Work programme launch 'speedy' but MPs warn of risks attached

Contractors are paid a fee when the job centre refers an unemployed person to them

MPs have "commended" the speed with which the welfare-to-work programme was set up but warned of risks associated with the payment-by-results approach.

Launched in June 2011, it aims to help 2.4 million people into work by 2016.

The Public Accounts Committee said no contractors should be paid until their performance was properly monitored and warned against "cherry picking".

Ministers said firms were incentivised to help "harder to reach" claimants and to deliver value for money.

The £3bn programme replaced employment support schemes introduced by the last Labour government, notably the New Deal and Pathways to Work, with an onus on helping the long-term unemployed find sustainable jobs.

The government has said the scheme - which is contracted out to 18 private and voluntary companies - is "on track" although the first figures for the number of people who have been found work will not be published until August.

'Wider benefits'

In an interim report, the cross-party group of MPs said getting the programme operational within a year was a "significant administrative achievement" for the coalition.

It said the programme had advantages over its predecessors, with contractors having more time to work with those referred to them and "greater flexibility" in how to proceed.

The business model did transfer risk away from the taxpayer, the MPs said, with firms only getting the bulk of their fee if someone remained in a job for a set period of time.

However, the committee said the fact the programme had not been piloted before launch did present additional risks - illustrated by the fact that automated checks to determine whether people said to have been placed in jobs had actually stopped receiving benefits were not put in place until March.

Any payments to contractors must be "correct and valid", the report stressed, and only made after proper scrutiny and a broader assessment of what constituted value for money.

"The speed with which the work programme was introduced was commendable but the quick introduction threw up risks that have to be addressed," Margaret Hodge, the Labour MP who chairs the committee said.

"Achieving value for money will depend on more than whether the contractors meet their contractual targets. We need to be assured that significantly more people are in work than if the programme had not existed and that wider social benefits are being delivered in practice."

'Treated fairly'

One of the programme's leading contractors, A4e, is currently the subject of two police investigations over allegations of fraud relating to other government schemes. An eighth employee of the firm was arrested in connection with the police inquiry on Monday.

The committee said they expected the Department for Work and Pensions to "urgently" publish the results of its investigation into allegations against the firm regarding the Mandatory Work Activity work experience scheme, adding that Parliament had "significant interest" in the firm's financial affairs.

Separately, the National Audit Office is also investigating the overall safeguards built into the work programme.

In response to the committee's report, the Department for Work and Pensions said similar schemes had taken four years to set up in the past but nearly 520,000 people had received support in the first eight months of the work programme's life.

"For the first time we require providers to set out minimum standards for participants along with a complaints system to make sure they are treated fairly," a spokesman said.

"Every job outcome payment through the programme is fully validated. We are convinced the scheme offers jobseekers the best chance of getting into work at far better value for money than previous schemes."

Unofficial figures seen by the BBC in February suggested about 20% of unemployed people who have been signed up for at least six months have been found a job.