Financially viable?

Nobody seems to be asking at the moment whether the Work Programme is financially viable for the providers.  The Work and Pensions Committee has taken evidence from "users" and there is a focus on the voluntary sector and small organisations which have found that the programme is not working for them or for anyone else.  Charities which help the homeless are particularly concerned about the specific problems of their clients being ignored; WP providers not even asking whether someone is homeless.  Yet the charity Crisis says that it got two people into work separately from the WP but was contacted by a provider asking for details so that it could claim the outcomes.  Meanwhile the media are focussing on other groups such as the disabled.  I missed the Panorama programme, but I gather that A4e was just one of the providers that didn't come out of it very well.  The response of A4e, as usual, is to point to a success story.  Next Sunday morning at 11.00 Radio 5 Live is looking at self-employment and the WP.
But, as I said, nobody is asking whether the whole thing could founder on the fact that the providers can't afford to run it.  The government insisted from the outset that only the largest and most financially secure companies could be prime providers, and that drove some companies, such as Ingeus, to partner with companies which could guarantee their financial security.  A4e didn't do that.  Nonetheless, the DWP was surprised that some potential primes put in bids that even the government didn't think were viable.  It now appears that the attachment fee income was sufficient to keep the companies ticking over.  Maximus, for instance, said that it had broken even on the first year.  But A4e's accounts to March 2012 showed them in deep trouble, and apparently without the expectation that things would improve much.
So what would happen if a prime decided that it just couldn't afford to go on?  Would the business be transferred to another company - assuming anybody wanted it?  Would they have to pay a penalty for breach of contract?  Is the government busy renegotiating terms in order to save the skins of these companies?  If that happens, I suspect it will be slipped through without publicity.

Someone put a petition on the government's e-petition website asking for the abolition of "work for your benefit/workfare schemes in the UK".  The rest of it was eminently sensible, but unfortunately the DWP was able to seize on the description and deny that there was any such thing as workfare in this country (it's American) and equally no such thing as "work for your benefit" - it's all about support.  How lucky that they changed the title of Labour's pilot scheme from "Work for your Benefit" to "Mandatory Work Activity".  

The Work Programme: experience of different user groups

This is the title of a lengthy document produced by the Work and Pensions Committee.  It's an interesting read, although I admit to skimming after a while, because a lot of the submissions are very similar.  A variety of sub-contractors contribute, along with individuals and prime providers.  Since there's so much of it, I've chosen to pick out the bits about, or by, A4e.

Gill Marshall, A G & I (UK) Ltd: "Companies such as A4e/Ingeus are too large to effectively run the programme and have far too much control."  She recommends a model not very different from that which worked before outsourcing in 2006.  "It would be better if there were one centre (Centre of Training & Educational Excellence) in each county holding the funding, regulating and managing the training providers to ensure standards and performances are met."  She gets in a specific dig: "Anyone can claim that they are successful, A4e being a prime example!"
Anna Burke, Consultant Partner, Drop the tag: She was the boss of Eco-Actif, the sub-contractor to A4e which folded.  "We only received £210 of the average £400 attachment fee in Year One.  This double impact meant that we found it very difficult to provide the quality of service and adviser time that we were contracted for.  Indeed we felt it would be unethical to provide less.  The double layer of contractors also meant that it was taking an average of 10 weeks for invoices to be paid, which was disastrous for our cash flow. We were, however, under a great deal of pressure to ‘cream and park’.  At one point we were told (after a monitoring visit) that our advisers were ‘very good and experts in their field’.  We were then advised to redeploy them to other projects and employ more sales oriented staff who ‘would not care so much’."  She concludes that "There was very little in A4e’s approach that could be considered in any way innovative."
Milton Keynes Women and Work: They are very critical of A4e's behaviour.  "Milton Keynes Women & Work (charity No 1010038) established an agreement with the local A4e office to deliver various training packages. A4e did not adhere to the terms of the agreement e.g.  
a) They did not confirm numbers of attendees in time, did not give agreed notice times to cancel a course, did not give agreed notice period to cancel the crèche provision we had outsourced.  All of this had a negative financial effect on the
charity.  
b) They did not pay their invoices for several months which also impacted on the charities cash-flow.  
c) They cancelled a course we had an agreement to provide for them and started delivering a course in-house based on the format and content we had devised.

