The Department for Work and Pensions has introduced the Work Programme quickly, in just over a year, and this has had benefits, but the speed with which it was launched has also increased risks, according to a National Audit Office (NAO) report.

Sector organisations welcomed the report.

The Department and providers have made assumptions about how many people the Programme will get back into work but there is a significant risk that they are over-optimistic.

The Programme, which replaces virtually all of the existing ‘welfare to work’ schemes, has a number of innovative design features that address weaknesses in previous schemes.

Providers are paid primarily for the results they achieve in supporting people into employment so what the provider earns is tied to performance.

Providers will receive higher rewards for supporting harder to help claimant groups into work and are paid partly out of the benefit savings they help to generate.

There is more potential for competition between providers, said the NAO.

However, assumptions about the feasibility of the Programme might be over-optimistic.

The NAO’s analysis, The introduction of the Work Programme, suggests that 26 per cent of the largest group of job seekers in the Programme will get jobs, compared to the Department’s estimate of 40 per cent.

Some contractors in areas of high unemployment may struggle to meet nationally set targets.

It is possible that one or more contractors will get into serious financial difficulty during the term of the contracts, said the report.

Today’s report also points out that no alternatives to the Programme were considered as part of the business case, nor was it piloted to test assumptions.

It has so far cost £63 million to terminate existing welfare to work contracts, including contracts with ten providers that went on to win contracts for the Programme.

Two former contractors have not yet agreed settlements.

The IT project to support the Programme was not fully functional when the Programme was launched.

A consequence is that the Department will not be able, until March 2012 at the earliest, to carry out automatic checks to confirm that people who find work have stopped claiming benefits.

The Department needs to ensure that improvements to the IT system are delivered on schedule, said the report.

In the meantime, there is an increased risk of fraud and error going undetected.

Fewer clients than expected are being referred onto the Programme as part of the ‘harder-to-help’ category.

Some have been found to be ‘fit for work’ and switched into other categories and it is taking the Department longer to process assessments and appeals.

As a result, some sub-contractors are frustrated at the speed with which clients have been referred to them, says the National Audit Office.

NCVO: lessons to be learnt
On the report, the National Council for Voluntary Organisations' chief executive Sir Stuart Etherington,said: "This report rightly identifies that many elements of the Work Programme have addressed the shortcomings of previous schemes, particularly in terms of offering more innovative financing arrangements and greater freedom and flexibility for providers.

"However, there is a need to ensure that these financing arrangements are fair and proportionate so that subcontractors have sufficient funds to carry out the work.

"Whilst the progress is welcome, there is still plenty of room for improvement, and we are glad that the NAO shares many of the concerns which we have raised before around over-optimistic performance expectations and delays in sub-contractors receiving referrals.

"There are lessons to be learnt to ensure that this and future programmes are up to the job and delivering fully and fairly both for clients and providers. The recommendations for monitoring performance assumptions both for this and future initiatives are particularly timely given the disappointing value and number of contracts which have gone to voluntary sector subcontractors.

"The report’s recommendations, if implemented by Government, should go some way towards ironing out current issues in the Work Programme and help to raise the bar for future schemes.

"NCVO would also recommend that the Department for Work and Pensions explores scope for better data sharing between Jobcentre Plus and providers and gives more customers the chance to choose their own provider; these points were raised at our Special Interest Group meeting with Chris Grayling last week."

NAVCA: report is welcome
Joe Irvin, chief executive of NAVCA, said: “The Audit Office report into the Work Programme is welcome. It has been said that private companies are bearing the risk. We should always remember that it is unemployed people who bear the risk if they are let down by the companies.”

“Amyas Morse, head of the NAO, said that the DWP needs to ensure that prime contractors do not cut corners to stay in profit, such as targeting easy-to-reach people, reducing service levels or treating sub-contractors unfairly.

"That is why NAVCA strongly supports the recommendation for spot checks and a survey of subcontractors to ensure the prime contractors are meeting the Government’s own standards. We must ensure the Work Programme allows local charities to give unemployed people the help they need.”

Voice4Change England: Compact is crucial
Voice4Change England (v4CE), national advocates for the Black and Minority Ethnic (BME) VCS, made a number of recommendations put forward in the report.

These include:

Making leadership of the Compact more visible within departments;

Departments to provide an evidence base for Compact implementation;

Ensuring implementation is monitored and reported against;

Carrying out 12 week consultations or providing a clear rationale when less then 12 weeks;

Providing a clear rationale for funding decisions.

Vandna Gohil, director of V4CE, said: “Implementation of the Compact is crucial as cuts to funding bite and the changing policy landscape redefines the relationship between government and the VCS.

"We welcome the recommendations made in the NAO report. The report identifies a number of gaps in the implementation of the Compact by government and we want to ensure that this does not have an adverse impact on local voluntary and community organisations.

"We have strongly advocated for the development of a specific BME implementation guide on behalf of our members. Responsibility for the development of the guide has moved over to Compact Voice.

"We are actively working with Compact Voice to develop a strong and enforceable BME implementation guide. When the BME VCS continue to face specific challenges and barriers in their relationships with government, this guide is essential.

"We will work alongside Compact Voice to make sure the recommendations made by this report are taken forward by government to improve equality, transparency and fairness in their relationships with the VCS."

Gareth Thomas: Big Society rhetoric hasn’t delivered
Gareth Thomas MP, Labour’s shadow minister for Civil Society, said: “The Work Programme was billed as the great solution to the funding crisis facing charities and community groups as Ministers promised 40% of referrals would go to voluntary sector organisations.

"Instead less than half of this level has materialised; yet another sign that the Big Society rhetoric hasn’t delivered. If the government can’t deliver on its promises to charities through the Work Programme what confidence can they have that other government contracts will deliver for them?

"The revelation that terminating existing welfare to work contracts cost the taxpayer £63 million is particularly shocking when so many charities and voluntary groups are struggling to keep their heads above water.”

4Children: need for renewed scrutiny
Anne Longfield, chief executive of 4Children, said: “There is a clear need for renewed scrutiny of the effects of benefit capping on a large number of families. The Government should more carefully model and test this and other disputed measures in the Welfare Reform Bill – child maintenance application charges, for example. Untested, they risk passing unfairness into law, and pushing many families into even greater difficulty in already difficult times.”

“This is an area where the Prime Minister’s proposed Family Test could really make its mark. It is therefore imperative that the test becomes operational as swiftly as possible.”

For the full National Audit Office report go: here.

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