Work programme - in pounds shillings & pence Jun 9, 2012 23:19:30 GMT 1
Post by nickd on Jun 9, 2012 23:19:30 GMT 1
The Work programme
They all say it works - but does it all add up?
Let's take a look in £££££'s, shillings & pence[/b][/size][/color]
The Work programme has come in for a great deal of criticism of late, Government insists the flagship programme is on track and set to deliver; as always the statistics are used to advantage. On Mylegal we've had a close analysis of the figures before as and when the DWP decide to produce reports which give us only a very limited insight into the key question we all want an answer to - just how many people has the Work programme helped back to work? In truth no-one knows yet, government has promised to produce the figures in August; we can but wait and see. However we do have the number of 'referral' and 'attachment' figures to the programme to work off and these give us a good clue as to which groups of claimants are being assisted by the programme. From this we can go on and get some idea of the following:
(a) Which claimant groups are being targeted
(b) Whether the programme looks at though it is financially viable for both the prime and sub- contractors involved in the delivery of the programme.
From DWP sourced information we can see that a total of no less than 855 organisations are involved in the supply programme (as of the 30th January 2012). These can be broken down as follows:
As of the 12th August 2011
295 - Private organisations
133 - Public organisations
420 - Voluntary or community organisations
As of the 30th January 2012
306 - Private organisations
137 - Public organisations
412 - Voluntary or community organisations
There is a slight anomaly in the figures due to DWP miscounting.
The figures promoted so far
In a recent promotion by the DWP the following headlines were bandied around in an attempt to make the programme sound successful:
"New statistics show 519,000 people got help through the Work Programme from 1 June 2011 to end of January 2012"
Helping nearly half a million people since the programme started last June may sound impressive, but a closer look shows that the programme isn't really reaching the claimants it pledged to help the most; - those who have a longer history of incapacity and who require more intensive support to help them find suitable work. The government and media has spared no mercy in almost declaring war on the disabled, the question we should all be asking is are they doing anything to help them and if not - why not?
Let's take a look at the number of 'attachments' to the programme between 1st June 2011 and this January, these are divided into 8 different 'payment' groups which determine the level of payments paid to providers according to the intensity of support needed to help different claimant groups back into work:
98,690 --------- JSA 18/24
250,650 -------- JSA 25 +
125,850 -------- JSA early
1,880 ---------- JSA ex IB
5,650 ---------- ESA voluntary
32,000 --------- ESA new
2,790 ---------- ESA ex IB
1,470 ---------- IB/IS voluntary
518,980 -------- Total
So what we can see is that the bulk of all attachments were JSA related - without any incapacity links.
The payment groups are paid as follows:
These are the amounts paid to WORK providers for the different categories of claimants who are helped in to employment, remember this is 'payment by results' contracting. Remember also that the 'result' is putting claimants into 'sustainable employment'.
Providers will be paid a small start fee for each new participant in the early years of the contracts but this will be reduced each year and eliminated after three years. In previous UK welfare-to-work programmes providers have earned most of their revenue through service fees linked to the value of the contract as a whole, rather than the number of participants that start on the programme. Work Programme providers will not be able to survive on start fees alone.
Providers can claim a job outcome payment after a participant has been in a job for three or six months, depending on how far they are from the labour market. This period recognises the fact that some participants would have moved into jobs anyway, without support. The programme seeks to deliver sustained work, not just quick fixes. After receiving a job outcome, providers can claim sustainment payments every four weeks when a participant stays in work longer. These payments can be claimed for up to one year, eighteen months or two years, depending on how far the participant is from the labour market. These payments create strong incentives to help participants into sustained work and to continue to support people to stay in work for longer.
So now we know the number of attachments and the payments, let's take a look at how the attachments were divided up between the prime providers (I've added in some of the provider's total reported contact values as reported by the Guardian in brackets):
Attachments per prime contractor
Attachments per prime provider
118,840 ------- Ingeus (Seven contracts £727 m)
63,390 -------- A4E (Five contracts worth £438 m)
47,070 -------- Working Links (Three contracts worth £308 m)
44,130 -------- Seetec (Three contracts worth £221m)
40,910 -------- Avanta (Three contracts worth £267m)
33,310 -------- G4S
20,700 -------- Newc College Group
18,910 -------- Rehab Jobfit
18,820 -------- Serco Ltd
15,040 -------- Careers Development Group
13,510 -------- EOS - Works LTD
13,330 -------- Business Employment Services
13,000 -------- Pertempts
11,300 -------- Reed in Partnership
9,870 ---------- ESG
7,250 ---------- Prospect Services Ltd
6,890 ---------- JHP Group LTD
Read more on the Guardian article on providers here..