There is a long submission from A4e itself.  Not surprisingly, it stresses how wonderful the company is and how well it is doing with the Work Programme.  They do, however, echo something which comes up in a number of submissions:

"One way the Work Programme could be enhanced further is by strengthening the use of differential payments.  The nine current payment groups for the Work Programme are still loosely based on the previous type of benefit recipient. A4e is a provider to Job Service Australia, which means that we also operate with the Australian model. The Australian system has over eighty different payment groups. Our experience is that this creates better incentives, and better reflects the true costs and difficulty of dealing with a very diverse group of customers."

Specialist charity sub-contractors often say the same thing.

A4e says: "We would support greater use of 'Day 1 entry' for some types of customer."  Ignoring the misuse of the word "customer", this is about wanting to get some people, like offenders, onto the programme as soon as they sign on.

They get in a plea for their "super-contract" idea.  They want "the DWP to lead a pan-government effort to create a common social outcomes procurement framework.  This should build on the work of the recent Social Justice Framework for measurement and the Cabinet Office’s Social Outcome Fund, to allow a single provider to pool budgets around an individual."  I think they're going to push this at every opportunity.  

It will interest their clients to know that A4e believes "It is vital customers have a voice in the service they receive. It is crucial both to ensuring quality service and to suggesting further improvements to the service model. Therefore having good mechanism of feedback and complaint is a very important part of the Work Programme’s black box."

There is a great deal in this whole document which should result in changes to the Work Programme.  The criticisms and recommendations are so similar that they surely can't be ignored.

How to reform public services?

If you're looking for a little light reading, you might try this collection of essays by a group of Conservatives calling themselves Bright Blue.  All political parties have such groups, who want to demonstrate how progressive / radical they are.  This one interests us chiefly because one of the contributors is Jonty Olliff-Cooper, of A4e.  Scroll to page 47 (unless, of course, you want to read the rest as well).  It's entitled "Better, cheaper, more human - building progressive Conservative public services".  Jonty is obviously very proud of it.  To be sure, there's a disclaimer at the end of the article that it's his personal opinion and not necessarily that of his employers; but there's a great deal in it which chimes very well with ideas which A4e has been pushing since long before JOC joined them.

JOC and I start from fundamentally different positions, both philosophically and practically, on public services, privatisation and outsourcing.  I believe in a mixed economy.  There is a place for the private sector.  Conservatives believe in the free market unconfined, in the profit motif as the best incentive to doing anything.  Yet at the outset of the article JOC says: "As progressive conservatives, we should reject the orthodoxy that the private sector is the only route to growth. It is not. A flourishing economy requires quality public services too, to educate its workforce, get people back to high-quality work, keep its population healthy, reskill workers in declining industries, and attack the social evils of crime, disillusionment and addiction, which drive up taxes."  It sounds hopeful.  Public services are necessary.  But: "across the political spectrum, the expert consensus is that many public services intervene too late, are too bureaucratic and expensive, and do not give people what they really need or want."  This is an assertion without evidence, but it's preparing the ground for something which is introduced later in the piece.  Services, he believes, should be delivered on a "right to try" basis, ending the monopoly of the public sector; a position where "government stops trying to do everything itself, and instead pays whoever is best able to meet its objectives."  He continues to write in defence of the public sector.  It's not its fault if it doesn't work properly.  Where is this going, one wonders.

