Payment by results imminent for DWP contractors

Organisations working under contract with the Department for Work and Pensions will soon be paid according to the results they achieve.

Under the plans, announced on Thursday by James Purnell, Secretary of State for Work and Pensions, contractors will be paid virtually nothing if they do not deliver results. Longer contracts of between five and seven years will be offered.

“For the providers, the rewards will be high, with longer contracts and a growing market, but in return I will set high expectations with payment on results,” said Purnell. “The private and voluntary sectors already play a role in delivering our work programmes. I want to take this to the next level, free them from central control and allow them to innovate.”

Emily Frith, public affairs manager at social care charity Turning Point, warned that the new system had to ensure the most marginalised people were not left behind in the drive for results. “There must not be perverse incentives for organisations to prioritise help for those who are closer to the workplace,” she said.

The DWP will also introduce a code of conduct for first tier, or ‘prime’ contractors, governing how they should deal with organisations to which they subcontract parts of the work.

The department promised to bring in the measure after it was suggested in the Acevo-commissioned McDonald report into the DWP’s procurement process for the Pathways to Work scheme. This saw the voluntary sector miss out on the bulk of contracts that were offered (Third Sector Online, 21 December).

Stephen Bubb, chief executive of Acevo, said: “The code of conduct will be particularly important to the sector given the increased size of welfare-to-work contracts. But the proof of the pudding is in the eating, and we expect the DWP to keep to its commitment of ensuring the code is adhered to.”

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