The total figures don't round with the headlines statistic total of 518, 980 due to rounding and also the non inclusion of two of the smaller providers; thus the above sum to a total of 496,270. What is clear is that Ingueus have the lion's share followed by A4E who have since had some of their contracts terminated.
Given the lack of public information over the payment of these contracts it pays to home in on A4E because they have received media exposure which gives us a bit of clue as to how much their contracts have been estimated to be worth, but what we should also take a look at is the total sums derived from 'start' payments as well as outcome payments. It is unlikely that the sustainment payments are going to factor at this stage in the contracts given how the programme is in its relative infancy.
Using A4E as an example we can see how they subdivided their attachment related work load into the different payment groups at the 'start; fee, very few would be at the higher rate of £600 due to the very low numbers of claimants in the ESA mandatory support and ESA support group with previous IB claim bracket. The independent reported on the 15th May this year over the termination of A4E Work contracts:
"A4e still has 11 contracts with the Government, while the one which was terminated was the smallest it held. It is understood the terminated contract was worth less than £1 million. "
Clearly A4E still have a substantial finger in the WORK pie is the DWP statistics to January 2012 are accurate. If we assume that for all of A4E's 63,390 attachments they were paid a bare minimum of the £400 'start' payment per claimant (shown in the DWP table - part of the DWP Work prospectus) it is simply a question of multiplying the attachments by the start fee:
63,390 X £400 = £25,356,000.
Which in figures we can all understand is a fairly hefty £25.3 million pounds in mere start fees alone. Bear in mind these costs have all been incurred since last June and the figure does not include any of the 'outcome' payments for getting people back in to work. The employment minister Mr Grayling would therefore struggle to attribute these payments to contacts taken out under the previous Flexible New Deal scheme as they clearly relate to the current Work programme introduced by the current government. Government pledges transparency on all things these days but seemingly when it comes to private contracts they are concealed behind a blocked up wall. With reported contact values pertaining to A4E being reported at anything from £1 million to a total of £438 million it's clearly time that government came clean and produced some public figures so the tax payer can see whether they are getting good value for money or not. The contract bidding is now well and truly over so government can no longer hide behind 'competition rules' as an excuse for its veil of secrecy with private contracts fuelled by public money.
A glance at the DWP accounts for 2010/2011 shows that there was an overspend on 'work programmes', a limit being set at 1,487,806 (£1.48 billion) but the actual 'out-turn' came in at £1,946,154 (£1.94 billion) representing an overspend of £458,348 (almost half a billion pounds). It should be borne in mind that these represents the accounts relating to the current administration from May 2010 onwards; these expenditure figures are also pre-implementation of the Work programme in June 2011. Overspends are likely to be more as unemployment soars and harder to help claimants remain unassisted by the programme. The relevant section in the accounts is at page 43.
More here: www.dwp.gov.uk/docs/dwp-annual-report-and-accounts-2010-2011.pdf
It's impossible to gauge the outcome fees but if we assume that in between June 2011 and January 2012 just 10% ( one would hope it would be higher) of the total A4E attachments resulted in actual work placements we would be looking at:
6,300 (10%) X outcome payment of say £1,200 (more likely to be JSA related) the total would be £7,560,000 (£7.5 million pounds)
On these payments alone A4E could have received around £32.8 million pounds for getting 6,300 people back into work; the figure could be much higher especially if sustainment payments have been claimed. It has been argued than around 25% of the easier to help groups (people with no incapacity or disability) would have found work anyway; so there is potential 'wastage' of £8.2 million pounds in the A4E attachments. You have to bear in mind A4E is just one of a number of many other prime providers.