This country has a great deal of experience now with outsourcing.  We know exactly what can go wrong.  But this experience is never reflected in the visions of the ideologues.  As JOC developes his argument, and talks about "where we are going wrong" he neglects entirely the reality of years of private sector involvement in the delivery of public services.  "Current provision fails because it finds it hard to see the whole person," he says.  What follows is very much A4e's long-held belief in a sort of wrap-around contract which tackles all the perceived needs of the people whose behaviour government wants to change.  Mental health, addiction, offending, unemployment, debt - all should be addressed by an integrated approach rather than piecemeal with separate contracts.  While his analysis sounds perfectly reasonable, the implications are not.

He gives three options.  The first is to "Stop specifying the process; start specifying the end point."  This boils down to something like the Work Programme; a clear definition of an outcome and payment only on results achieved.  Well, that's working well, isn't it?  The WP was never solely PBR because it cost too much to deliver the service (I use the word loosely) before any outcomes could be achieved.  The new outsourcing of the Probation Service is to be on PBR but, we gather, in a modified fashion.  This option also leads to the "We don't care what you do as long as you get results" approach, which leaves the hapless client with no rights.

Second, JOC wants to "Slash commissioning bureacracy".  This is where the thesis unravels.  He wants a "let a thousand flowers bloom" approach, permitting anyone who thinks they can deliver a service to try to do so, a licence system, paying by results.  This would not exclude the public sector, he insists, which could compete if it wanted to.

In both the NHS and education we are seeing private and public sectors "competing" but the end result is not in doubt.  There was a move recently by Monitor, the body charged with overseeing the changes in the NHS, to recommend that private companies should not be charged corporate taxes because the public sector did not pay them.  This seems to have been quashed for the moment, but will certainly continue to be an issue.  In education, the public sector, i.e. local councils, are increasingly being left with no role except to pick up the pieces.  They cannot compete, and nor should they.

The fact is that, especially in the sort of services JOC envisages, the public sector cannot compete with private companies.  Who would be doing the commissioning?  A council cannot put a service out to tender and then bid for it itself.  Is it, then, supposed to watch a private company set up a rival service and pay them for outcomes?  That might be attractive to a big private business, but a council is answerable to its residents, not to shareholders, and would not be able to maintain a department which had a diminishing role; nor could it run a department at a loss, as businesses are willing to do.  There are instances of local councils bidding for contracts from government.  This works only as long as the contract is profitable.  In the current climate (or in any climate, come to that) no council or other public body would be in a position to lay out money on a gamble that it could make a PBR contract pay.

Experience also tells us that the flourishing start-ups JOC foresees would soon disappear.  We have three or four huge outsourcing companies in this country, and if the government wants to spread the net wider it has to look abroad.  Small enterprises rapidly get swallowed up or driven out by the big players, who are prepared to work at a loss if it secures them long-term business.  JOC's vision is a fantasy.

His third point returns to the delights of PBR.  "The deeper the need, the deeper the help", he heads it, and could add "the bigger the payment".  He rejects the idea that this is "naked Tory privatisation" (although nothing he has said convinces me otherwise).  He describes "a person down on their luck", with multiple problems, all of which could have a price to the organisation which could address them; "an organisation that would provide a single source of advice and support, and help you with all your issues, an organisation which understood you, your family, and the place where you grew up; one that would stand by you for the long term; treat you like a human, not a number; and back you to build a different future for yourself."  I don't think he means to be patronising.

As a vision of public service reform, this is deeply flawed.  It professes to admire the public sector whilst putting forward plans which would wipe it out.  

"Statistics cast doubt on coalition's '500,000 new jobs' claim"

That's the headline to an article in the Guardian yesterday.  It will no doubt surprise most of you to know that if you're on the Work Programme you're counted as one of the half a million new jobs which the government brags about.  105,000 people, 20% of that total, are on what the report calls back-to-work schemes (the Work Programme and MWA) but are classed as in work.  The article is muddled on its figures in places, but it's clear on that 105,000.  The vast majority are on benefits but the government counts them as new jobs.
Apparently it's not really the government's fault.  The (ILO) International Labour Organisation insists that our Office of National Statistics "counts people as employed if they are adding to the nation's economic output, regardless of whether or not they are paid."  Mark Hoban wants the ONS to change this, but says that it makes little difference.  The equivalent of, "Whatever".
Now here's an interesting point that lawyers might want to get their teeth into.  People on these schemes are "adding to the nation's economic output" - the ONS has accepted that, and it's what Hoban doesn't like.  So shouldn't they get at least minimum wage?
The next time that the government puts out any figures on unemployment or jobs, they are probably not telling the truth.

