Reposted from The Guardian
National Audit Office discovers DWP is obliged to make bonus payments even to badly performing work programme providers
Welfare-to-work providers will receive undeserved bonuses of up to £25m even though they have failed to hit government targets for placing people in to long term jobs, official auditors have found.
The National Audit Office has discovered that flaws in work programme contracts meant that the Department for Work and Pensions is obliged to make incentive payments to even the worst performing providers.
In a report released today, auditors also say the success rates of contractors has fallen. Around nine in every 10 claimants of employment and support allowance, who include many people with illnesses and disabilities, are failing to maintain a job.
The report is the latest damning assessment of Iain Duncan Smith’s £2.8 billion programme which has been beset with problems since its inception in 2011.
The amount paid out in bonuses from the public purse is likely to be around £31 million in 2014-15, whereas a measure of performance more dependent on results would have triggered payments of just £6 million, according to the report.
“Flawed contractual performance measures mean the department will have to make incentive payments to even the worst performing contractors,” the report said.
Auditors said that the way the contracts were drawn up also made it more expensive to sack under-performing providers. When the Department for Work and Pensions decided it wanted to drop the Newcastle College Group, it was unable to argue it had breached its contract by failing to meet minimum performance levels and instead had to use a voluntary break clause to negotiate the termination costs.
Despite claims by ministers that the work programme would be an improvement on previous schemes, auditors found that the actual performance levels were very similar.
Performance for the harder-to-help groups was also below expectations with only 11% of claimants of employment and support allowance (ESA) – paid to those with disability or long-term illness – finding work compared to a forecast of 22%, according to the report. The contractors’ own estimates showed they were now planning to spend 54% less on the harder-to-help groups than they were when they originally submitted their bids, auditors said.
Margaret Hodge, the chair of the public accounts committee which oversees the work of the NAO, expressed anger at the failure of the DWP to help those who needed it the most.
“The work programme is absolutely critical to getting people, especially some of the most vulnerable in society, into work and helping to keep them there in the longer term,” she said.
Unusually, the report was not signed off by the DWP prior to publication on the grounds that it did not reflect its view of “the relevant facts”.
The department said that no incentive payments had been made so far, and that any future payments would be included in ongoing contract negotiations.
“The work programme is helping more people than any previous employment programme and has already helped half a million people start a job and 300,000 into lasting work,” a DWP spokesman said.
The Employment Related Services Association (ERSA), representing work programme providers, insisted the scheme was working well.
“It’s quite an achievement that performance is the same level as predecessor programmes despite there being less cash in the scheme,” said ERSA chief executive Kirsty McHugh.
• The headline on this article was amended on 2 July 2014 to clarify that the bonuses have not yet been paid out.