A pioneering payment-by-results system set up under the Department for Work and Pensions was too complex and failed to achieve desired outcomes, MPs said today.
The department “deserves credit” for it’s Work Programme, according to a Work and Pensions select committee report, since the welfare-to-work scheme “in general, produces results at least as good as before, for a greatly reduced cost per participant”.
However, the report found that the model of paying providers more to work with more challenging individuals was unnecessarily complicated and “has not had its intended impact on the behaviour of providers.”
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The committee recommends a simplified payment structure based on a more accurate categorisation of claimants in the Work Programme Plus scheme, which is due to be rolled out in 2017. MPs also called on the Department to provide upfront funding to support individuals who need extra help to find employment.
Committee chair Frank Field said: “We strongly support a continued focus on payment-by-results in welfare-to-work but the evidence is clear: pure payment-by-results has not worked in relation to people who need a lot of help to return to work. Some upfront funding from the Government is needed to address this.”
The current scheme uses the type of benefits that participant are on as a proxy for their relative employability. But the committee believes it would be more effective to assess individuals using specific characteristics – such as educational attainment and housing problems – which are known to be strong indicators of likely long-term unemployment.
Claimants would then be grouped in just three categories: work-ready; intermediate support; and intensive support. Providers should be paid more as the help greater proportions of claimants in the intermediate and intensive support groups, the report says, and they should receive an upfront fee when dealing with a claimant needing intensive support.
MPs also recommend that employment support schemes should be more closely integrated with related services such as housing support, and there should continue to be separate programme dedicated to helping unemployed people with disabilities.
“For reasons of cost, the government may be tempted to consolidate mainstream and specialist disability employment support into a single new programme,” said Field. “We think this would potentially be a grave mistake.”