Self-employment

I was talking to someone recently who felt that he'd been pressured into going self-employed by a WP provider (not A4e) and then wasn't given the help and advice he needed.  Under previous programmes, there were accounts of people who wanted to go self-employed, but were not helped to do so.  What is the picture now?
We know that self-employment removes someone from the jobless figures, and counts as an outcome if it's sustained, so there's every incentive to encourage this.  But is the backing available?  Are we going to end up with an army of under-employed freelancers?

Don't mention the Work Programme

Have you noticed that the Work Programme doesn't exist any more?  Up to last Autumn it was dropped into every pronouncement by Tory ministers; but after the publication of the performance data it's as if an edict has gone out saying don't, under any circumstances, mention it.  Too embarrassing.
Even today, when Chris Grayling was doing the rounds to talk about his latest brilliant idea - outsourcing the Probation Service on a payment-by-results basis - hardly any journalists brought up the failure of the WP.  Their short memories are very convenient for the politicians.  They lose interest very quickly.  Only the Telegraph has published anything about A4e's accounts.
But something must be going on behind the scenes, surely.  The providers, if not losing money, are not making any profits, and updated performance figures will have to be published sooner or later.  Who will blink first?  Will a provider pull out of the contract, or will the government pull the plug on the whole thing?  Is Mark Hoban trying to renegotiate the contracts?

It seems that there's been a backlash over the language being used about people on benefits.  The Independent is leading the way in reporting this.  Last Friday it publicised a poll commissioned by the TUC showing that "a campaign by Tory ministers is turning voters against claimants – but only because the public is being fed 'myths' about those who rely on benefits."  The article goes on: "According to YouGov, four out of 10 people think benefits are too generous and three in five believe the system has created a culture of dependency. However, people who know least about the facts are the most hostile towards claimants. More than half of those who are 'least accurate' about the system think benefits are too generous, while fewer than one in three (31 per cent) of those giving the 'most accurate' answers agree."  Today the paper reports that the Tory campaign team has been told to tone down the language.  "Mr Duncan Smith was appalled by a Tory online advert last month showing a man on a sofa, asking whether the Government should support 'hard-working families or people who won't work'".  Nice.  Apparently one Tory minister told the paper: "Some people who lose their jobs and many people on tax credits, are strivers not scroungers."  (my italics) How generous of him.  Methinks he doesn't get it.  Two of the Lib Dems, Sarah Teather and Vince Cable, are completely unequivocal that the language is wrong and damaging.

A4e's accounts for 2011 - 2012 published

The accounts for the year to March 2012 have been published.  Company accounts are not easy reading unless you're an accountant, but there are some interesting facts to be extracted.

Emma Harrison was paid £1.5 million in dividends when she stepped down as Chair in February.  There were no dividends paid after that, and no more will be paid up to March 2013, because they need to invest in the Work Programme.  It was an expensive year.  The parent company made a loss of £1,007,000 after dividends were paid, compared to a profit of £15,158,000 in the previous year.  Actual revenue was significantly down.  In the UK it was £127,126,000 compared to £215,616,000 in the year.  Revenue from Australia was up a lot because of the acquisition of a company there.

The preamble declares that they pay the Living Wage and intend to raise pay according to new recommendations in April 2013.  They have chosen to follow the Hutton Review of Fair Pay and pay the Chief Exec no more than 10x median adult full time salary.  Directors' emoluments (pay etc.) for the year total £2,327,000, less than last year.  The highest paid director got £416,000.

