MPs warn of the risks of the £5bn Work Programme

The public accounts committee says that contractors may "cherry-pick" individuals who need little su

David Cameron and Ed Miliband walk with MPs near parliament.
David Cameron and Ed Miliband walk with MPs towards the state opening of parliament on 9 May.

The Work Programme is at risk of being fraudulently exploited, the public accounts committee (PAC) has warned.

The programme, designed by the Department of Work and Pensions (DWP) to pay private companies to help get the long-term unemployed into sustainable jobs, launched in June 2011 and replaced virtually all welfare-to-work programmes run by the DWP. Over the next five years, the department expects it to help as many as 3.3 million people into work, at a cost of up to £5bn.

Contractors receive the majority of their pay once a participant has stayed in a job for a set period of time. This length of time varies according to the claimant group.

The DWP argues that payment-by-results contracts have transferred the financial risk to providers. However, the PAC says that although some risk has been transferred, the test of whether the programme is achieving value for money will be broader and there are new risks associated with the changes.

The DWP and prime contractors must show that more people are in work as a result of the programme than would have been if it had not existed and that the wider social benefits that underpin the cost-benefit analysis are delivered in practice. The department must also be alert to the impact the difficult economic environment may have on the Work Programme, the PAC argues.

The commitee warns that the DWP is less concerned with defining how clients should be treated and the services they should receive and is measuring success on sustained job outcomes; it must seek assurances on a range of issues, and also needs assurances that harder-to-help claimants are not parked and ignored.

The DWP, which currently relies on contractors to set minimum standards of service, must assure the public that no improper payment is made to contractors before the effective monitoring systems are in place, the commitee says.