Wednesday, 2 July 2014

Work Programme puzzle

It started with a statement from the redoubtable Margaret Hodge MP, chair of the Public Accounts Committee.  She is angry at the failure of the Work Programme to help the people it was supposed to help, especially those on ESA.  There has been no improvement, she said, since the PAC examined it in 2012, and providers are spending only 46% of what they were meant to spend supporting each client.  Then comes the puzzling bit: "It beggars belief that the Department expects to pay at least £31 million in bonuses to all of its contractors despite their poor performance - even the Newcastle College Group whose contract has been terminated will receive a bonus."
I confess to never having heard of these bonus payments.  There was little enlightenment from an article by Rajeev Syal in the Guardian.  He adds some more figures, but gives the bonus as £25m (and then £31m), while calling it "incentive payments", and saying that the National Audit Office "has discovered that flaws in the work programme contracts meant that the [DWP] is obliged to make incentive payments to even the worst performing providers."  The figure isn't dependent on results.
Still confused, I looked at a piece from Sky News.  It's clearer.  And there's an interesting paragraph: "Figures for the most recent group to have gone through the scheme showed just 32% of participants found jobs - still below the DWP's minimum performance level of 33% and well below its original forecast of 39% and the 42% predicted by the contractors themselves."
Newcastle's local Journal tells us that NCG's contract in North East Yorkshire and the Humber had a success rate of 7.4% - but they're going to get a bonus anyway.
Okay, I must have missed the bit about bonuses when these contracts came out.  Perhaps they were negotiated at the same time as the "attachment fees" which meant that the providers would have a steady income and wouldn't be dependent on PbR.  But they are certainly a comfort to A4e and the rest.

27 comments:

  1. You're not the only one who's puzzled.

    If you don't apply for jobs, you don't get any interviews (or the chance of). If you don't get interviews, you don't get a job (again, or the chance of). So why is it that if the WP is a failure, the contractors are still being paid a small fortune?! Failure sure comes with a large payout these days, doesn't it? I wonder, if there wasn't such a big push to "privatising" EVERYTHING, would we actually see better results? Personally, I don't think we would as the jobs just aren't there [for the unemployed].

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  2. I'm open to correction (as ever) but I studied the DWP's original Invitation to tender (ITT) document; This document laid out in some detail the framework for the Providers' remuneration, though the actual amounts were subject to bid. There was no mention of bonuses/incentive payments like these described. So what on earth is going on? Maybe the PAC needs to look closer at this?

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    1. According to the Executive Summary of the NAO’s new report, the DWP has made more than 30 variations to the terms of WP contract since the inception of the WP scheme.

      What’s to stop a contractor from demanding an “incentive payment” every time the DWP wants to vary the terms of the original WP contract?

      IDS’ idea that contractual details are mere trifles with which he need not bother himself, is nonsense. A combination of detailed contract law and harsh commercial reality will clobber that clown every time. Contract law says that “new consideration must be given” (ie money paid) in order for a variation of a contract to have any legal effect. Where the contracting parties are on good terms and the variation will not hurt either side, £1 is usually sufficient but guess what? My price increases each and every time you want to impose more onerous terms & conditions on me, Guv. The taxpayer can afford it, after all.

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  3. There's a response here from the DWP. http://goo.gl/aqyOYZ
    Notice that it still talks about absolute numbers rather than percentages; that it talks about savings, which will include what they've saved by sanctioning people; and that it doesn't mention bonuses at all.

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    1. On further consideration (and reading of the relevant articles) I think this may be a storm in a teacup. Quite possibly the "bonus" payments referred to aren't bonus payment at all but are in fact the ongoing/sustained employment type payments which were specified in the original ITT. Basically this means that the authors who refer to "bonuses" don't really understand the nature of payments specified in the original ITT and reflected in the subsequent contracts.
      Still if it causes bad publicity for the WP and IDS who am I to complain?

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    2. That was my first thought. But I'm sure Margaret Hodge understands the distinction between "bonuses" and PbR payments. The articles do seem to suggest that they are different.

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    3. Incentive payments for high performance (sic) were always in the contracts. I can't recall the details but I'll try to dig them out when I have the time. Clearly though, something has gone wrong if everyone has been receiving them. With regard to NCG, my understanding is that their performance improved pretty significantly, so it may be that despite losing their contract they've been in the incentive payment band at some point.

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  4. While on the WP I arranged 3 placements (2 with Charities 1 with a major corp) The WP Provider could not get motivated to vet them,so I was not allowed to participate,I felt that their was a real possibility of getting hired or at least some relevant experience. Amazingly once they were paid £600 for an MWA Placement it flew through..

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  5. Former A4e Client3 July 2014 at 02:03

    So the 'Payment By Results' (PBR) Work Programme is less and less about PBR. We knew from the beginning that a £400 attachment fee was demanded by the providers. Now we find out that bonus payments (on top of other in work sustainment payments) will cost tens of £millions to the taxpayer.

    Privatisation usually ends up costing far more than the initial publicity states! But all the main establishment parties are wedded to it ideologically.

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  6. The links to the new NAO documents are below:

    http://www.nao.org.uk/report/the-work-programme/

    Para 23 of the Executive Summary states:

    “23 Flawed contractual performance measures mean the Department will have to make incentive payments to even the worst performing contractors. The Department established incentive payments to reward high performance. But it uses a measure of performance that is highly sensitive to changes in referral volumes over time. In 2014-15 all 40 contracts are likely to be entitled to £31 million in incentive payments. The Department estimates that only £6 million would be paid using an accurate measure of performance (paragraph 4.21).”