But let's home in on the claimant groups A4E were attaching to the Work programme according to DWP statistics:
(they are broken down into groups A - E - which relate to the ledger below the table)
|---- (A) ---- (B) ---- (C ) ---- (D) ---- (E) ----- Total ---- Area|
---- 50 ----- 30 ---- 50 ---- 1020 --- 230 ---- 1330 --- East Midlands
---- 90 ---- 130 ---- 20 ---- 820 ---- 140 ---- 1110 --- East London
---- 10 ----- 80 ----- 30 ---- 900 ---- 90 ----- 1100 ---- Merseyside, Halton, Cubria & Lancs
---- 40 ----- 60 ---- 20 ---- 740 ---- 740 ---- 1560 ---- Thames Valley, Hamps & IOW
----- 0 ---- 410 ---- 50 ---- 410 ---- 410 ---- 1280 ---- South Yorkshire
190 (A) Incapacity Benefit / Income Support (Voluntary)
710 (B) ESA ex Incapacity Benefit
170 (C) Jobseeker's Allowance ex Incapacity Benefit
3,890 (D) New Employment & Support Allowance entrants
1,610 (E) Employment & Support Allowance (Voluntary)
Just 6,380 claims which are incapacity Benefit /ESA related attached by A4E
Mindful that the WORK programme is meant to be assisting longer term incapacity related claimants back to work the figures do not look good in addressing their needs with only 6,380 attachments from these five groups; 1800 only of them voluntarily coming forward for referral & attachment into the programme. It is hard to understand why only 30 Employment & Support Allowance claimants with a previous Incapacity Benefit claim could be attached to the programme in the East Midlands whereas 410 were attached in South Yorkshire; regional variation is no doubt a factor but both areas would face similar economic difficulty.
The attachment of Incapacity/ESA related cases represents just 10% of all A4E's attachments. It just goes to show that the media headlines are clearly not representative of the reality. If a long term welfare to work contractor can't attach this group of claimants to the programme it has to tell you something about how difficult the providers realise it will be to place them in the labour market.
It punches serious holes in headlines like this:
If 75% of incapacity claimants are faking it why are providers like A4E only attaching around 10% to the programme?
'Creaming & Parking'
The reality is contractors such as A4E are 'creaming & parking'; it's an industry expression for picking easier to help cases. In the alternative it is a question of the DWP not referring the cases to them in the first instance; I'm open minded as which is the explanation, I think it's a combination of both. The dangers of creaming & parking where of particular concern when the programme has gone before parliamentary committees.
Let's look at the rest of the cases which our example A4E attached to the Work programme.
|12,060 (F) Jobseekers Allowance 18 - 24|
33,450 (G) Jobseekers Allowance 25+
12,760 (H) Jobseekers Allowance early entrants
58,270 Total (F) (G) (H)
Of the total 63,390 A4E attachments approximately 90% are entirely Jobseeker Allowance related and around approximately 10% are Employment & Support Allowance or Incapacity related (which includes those on Jobseekers Allowance with a previous incapacity claim)
The programme from an analysis of A4E alone; certainly appears to be doing very little to help the incapacitated into work.
The total monetary value of all Work contractor attachments using 'Start' fee
518,990 X £400 =£207,596,000
The total monetary value of Work outcome payments assuming 300,000 work placements have been secured for between 3 and 6 months using the 'outcome' fee
300,000 X £1,200 = £360,000,000
Total 'start' & 'outcome' fees = £567,596,000 (£567.5 million pounds)
Enough cash to go round?
Now it's here we have a potentially serious problem
Remember how many providers we are talking about here?
A mixture of 855 prime & sub - contract providers; how will the fees be shunted around? Half a billion pounds sound generous but when you look at how much goes to the primes and then you look at how little is left to be shared between a large number of second/first tier providers - it's a recipe for financial disaster for the mainly voluntary sector.
