Stepping Stones – the voluntary sector’s role in future welfare to work schemes

Ramzi Suleiman was at NCVO between January 2013 and December 2014, leading on NCVO’s Work Programme initiatives and running the work shadowing ‘Day in the Life…’ scheme. Ramzi has left NCVO, but his posts are kept here for reference purposes.

Today we published a report calling for a major overhaul of how welfare to work schemes are designed and paid for (PDF, 360KB). The Work Programme is failing many people with complex or multiple needs and is underutilising the skills and expertise of the charity sector. We believe that people’s needs would be better met by a co-designed, locally-led service delivery approach based on smaller contracts and flexible payment models, including recognition of milestones towards employment. If implemented, our recommendations would allow charities to play a fuller role in future welfare to work programmes.

The Work Programme is…

…failing people with multiple or complex needs

A recent National Audit Office report showed that the Work Programme is failing most Employment and Support Allowance (ESA) claimants – often called the ‘harder to help’. Statistics in the report revealed that prime contractors are spending less on provisions for ESA claimants than they are for those claiming Job Seekers Allowance. The NAO concluded that many ESA claimants on the Work Programme are receiving “little or no help”.

…underutilising the voluntary sector

Charities are often best placed to help service users with complex or multiple barriers. They have the experience and expertise to offer these service users the tailored support they need. However, the NAO report also revealed that prime contractors are spending less than half the amount of money on sub-contracting as they originally indicated in their bids. This points to a failure to use  charity sub-contractors that, if addressed, could help the hardest to help access the support they need.

NCVO’s recommendations for future schemes

To cater for the ‘hardest to help’ in future welfare to work schemes, charities need to be more involved in their delivery and design. Our recommendations will enable commissioners to harness the charity sector’s skills and expertise in supporting people with complex or multiple needs.

Co-design of services

The charity sector should be seen as more than just a provider of public services – it has the expertise and skills to be a shaper of them too. At the earliest opportunity, commissioners should open a dialogue with charity providers to use the sector’s local knowledge and their expertise in working with those with multiple barriers. Their knowledge will help commissioners develop a scheme that better serves the needs of those with multiple or complex needs. By engaging with the sector early, commissioners would also get an insight into the needs of providers and develop schemes that are able to harness the potential of the sector.

Locally led approach

Smaller contracts would allow for a more diverse range of providers to become prime contractors. To bid for a prime contract on the Work Programme, organisations had to have an annual turnover of over £20 million. This discounted the vast majority of the charity sector. As our Almanac data shows, just 533 VCS organisations have a turnover of over £10 million. Smaller, more local contracts would allow charities to play a greater role in future schemes. Smaller contracts would mean that more voluntary organisations would be in a position to bid for prime contracts. If commissioners persist with large contracts, then a parallel funding stream could be established to provide support for individuals with the greatest needs and JCP staff given the option of referring service users directly to specialist charity providers.

In the short term, we have recommended that DWP pilot a parallel funding stream in advance of the last referrals to the Work Programme in 2016. This would enable support to be given to those who need it most, and provide a solid evidence base for future schemes.

Flexible payment models that supports the whole pathway towards employment

Many charities do not have the financial capability to take on the risks associated with the Payment by Results (PbR) model used in the Work Programme. More flexible payment models would ensure a more diverse and engaged set of providers.

For some providers the use of grants or service fees would be most appropriate. This is particularly relevant to small organisations that provide niche services. For other charities, a hybrid model whereby service providers are paid a proportion of their fee upfront, followed by payments linked to the individual service user journey towards and into employment could be appropriate.

Milestone payments

The PbR model adopted in the Work Programme only recognises one trigger for payment – a sustained job outcome. We believe that this is too simple and fails to recognise some of the vital steps towards employment an individual could make. That is why we recommend milestone payments become an integral part of future welfare to work schemes. This will help ensure that providers are incentivised to help those with multiple or complex needs over their barriers to employment.

Categorisation of service users

In the Work Programme, service users are categorised into payment groups according to their benefit status. The benefits claimed by a service user often fail to reflect their barriers to employment. Early and detailed assessment should identify who needs help to get closer to the labour market. In tandem with milestone payments, this change would incentivise providers to help those with multiple or complex barriers.

What next?

Did we miss anything in our report? Leave us a comment below or email us.

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