    Margaret Hodge describes these incentive payments as being bonuses for failure, in effect:

    http://www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-committee/news/work-programme-chairs-statement/

    The DWP’s press release seems to me to be be yet more Tory right-wing propaganda that Richard Caseby should have vetoed in his new role as an impartial (theoretically) Civil Servant. If IDS wants a personal spin-doctor then IDS should be paying the spin-doctor’s salary personally, too.

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    1. Thanks for that Judi.
      So basically the cost to the taxpayer is around £25 million. This is down to either incompetence at the DWP, corruption or a deliberate and clumsy attempt to boost the Provider's income in a non obvious way.
      In any event no heads will roll as they should.

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  7. Off topic, sort of

    Did anyone notice that the song "If you tolerate this [ie Fascism] your children will be next" by Manic Street Preachers at this year's Glastonbury Festival was deleted by the BBC on IPlayer? Incredible.

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  8. addendum

    29 minutes into the programme on BBC IPlayer.

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  9. Late last night, I watched a recording of an oral evidence sesh held by the Work and Pensions Committee on 2nd July 2014 about “Access to Work” for sick/disabled people. The experts who help sick/disabled people were certain that the Work Programme is the wrong context in which to try to “support” people who are sick/disabled (and are therefore identified as a “harder to help” cohort where the WP scheme is concerned.) One of the experts queried whether it is even appropriate for the DWP to dabble in matters they know nothing about but in which the Equality Act 2010 and its ramifications are very important.

    If the Civil Service can’t get its act up together sufficiently, it is absurd to imagine that private, profit-making WP providers would be either able or willing to do so, no matter what IDS & Co might desire.

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  10. Probation has this to look forward too

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  11. This might wipe that smirk off IDS' smug face;
    http://www.bbc.co.uk/news/uk-politics-28158483
    The High Court has ruled emergency laws underpinning a government back-to-work scheme are "incompatible" with the European Convention on Human Rights.

    Read more at PIL site
    http://www.publicinterestlawyers.co.uk/news_details.php?id=420

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    1. No, they're appealing it. That'll take ages, and whatever happens they'll ignore it.

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    2. According to the DWP’s anonymous “spokesperson”, the unlawful retrospective legislation was, “….discussed, voted upon and passed by Parliant.”

      No it bluddy well wasn’t. It was sneaked in via a hastily-devised Statutory Instrument late one evening and NOT via primary legislation.

      I suggest that Caseby gets his facts right before he becomes notorious for being, “IDS’ Foot-In-Mouth spin doctor.”

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    3. But it was voted on and passed by the H of C. Shamefully, Labour voted with the government.

      Delete
    4. Technically Labour didn't vote with the Government - they abstained (with a few honourable exceptions). You're dead right about it being shameful though.

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    5. No, passing secondary legislation (in a heck of a hurry) doesn't work like this. IDS could pass the SI regardless of anything Labour said or did. For this reason, Lord Pannick QC, in the HoL, was extremely critical of the govt. He said that it is unconstitutional to behave in such a shabby fashion etc. Labour merely confirmed, in effect, that they would have been equally eager to save their own miserable skins had they been in IDS' shoes. The idea, however, remains unconstitutional and thoroughly reprehensible.
      This sort of chicanery undermines the rule of law.

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    6. As the name (Jobseekers (Back to Work Schemes) Act 2013) suggests, it was an act of parliament, not an SI. Gissajob is right about Labour voting; the quid pro quo was the Oakley sanctions review - Labour were sold a pup, basically.

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  12. Historian,I agree which makes a mockery of the Courts,with any luck though the public will see what an arrogant and vain ???? (person?) IDS is,I am not a medical professional but I am sure he suffers from some sort of condition! After? Will he claim the same benefits that he has denied so many others?

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  13. "IDS is,I am not a medical professional but I am sure he suffers from some sort of condition!"
    It seems that when he went to Easterhouse 10 years ago he left the people with the impression he was genuinely sincere in his desire to help. It's true that people with psychopathic personalities can indeed feign or switch on empathy if it helps satisfy their immediate needs. Undiagnosed minor strokes can progessively bring about a change of personality that includes lack of empathy. Those who are spirtually inclined can also add another factor to the list for undesirable personality changes.

    On the otherhand IDS just represents his Westminster milieu. He may be at the high end of the spectrum but nevertheless he is firmly rooted in what, in my opinion, is the most corrupt government by far in living memory. Thatcher set the selfishness ball rolling for what its now unravelling now but at least she had some principles whereas the people we have governing now have none that I can discern.

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  14. Off topic but worth a read (though seemingly one is barred from commenting)
    http://www.theguardian.com/commentisfree/2014/jul/08/mentally-ill-need-help-not-bullying-by-the-state
    The section about half way down is particularly alarming. The DWP's bullying of ESA claimants with specific off flow targets (or "spinning plates") is described by a Jobcentre manager.

    It would appear that bullying is an official policy aimed at the most vulnerable.

    What a truly disgusting shower we have in power.

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    1. I've just seen this. Toynbee seems to have been gathering whistle-blowers' accounts, which is great.

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  15. Margaret Hodge plans to give Devereux of the DWP another mauling next Monday arvo:

    http://services.parliament.uk/calendar/#!/calendar/Commons/SelectCommittee/2014/7/14/week.html

    I imagine that Devereux will probably squirm, fidget and gabble, as usual.

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