Here are some clues as to some of the concerns raised by sub-contractors:
"Payment by results, performance expectations and upfront funding
Payment by results (PbR) is central to the Government’s public services reform agenda with plans to extend it to other sectors such as rehabilitation and health. As such, it is perhaps one of the more important components of the Work Programme. Despite shouldering the transitional costs of sub-contractors being a requirement of the prime
contractor model, concerns remain as to whether primes will pass on sufficient upfront fees to their supply chain partners, many of whom will be financially vulnerable ‘niche’ providers unable to wait for the delay in payment associated with a PbR system. This is particularly problematic for organisations where the programme has replaced existing funding streams that have no element of outcome-based funding. There is a further concern that by the time a prime has taken its management fee from an already heavily discounted payment from DWP, very little remains for tier 1 sub-contractors, and even less for tier 2 sub-contractors. The following is an example of what one London based prime is offering to its tier 1 end-to-end sub-contractor with JSA 25+ customers:
Passing cash from prime to sub - contractors
• Attachment fee: £150 (out of a DWP maximum of £400)
• Job Start: £140
• After 6 months in work: £590 (out of a DWP maximum of £1200)
• 13 monthly payments for each additional month of sustained work: £110 (out of a DWP maximum of £215)
Total awarded to the sub-contractor: £2300 out of a DWP maximum of £4395."
See more here:
In other words prime contractors can profit out of sub contractors by simply passing the case on, they keeping a major proportion of the fee and the sub-contractor gets much less than the DWP earmarked for the work.
The employment minister Chris Grayling tells us that the work programme as introduced by the coalition government can't be abused because contractors are paid by results.
Failing those who wait in hope
The evidence shows that sub - contractors (particularly the voluntary sector) are falling by the wayside; a recent example of which was the South West subcontractor Groundwork South West going into administration. They don't promote this on their website so I decided to see what a response I would get by emailing them. I sent one to Groundwork South West and told them I was looking for work and willing to travel within a 30 mile radius. I received an automated response telling me I would be contacted by Groundwork; I'm still waiting! There was nothing telling me that they had gone into administration and at no stage was I referred to an alternative provider or even referred to the prime provider for the area Prospect Services, it's been over a week now which I think would be quite disillusioning if I really was in the labour market.
Ripping off the voluntary sector?
There is in my view a potential 'scam' if prime providers are simply subcontracting work out and keeping nearly over 50% of the attachment fee. Imagine if all of the A4E 63,390 attachments (and I'm not for one minute suggesting they were) were farmed out to subcontractors on the same basis reported above where just £150 of the £400 start fee is passed on by the prime contractor.
63,390 X £400 =£25,356,000 (£25.3 million) Prime providers
63,390 X £150 = £9,508,500 (£9.5 million) to subcontractors
Prime provider nets £15,847,500
Thus prime providers can simply pocket cash from the attachments fees by referring them on to sub contractors who do all the work and run at a loss! The profit margins are potentially lucrative for doing very little work
Duplication of costs
When we talk of the Work programme we tend to talk only of the costs associated with those of the contractors. However, you cannot disregard the ongoing work of the DWP and their contact with claimants during the claim process. Their costs are quite a revelation:
Unit costs of Jobcentre Plus labour market support per customer:
Jobseeker’s Allowance Interview (New Claim, 13-week, 6-month) £70 (2009/10) £59 (2010/11)
Jobseeker’s Allowance Job Search Review £9 (2009/10) £8 (2010/11)
Lone Parent Interview £82 (2009/10) £77 (2010/11)
Employment and Support Allowance and Incapacity Benefit Interview £109 (2009/10) £107 (2010/11)
Processing cost per new claim for Jobseeker’s Allowance £114 (2009/20) £92 Provisional for 2010/2011
Cost of maintaining each existing claim for Jobseeker’s Allowance per annum £307 (2009/10) £306 Provisional 2010/2011
Cost of processing each new claim for Employment and Support Allowance £311 (2009/10) £233 provisional for 2010/11
Cost of processing each new claim for Income Support £220 (2009/10) £181 Provisional for 2010/11
Cost of maintaining each claim for Income Support per annum £137 (2009/10) £116 Provisional for 2010/11
Cost of maintaining each existing claim for Basic State Pension per annum £15 (2009/10) £14 Provisional for 2010/11
Cost of maintaining each existing claim for Pension Credit per annum £59 £47
Cost of processing each new claim for Disability Living Allowance £263 (2009/10) £251 Provisional for 2010/11)
See page 10 of DWP 2010/2011 accounts
Are these costs in addition to those paid to the Work contractors and if so why is there duplication? It also seems astonishing that with Disability Living Allowance being a benefit which people can claim when in work there is no recognition of this in the programme payment tables. What if a person with a disability was a DLA recipient and in work then lost his of her job. Seemingly there would be no recognition of their additional needs in the programme if they just claimed JSA rather than ESA. The system has been designed by those who do not understand how it works.
