The House of Commons Work and Pensions Committee has been looking at contracted employment programmes – the sort of thing people are sent on by Jobcentre Plus after they have been out of work for a while.
Jobcentre itself does not actually run these programmes, but instead contracts them out to mainly private providers. The bulk of the work is carried out by a mixture of private companies and some “third sector” non-profits. PRIME itself has sometimes been a provider in such schemes, so we know what they are like.
Most of the organisations involved, whether private or charitable, are actually looking to make a profit or surplus on providing such services. Payment to the providers is usually by results in some way. They receive a portion of the money up-front when they start training or helping a person, but the majority later – when the trainee achieves some target outcome, like ceasing to claim benefit or staying in a job for three months.
This all sounds pretty efficient, but there are some potential problems with this model. The Committee has drawn attention to them in its report – and found some evidence that bad things are happening.
Basically providers have a financial incentive to concentrate their efforts on the candidates most likely to succeed – in the words of the report to “cream off” the people most likely to help them attain their targets. Meanwhile those the provider thinks are not likely to end up giving them good or profitable outcomes are at risk of being simply “parked” – i.e. minimal effort is expended on them.
This is indeed a real risk, and it is likely that future back-to-work schemes, whichever flavour of government is in power, are likely now to follow some payment by results model. The Committee is to be congratulated on drawing attention to the problems that can result. The solution, if there is one, is to police the contracts more effectively, and perhaps to broaden the range of rewarded outcomes, so that all who go on these programmes get a fair crack of the whip.
Extract from report below.
Full report at the Parliament web site – HTML version (browsable) or PDF version.
Creaming and Parking
100. Providers are increasingly being paid by results, on the basis of the number of customers moving into work, rather than a flat fee. There are two particular risks associated with this approach. The first is that of ‘creaming’, where contractors who are paid by results are likely to concentrate their efforts on those participants who are closest to the labour market and more easily placed in a job. The second is that of “parking” where participants who are deemed furthest from the labour market will receive a bare minimum of services and are unlikely to make any progress whilst participating in a programme. In this way providers seek to maximise their profit, focusing on customers who will earn them outcome payments, while spending as little as possible on customers who will not.
101. There is evidence that creaming and parking is taking place in the Pathways to Work programme. Research by the Department found that provider staff felt that the focus on performance targets influenced their behaviour with clients, to the extent that they spent less time than required with people with multiple barriers to work (and perceived as harder to help). They also felt that they needed to encourage job ready clients to take jobs that would enable a swift return to work, rather than take lengthier routes towards jobs that they wanted.
102. In addition, most providers who took part in the research perceived that clients were, on the whole, harder to help than they had anticipated and some staff expressed concerns that this had also led to job outcome targets being prioritised ahead of clients’ well being and ability to sustain employment.
from p28, section 4, Vulnerable Groups in The House of Commons Work and Pensions Committee – Fourth Report Management and Administration of Contracted Employment Programmes
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This article makes very interesting reading. I have been out of work for over a year. I am 52 years old (and female). I have attended one of these schemes and want to add that the only real value of the Executive Networking group (see the LinkedIn group)is the support we get from each other. I posted this site address on the group yesterday.
I am a marketer (for IT) and a coach. Many of my colleagues seem to be going through a few common thought processes that include loss of self esteem, loss of direction, fear and a sense of now is the time to chose to do something else. The help we need as a group is centred around provision of mental support (not over simplistically how to re-write your CV and how to interview well) and also exactly what the Prime site is about – self employment. I am pleased to have found it.
In addition to my last comment, I would like to add that, because of the way the Job Seekers benefit and other benefits are set up (including Mortgage Interest payment assistance), they fail in providing a ‘temporary safe haven’ whilst looking for work. The Mortgage assistance paid for around two thirds of my overall mortgage repayment per month. The job seekers paid around £260 a month. As someone who has built up my lifestyle – and my outgoings – this did not come anywhere close to keeping me ‘afloat’. I have had to sell my house. Now I am in the position of having ‘savings’ (equity) so there is no help at all for me. As I have little or no pension, I am absolutely required to work – or have the state support me – into my older age (70s). This is becoming more of a necessity each month as I have only my equity to live on. My rent is what I was being paid in Mortgage interest help, I have no Job Seekers allowance and I have now to pay council tax. I am no exception to the rule. I can’t see how this country will survive supplying me and others with help when we run out of our means to support ourselves.
They do this in America’s prisons, so they can undercut many businesses, and those who benefit, are the very people, who own the companies that get work done, as so ably shown recently, when a judge was sentencing children to labour in prisons, so he could receive payment, from the companies concerned. Mostly it is cheap labour, with a threat of reduction in income for those who do not comply.
It may be a step short of imprisoning the poor and unemployed, or using them as slave labour for less than national minimum wages, but we now have the prospect of the government making prisoners work, while interred, and just who are they going to do work for ?
Want a bet that they work for the very same people who are in the “know” with the politicos …..and who will that help in the employment market, I can just see it jobs that exist now and have to be paid for at a fair rate by law, will go, and the “dollar a day worker” will undercut all the least skilled in society, and they will be the next unemployed.
When examining these proposals, it is always best, I find to ask, who profits ?, and then, just follow the money