Work programme failure: Finger pointed at payment-by-results

Payment-by-results' failure is behind the "extremely poor" performance of the work programme, MPs have suggested.

The government's flagship welfare-to-work initiative has triggered condemnation from the Commons' public accounts committee, after initial results showed just 3.6% of people referred to the programme had found job between June 2011 and July 2012.

Officials at the Department for Work and Pensions (DWP) had predicted that 9.2% of the largest group of participants would have moved from benefits into work without the programme's existence, suggesting it is actually making the situation worse rather than better.

MPs were appalled by the four-month delay in publishing the figures and the lack of transparency provided by the DWP.

But most of their anger was directed at the programme's results, which have fallen well below expectations.

Only 20 people out of the 9,500 former incapacity benefit claimants referred to providers have got jobs in the last three months – a fact committee chair Margaret Hodge said was "shocking".

"The work programme is absolutely crucial for helping people, especially the most vulnerable, get into and stay in work," she said.

"However its performance so far has been extremely poor."

Under the terms of the payment-by-results incentives offered to providers, ministers hope the private sector firms attempting to assist vulnerable people back into work will increase their efficiency.

But one provider did not succeed in getting a single person aged under 25 in a job lasting six months or more. None of the providers managed to meet their minimum performance targets.

MPs said they feared 'creaming and parking' – in which the easiest cases are dealt with quickly and more challenging ones are simply left abandoned – was taking place across the board.

"The difference between actual and expected performance is greatest for those claimants considered the hardest to help, including in particular claimants with disabilities," the report stated.

"The department's own evaluation suggests that these claimants have been receiving a poor service from providers.

"Creaming and parking are clear policy concerns which we share with the department.

"Despite assurances that it would do so, the department has not provided the further analysis which would demonstrate whether or not creaming and parking was taking place."

Unanswered questions about the truth of the situation did not stop voices on both sides of the argument about the role of the private sector's payment-by-results scheme offering noisy opinions.

"The government's work programme has spectacularly underachieved, even by its own modest targets," TUC general secretary Frances O'Grady said.

"It has failed those in greatest need, especially unemployed young and disabled people."

Shadow work and pensions secretary Liam Byrne went further, attacking the government's "farcical" handling of the figures and its unsuccessful attempts to "bury bad news in the detail".

The CBI rallied around the failing providers by pointing out the initial work programme results reflect a scheme still in its "infancy".

"The initial work programme results were disappointing, but the statistics represent a snapshot during the roll-out of the scheme and should be viewed in this light," chief policy director Katja Hall said.

"Gains will come over the longer-term. Providers are paid by results and so are incentivised to improve performance. But to deliver the best outcomes we also need to ensure that they are working closely with local authorities, FE colleges and businesses."

A DWP spokesperson said: "The work programme gives support to claimants for two years and it hasn't even been running that long yet, so it's still early days."