A Work Programme designed in a boom can’t cope with the bust

All is not well with the Work Programme, the government’s flagship back-to-work scheme.

Last week Channel 4 news released the first piece of real evidence we’ve seen on how the scheme is going. It doesn’t make for happy reading. Out of 115,000 jobseekers referred to provider A4E in the first year of the scheme, just 4,000 of them – 3.5% – have found sustained jobs.

Since last year’s launch of the Work Programme, hailed by ministers as a revolution in back-to-work support, the omens haven’t been good. But the Department for Work and Pensions’ baffling strategy to ban any public sharing of the scheme’s performance data has made it impossible to properly assess how it’s going – until now.

A4E’s 3.5% rate is lower than the rock-bottom minimum of 5.5% expected by the DWP. In the context of recent, unflattering media coverage surrounding the provider, people will no doubt want to kick A4e for these atrocious figures. It may be that the organisation isn’t making a good fist of the new programme. But A4e’s past performance suggests that the problem isn’t unique to it. It’s likely that lots of Work Programme chiefs are staring at a similarly dire set of figures. The problems run deeper.

The uncomfortable truth is that the Work Programme design is flawed. DWP’s minimum performance targets are based on its best guess of how many people would have got a job without any help. These, in turn, are based on the Office for Budget Responsibility’s projections for growth from November 2010, when it predicted the economy would grow by 2.1% last year and 2.6% this year. But the economy has flatlined since then, and employment prospects have been similarly poor.

Worse, the scheme’s design cuts frontline services at the very point when unemployment is mounting. During economic stagnation, when job outcome payments slow to a trickle, the only response for a firm or charity that doesn’t want to go bust is to cut services – just when people need them most.

At the root of these problems is the fact that providers are on the hook for something they can’t control – the labour market. A scheme that was supposed to hold providers accountable for their performance has ended up holding them accountable – and penalising their customers – for the performance of the economy. The programme was designed in a boom. Is it any wonder that it can’t cope with economic stagnation on a scale not seen for 80 years?

With little prospect of imminent economic recovery, we need to start a conversation now about how to make the scheme work for the people who need it more than ever. Without changes, we risk a rerun of the human, social and economic unemployment tragedy of the 1980s and 90s.

Many of the principles behind the Work Programme are sound. Paying for sustained employment success, holding poor providers to account and encouraging innovation are welcome parts of the government’s policy. But these features can be retained in a Work Programme reformed to cope with recession. So what should the strategy be?

First, the government could tone down the proportion of payments made for achieving job outcomes. In the depths of recession, the priority must be to make sure jobseekers get the help they need. For that they need the money to provide it.

Second, it should reassess its expectations of what’s achievable in a recession, and formally link minimum performance levels to the latest OBR forecast.

Finally, the government should look at re-engineering the Work Programme so that a large proportion of the payment to providers is based on their performance compared with those of other providers, rather than judging them on inflexible targets and crucifying them when the economy falters.

Only then will the funding for this vital employment scheme not collapse when the economy tanks. And only then will the policy adequately support the people it was designed to help.

This post first appeared on the Guardian’s Comment is Free


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