Work Programme providers plead poverty

Don't hate the small charity players, hate the large corporate game.

The Guardian has a slightly strange write-up of a piece of research around the government's flagship Work Programme, which is aimed at getting long-term unemployed people back into work (although the initial statistics imply it is less than efficient at doing so). The programme is structured in a "black box" manner; providers are entitled to, within reason, offer whichever schemes they think will work best to participants, and are paid by result.

But, Patrick Butler writes:

Welfare firms are involved in widespread "gaming" of the Work Programme, with the most vulnerable jobseekers often ignored because they are too costly to help, according to new research into how the government's flagship employment initiative is working in practice.
Providers privately admit they are focusing resources on the "easy customers" who are more likely to generate a fee, and sidelining jobless clients who require more time and investment to become ready for work, a process known as "creaming and parking," the study says.
It concludes that the quality of services offered to jobseekers is being undermined because the design of the Work Programme, in which companies are not paid until customers have been in work for two years, creates such huge financial stresses that many providers have little option but to cut corners.

The last paragraph is not strictly true. Providers are paid periodically throughout the two years that participants are said to be active. They receive a referral fee when an unemployed person arrives on their books, and then further payments when they find that person work, and periodically while that person is in work up to the two year deadline, when they are deemed to be back in stable employment.

The most obvious way of gaming that system is indeed relatively frequent: taking the referral fee for a new "customer", and then proceeding to ignore them entirely. Since there is not a huge amount of variation in the fees depending on how difficult it might be to find work, that usually results in people who are scarred from the effects of long-term unemployment being taken into the programme and left languishing while their referral fees are used to subsidise training for more easy-to-help participants.

That wheeze is likely to be short lived, for a couple of reasons. The first is that it won't result in many people actually getting work, and so the workfare provider's overall statistics will look terrible. If the government has a modicum of competency, that will be taken into account when the next contracts go out.

Competency, of course, is not guaranteed, but luckily the referral fees were only ever intended to be short term. They are important to getting the scheme going, but the intention is that the training for one cohort of jobseekers should be paid for, not with the referral fees, but with the profit from the previous cohort. That way, the system is true payment by results: if you don't find someone a job, you don't get anything.

The gaming Butler describes is a different sort. The black-box model the Programme runs on allows providers to subcontract work; and that seems to be where the trouble is starting:

The study cites a small private-sector provider which complained that big corporate providers, known as "primes", would keep "job-ready" customers for themselves while passing on more difficult cases to subcontractors. "It's not being PC but I'll just say it as it is … you tend to get left with the rubbish; people who aren't going to get a job … If the [prime] thought they could get them a job, they wouldn't [refer them to] someone else to get a job."

That doesn't seem to be symptomatic of anything other than bad business on the part of the small private-sector provider. There's nothing making them subcontract with the big corporate providers. Presumably they thought they could make a profit. The fact that they can't on the terms they'd agreed just means they should draw up a better contract.

Just as we can hope the government will take performance into account when offering the next set of Work Programme contracts, the best situation for the subcontractors is to stop taking work from corporate providers who offer them bad terms. That is, after all, how capitalism works.

Not that it has to be that way. Not all of the workfare providers view their job as purely extracting profit from a badly designed system, and at least one major one largely foreswears the possibility of boosting income by gaming it. Unsurprisingly, it is not one of the providers backed by private equity.

The Work Programme is frequently poorly designed, and many — but not every — provider is out to milk it for all it's worth. But the problem with it isn't that there is isn't enough money floating in the system.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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The “lunatic” incident showed us the real Owen Smith: and it ain't pretty

Forget the slur - what really matters is what it says about his empty promises, says David Wearing. 

Owen Smith has embarrassed himself again. Having previously called for Labour to “smash” Theresa May “back on her heels”, advocated negotiations with ISIS, and described himself as “normal” with “a wife and three children” while competing with a gay woman to stand for the Labour leadership, you might expect him to have learnt the value of expressing himself more carefully. But no. Not a bit of it.

