the DWP’s tendering process were those who offered to do it cheapest and so the only way they can deliver these contracts viably is by focusing on the ‘easier’ cases to meet their targets, leaving the more vulnerable unemployed by the wayside, with little hope of finding long-term employment.

A dangerous idiocy
The DWP has defended the payment-by-results structure of the Work Programme by asserting that it ‘offers the taxpayer real value for money’ as previous schemes had paid out ‘too much up front regardless of success.’ Toby Lowe, however, has dismissed this notion as ‘a dangerous idiocy’ and ‘a pernicious, damaging nonsense’: ‘If you pay (or otherwise manage performance) based on a set of pre-defined results, it creates poorer services for those most in need. It is the vulnerable, the marginalised, the disadvantaged who suffer most from payment by results.’

With such palpable inadequacies in this public services version of ‘no win no fee’, it is worrying that Grayling is planning on extending it into the realms of criminal justice in his new portfolio as Justice Secretary. As part of his planned ‘rehabilitation revolution’ Grayling wants to privatise the probation service, and underpin it by a ‘payment-by-results’ mechanism whereby private probation companies are paid bonuses for meeting reoffending targets.

I can’t imagine anything further from Cameron’s precious ‘big society’ notion. As with the Work programme, it is inevitable that only large private companies will be able to absorb the risks involved in bidding for the wholesale contracts proposed by Grayling for probation services. That is why it is the Sercos and A4Es of this world delivering the Work programme rather than even the largest charities involved in welfare to work, and why they will also take on the responsibility of rehabilitating offenders and protecting the public when Grayling’s plans are implemented.

Meanwhile, the most vulnerable groups in society will continue to suffer in the name of profit. It’s a great shame the coalition shows no indication of learning lessons from the Work programme.