Private companies who win government contracts to help the jobless find work are “parking” some of the most disadvantaged people on benefits, MPs warn today.
The Work and Pensions Select Committee said the flagship Work Programme, which pays private firms and voluntary groups by results, risks leaving the hardest to help with little or no support.
Although contracts are designed to give the providers an incentive to get the long-term unemployed into work, they are not having this effect in practice, MPs believe. An inquiry by the MPs found that the scheme’s poor performance in its first 14 months had improved for mainstream jobseekers but that the hardest to help remained at risk of being “parked”.
Dame Anne Begg, the committee’s Labour chairman, said the Government must ensure the scheme is effective for all unemployed people – not just those who are the easiest to help. “The Work Programme has proved much less successful to date in addressing the problems faced by jobseekers who face more serious obstacles to finding a job – people with disabilities, homeless people, and those with a history of drug or alcohol abuse. It is clear that the differential pricing structure is not a panacea for tackling creaming [off the easiest cases] and parking,” she said.
Under payment by results, the firms and voluntary groups receive small, advance fees and are paid much more when jobless people remain in work for 13 or 26 weeks within a two-year period. Fees are bigger for those on incapacity benefit than those on jobseeker’s allowance.
The committee calls on the Government to consider moving away from the current pricing model based on the benefit claimed to a much more individualised, needs-based system. It also calls for a £248m underspend on the programme – because of “under-performance” by providers – to be ploughed back into helping disabled job-hunters.
Figures published last November showed that the programme got off to a slow start in its first 14 months, with only 3.2 per cent of those entering keeping jobs. But new figures next month are expected to show that its performance has improved.
The Department of Work and Pensions said last night: “According to industry figures, already more than 207,000 people have been helped into a job through the Work Programme by the end of September 2012 and performance is clearly improving. The payment-by-results model goes further than any previous scheme to encourage providers to help all claimants, including the hardest to help. The key point is they earn the majority of their payment for helping someone into work and keeping them there.”
Richard Hawkes, chief executive of the charity Scope, said: “It is absurd that disabled people who face the biggest barriers to employment are receiving the least amount of support. No wonder so few are actually finding jobs through the Work Programme.”
Liam Byrne, the shadow Work and Pensions Secretary, said: “This report is fresh evidence that Iain Duncan Smith and David Cameron are failing the test they set themselves in opposition. Unemployment is rising in three quarters of Britain’s poorest estates and now we know why – the Work Programme is simply not working for them.”