At a rally on Tuesday evening, Smith described Jeremy Corbyn as a “lunatic” with no “coherent narrative about what’s wrong with Britain”. It’s an interesting choice of words from someone who needs to win over tens of thousands of Corbyn’s supporters if he is to avoid a crushing defeat in this summer’s Labour leadership election. Indeed, we may look back on this as the final nail in the coffin of Smith’s campaign.

Let’s be honest. Most of us at some stage have used casual language like this (“lunatic”, “insane”), to describe those whose rationality we don’t share or understand. I’ll admit to having done so myself. But it is wrong. It perpetuates a stigma around mental illness and damages peoples’ chances of getting the care and support they need from society. We should all cut it out, especially those of us who aspire to high public office.

Beyond this, however, Smith has driven a coach and horses through the central premise of his own campaign. Throughout the summer he has presented himself as substantively agreeing with Corbyn on almost all domestic and economic issues, and only seeking to pursue that agenda more effectively and professionally. He has set out a range of policies - including a £200bn “British New Deal”, workplace rights and more redistributive taxation - that constitute an overt appeal to the social democratic, progressive values of the hundreds of thousands who joined the party to support Corbyn and secure a clean break with the neoliberalism of New Labour.

But it is simply not credible to simultaneously say “I agree with Jeremy” and that Jeremy is a “lunatic”. No one uses the word "lunatic" to describe someone whose politics they basically share. No one says “your diagnosis of the country’s ills is incoherent, and that’s the substantive agenda I want to take forward”. Smith’s remarks indicate that, deep down, he shares the incredulity expressed by so many of his colleagues that anyone would want to abandon the Thatcher-Blair-Cameron “centre ground” of deregulation, privatisation, corporate-empowerment and widening inequality. After all, Corbyn’s narrative only appears incoherent to those who regard the post-1979 status quo as self-evidently the best of all possible worlds - give or take a few policy tweaks - rather than the very essence of “what’s wrong with Britain”.

This incident will confirm the suspicion of many Labour members that, if he did win the leadership, Smith would dilute or ditch most of the policies he has used to try and win their votes. Those fears are well founded. Take as one illustrative example the issue of immigration, where Smith has shown one face to the party while suggesting that he would show quite another to the country, as party leader.

At leadership hustings, Smith presents an enlightened, pro-immigration, anti-xenophobic stance, but in a Newsnight interview last month we saw something rather different.  When asked if there were “too many immigrants” in the UK, he replied that “it depends where you are”, giving official comfort to the post-Brexit “pack your bags” brigade. He asserted that EU migration “definitely caused downward pressure on wages” despite academic studies having repeatedly shown that this is false, and that EU migration is of clear overall benefit to the economy.

Then, calling for an “honest” discussion on immigration, Smith noted that his wife is a school teacher and that schools in their local area are under pressure from “significant numbers into South Wales of people fleeing the Middle East”. In fact, a grand total of 78 people have been resettled in the whole of Wales under the Syrian Vulnerable Persons Resettlement Scheme. In the local authority encompassing Smith’s constituency of Pontypridd, the total number is zero.

This suggests, not someone who shares members’ values, but one who probably regards the leader’s pro-immigration stance as “lunatic”, and would prefer a return to the days when Labour erected the notorious Yarl’s Wood detention camp, rejected the vast majority of asylum applications from Saddam Hussein’s Iraq, and when Tom Watson put out an election leaflet reading “Labour is on your side, the Lib Dems are on the side of failed asylum seekers”.

Smith’s problem is that his mask keeps slipping. And every time it does, the choice before Labour members comes into sharper focus. On the one hand, they have a man who lacks many of the managerial and communication skills for party leadership, but who shares their values and who they can trust to fight for their agenda until a credible successor can be found. Against him stands a man they may not be able to trust, who may not share their values, and whose claims of professional competence grow more threadbare by the day. It’s a poor choice to be faced with, but Smith is at least making it easier for them.