The Public Accounts Committee has called on the government to establish definitively whether 'creaming and parking' is taking place in the Work Programme.
In a report on the back-to-work scheme, published today, the committee says there is evidence that the practice, which involves the top-tier contractors 'creaming' off those people who are easiest to place in work and 'parking' the hardest ones with charity subcontractors, is taking place within the programme.
Margaret Hodge, chair of the PAC, told Third Sector: "There is early evidence that there is ‘creaming and parking’. We need robust evidence from the Department for Work and Pensions demonstrating whether or not it is happening; and if it is happening, we need to know what the department is going to do about it."
Research by the Third Sector Research Centre, published earlier this week, said that the practice was "endemic within the programme" and was a "rational response" by providers given that the scheme uses a payment-by-results model whereby "a proportion of customers would always be very unlikely to get a job".
Hodge said one of the major failings of the scheme was that it did not ensure prime contractors referred work to specialist charities.
"There’s a lot of evidence from charities themselves that suggests they are not getting the referrals," she said. "I think the way the department has designed the scheme has made it impossible for it to have an influence. It makes it very easy for charities to be ignored by the prime contractors."
A small number of charities, including the homelessness charity St Mungo’s, have pulled out of the scheme because of a lack of referrals.
Hodge also said the programme’s differential payments system, which makes larger payments for harder-to-place clients, was not working. "The financial incentives don’t seem to be enough," she said.
Hodge said the most recent Work Programme data, which was published by the Department for Work and Pensions in November, was "abysmal".
Between June 2011 and July 2012, only 3.6 per cent of people referred to the Work Programme moved off benefits and into work – less than a third of the DWP’s target of 11.9 per cent.
"Performance was so poor that it was actually worse than the department’s own expectations of the number of people who would have found work if the programme didn’t exist," said Hodge.
A DWP spokesman said: "This report paints a skewed picture. More than 200,000 people have moved off benefits and into jobs thanks to the Work Programme. It is making a real difference to tens of thousands of the hardest-to-help jobseekers. Long-term unemployment fell by 15,000 in the latest quarter.
"The Work Programme gives support to claimants for two years and it hasn’t even been running that long yet, so it’s still early days. We know the performance of our providers is improving.
"Previous schemes paid out too much up front regardless of success, but by paying providers for delivering results, the Work Programme is actually offering the taxpayer real value for money."