There are some bits and pieces of money spent on services, including:

• £188,000 to Andromeda Park, a conference management company owned by the Harrisons; 
• £816,000 to Thornbridge Ltd for lease of property (more than the previous year); 
• £81,000 to Elite Pension Scheme, of which the Harrisons are beneficiaries.

A small note tells us that on 24 April 2012 Medex Training Ltd was "struck off".  This was a company acquired by A4e in 2006 - see my post from October 2009.  It's been dormant for some time.  I wonder what happened.

If you want to examine the full accounts, go to the Companies House website.  You can download it for only £1.

Back to the future?

On many forums, including the comments on newspaper articles, it has become commonplace for people to forecast a return to the workhouse.  As a historian, in an amateur sort of way, I have begun to see genuine parallels between the plans and attitudes of the current governing classes and the climate of opinion which brought about the Poor Laws of 1834.
 

Let's start with the early 20th century.  It was a time of development of a sense that society had a responsibility to look after all its members.  The Old Age Pensions Act of 1908 saw many old people saved from the fear of destitution and the workhouse.  The following year Labour Exchanges were set up to help the unemployed find work.  This was followed in 1911 by the National Insurance Act which enforced contributions for sickness and unemployment pay.  Two world wars brought a sense that the people who had suffered for the nation should be cared for by the nation, and the growth of socialism meant the growth of a social conscience.  Labour MPs brought a different perspective to the House of Commons and to government.  In 1948 we had the birth of the Welfare State.  The logic was simple.  It was a form of insurance; one paid in when one was able, and drew out when in need.  There was recognition that some people would never be able to contribute, but they would be supported.  This is the system under which most of us have grown up and lived our lives.  We now see it seriously under threat.  Was this just a century-long blip in our history, and we're going back to normal?

I want to go back to the early 19th century.  For those of you willing to read a quite long and very erudite article, I recommend a piece on the  "Looking at History" blog by Richard Brown.  If that's too much for you, here's my less erudite summary.  In the early 1800s Britain had nothing even vaguely resembling democracy.  The country was governed by an elite which was getting increasingly nervous.  The French Revolution had shown what could happen if the ordinary people rose in rebellion, and there were plenty of rumblings in this country.  Low wages in the rural areas; the poverty in the towns to which people flocked for work; a savage penal code; all caused growing unrest and civil disorder.  The dissent was suppressed by the military.  Added to this, the welfare system, known as "relief", was inadequate and patchy.  There was a need for reform, and a report was produced in 1832 (the same year in which a few tentative steps were taken towards reforming the electoral system).  In a free market economy there was no excuse for not being able to find work if you were physically capable of working.  Relief, financial support, should only be available as a very last resort, as something which the lower orders would have to be truly desperate to seek.  This was to be provided only in workhouses, where the regime would be punitive.  (Later, "outdoor relief", payments to enable paupers to stay in their own homes, was allowed.)  The word "pauper" became an official designation.  Children growing up in the workhouse were hired out to local employers without wages.  All this was enacted in the Poor Law of 1834.  The system was to last through the century and into the next.

Does any of that sound familiar?  It should.  I don't believe that we're heading for the revival of workhouses, at least not in the foreseeable future, but the prevailing attitudes are much the same.  Among all the nonsense in the media at the moment I cite two pieces.  The first is on the excellent Spinwatch site, which examines an article by Sean Worth of one of those nasty think tanks.  The call it "The compassionate Conservatives go to war".  The second is in the Express, reporting a row in York.  A Conservative local councillor is critical of food banks.  "We have lots of poor people, but living standards have surged over the years. There is certainly no need for food banks; no-one in the UK is starving and I think food banks insult the one billion in the world that go to bed hungry every day and ignore the fact a child dies of hunger every three seconds.  The fact some give food to food banks, merely enables people who can't budget (an issue where schools should do much more and I have said the council should) or don't want to, to have more money to spend on alcohol, cigarettes etc."  The man would have been entirely at home in 1834.