Just one in five helped by Work programme
The Telegraph recently reported that "Just one in five people on benefits finds employment through Coalition’s work programme" - " Just one in five people on benefits is getting a job through the Coalition’s Work Programme even though private companies are paid £1 billion a year to help them, new figures show"
Read more here:
Which means we are potentially wasting £200 million (if not more) paid out to contractors who would have found work without the help of the Work programme. Perversely government saw fit to withdraw legal aid funding in benefit cases where specialists are proving that in up to 78% of ESA cases claimants need support to get them back to work. The work of such specialists could run to maybe six hour per case or more all for a fixed fee of just £150 in proving who should be getting help from the scheme, it makes you think government is just interested in parking people on the dole so they pay out cheaper provider fees and less in benefits. What they are failing to appreciate is huge numbers do in fact experience significant limitations and need the intensive support which the Work programme in meant to provide - it makes a complete nonsense of government's economic argument to be tackling long term welfare dependency or 'endemic worklessness' as they choose to express it.
Stuck in a revolving door
Lets not forget how thousands are stuck in a process of revolving appeals, a rise of which can be directly related to the implementation of ESA and much more rigid testing of claimants in an effort to prove who is entitled and who is not.
You can read more here
Here's how these costly appeals are worked out
The Tribunal Costs
2010 - 2011 ----- 418,500 ----- @£280.71 ---- £117,477,135.00
2011 - 2012 ----- 421,600 ----- @£280.71 ---- £118,347,336.00
2012 - 2013 ----- 483,400 ----- @£280.71 ---- £135,695,214.00
2013 - 2014 ----- 576,700 ----- @£280.71 ---- £161,885,457.00
2014 - 2015 ----- 644,000 ----- @£280.71 ---- £180,777,240.00
Total Tribunal cost £714,182,382
[£714 million pounds]
The total DWP cost
The DWP Costs
2010 - 2011 ----- 418,500 ----- @£148.95 ---- £62,335,575.00
2011 - 2012 ----- 421,600 ----- @£148.95 ---- £62,797,320.00
2012 - 2013 ----- 483,400 ----- @£148.95 ---- £72,002,430.00
2013 - 2014 ----- 576,700 ----- @£148.95 ---- £85,899,465.00
2014 - 2015 ----- 644,000 ----- @£148.95 ---- £95,923,800.00
Total DWP cost £378,958,590
[£378 million pounds]
[£1.09 Billion Pounds]
Out of 176,567 ESA appeals cleared in 2010/2011 - approximately 40% were successful. Our evidence suggests that most of these cases would have been as a result of the client being legally - aided, we know this because of the 135,000 legal aid welfare benefit cases a year around 50% were ESA appeals. The 67,500 ESA appeal cases funded by legal aid closely matches the 40% success rate of appeals identified within the total number of appeals cleared in 2010/2011 - this being 70,628 (40% of 176,567). The evidence suggests many of those who were successful would have been assisted by legal aid specialists. What's so appalling is how we hear how well how the Work programme is 'working' but the reality is it is failing the very people it is meant to help the most - the long term incapacitated who can do some work but need support to help them find it. A derisory numbers of incapacity related claimants are being attached to the programme yet welfare benefits are identifying around 70,000 who should be hooked straight into the programme once their decision has been overturned. It beggars belief that government will pay out £400 just to attach one person to the failing Work programme and yet axe minimal funding to proper specialists from the voluntary sector who are far better acquainted with the real problems people face and who have £150 a case funding axed for good quality work. or is it just that the DWP don't want people with limitations getting any support to help them into employment? - this is the serious question we should be asking.
We have all the evidence from reliable soures; the State.
These are all official statistics for first -tier appeals received by HM Court & Tribunals Service, (2010 - 2011) with forward projections (2011-2015) made by the Tribunal Judiciary. They also quote figures provided by the Parliamentary under secretary Jonathon Djanogly