Specialist subcontractors working with those people who find it most difficult to obtain work are less involved in the Work Programme than anticipated and need stronger measures to protect them, according to a report published today by the House of Commons Work and Pensions Committee.
The report, called Can the Work Programme Work For All User Groups?, says "specialist subcontractors with the expertise to support jobseekers with complex barriers to employment are not being used in delivery to anywhere near the extent they had expected".
The report does not identify these subcontractors as being specifically from the voluntary sector, but most voluntary sector subcontractors are involved in provision at this level.
The report says that many voluntary sector organisations listed by the Department for Work and Pensions as being Work Programme subcontractors do not consider themselves to be involved at all.
The report cites research by the BBC – this found that of the 110 voluntary sector organisations that responded to the research and did consider themselves to be involved, 80 had received fewer referrals than expected and 45 had received no referrals at all.
The report says there is not adequate protection for smaller organisations from the Merlin Standard, implemented by the DWP to govern the relationship between prime and subcontractors.
"The Merlin Standard, as currently designed, cannot regulate the market effectively," the report says. "It should be given more ‘teeth’, including the power to impose financial sanctions."
The report also says that "the suspicion remains" that smaller specialist organisations "were used by the primes as ‘bid candy’ – to make their bids more appealing to DWP – and then subsequently not used in service delivery".
It says there is evidence that "some voluntary sector providers are funding specialist Work Programme provision from their own resources, including from charitable donations".
And it says that the government’s differential pricing structure, which is designed to pay more for working with the hardest to employ, has failed to prevented "creaming and parking", where welfare-to-work providers prioritise work-ready jobseekers themselves and pass off more difficult cases to subcontractors.
"There is growing evidence that differential pricing is not having its intended impact," it says. "The Work Programme appears not to be reaching the most disadvantaged jobseekers. The current pricing structure, based largely on the type of benefit jobseekers are claiming, is a very blunt instrument for identifying jobseekers’ needs."
The report says that more work needs to be done to identify "jobseekers’ barriers to work, including disability, homelessness and serious drug and alcohol issues" and that jobseekers with these issues should receive more support.
It says that the DWP "under-spent its 2012/13 Work Programme budget by some £248m because of lower than expected job outcomes", and that this money should be spent on other welfare-to-work programmes, such as the Work Choice scheme, which supports people with disabilities and long-term health issues to find work.
A spokesman for the DWP said: "It is still early days, but according to industry figures more than 207,000 people have already been helped into jobs through the Work Programme by the end of September 2012, and performance is improving.
"The payment-by-results model goes further than any previous scheme to encourage providers to help all claimants, including the hardest to help.
"Almost half the providers are voluntary or community sector organisations and a third are from the private sector. What they all have in common is that they are experts in helping long-term unemployed people back to work."