Prime providers starving Work Programme subcontractors of referrals

November 7th, 2011

The Government’s flagship Work Programme has come under fire from a number of the organisations responsible for its delivery.

Under the scheme, launched earlier this year by the Department for Work and Pensions (DWP), providers are paid by the Government for successful placements, with fees increasing the longer a participant stays in work. Contracts to deliver the Programme are held by ‘prime providers’ who pass on referrals to small, local subcontractors – an approach intended to provide what the Government has termed a “boost for the big society”.

However, the Programme has already come in for significant criticism over the way it has worked in practice, with concerns that many of these subcontractors are finding their role in the scheme unsustainable.

Last month, the National Council for Voluntary Organisations (NCVO) claimed that some subcontractors had not yet received any Work Programme referrals from their prime provider and, in some cases, had not even been given a contract. The NCVO also said that some voluntary organisations felt they had been used as “bid candy” by prime providers during the tendering process.

Also in October, a report from the London Voluntary Services Council (LVSC) claimed that prime providers were passing the Programme’s “high risk outcome based pricing structure on to groups in their supply chains, regardless of size or financial capacity of subcontractors.”

Dawn Whiteley, chief executive of the National Enterprise Network, told BAD News that many of the Network’s members had also reported problems, suggesting that “prime contractors and their end-to-end providers are holding onto clients because the payment arrangements are not constructed to support effective referral.”

She said: “We have a number of members who are involved in the delivery of the Work Programme, specifically where they are within the supply chain to provide specialist self-employment support. 

“We also have a large number of members who tell us that the prime providers within their areas are not really addressing self-employment, preferring instead to concentrate their efforts on job outcomes.” 

Network members’ experiences of delivering similar programmes in the past had shown that self employment “can be and often is a really valuable and positive outcome for unemployed people,” she said, adding, “we would like to see almost a mandatory inclusion of specialist self-employment provision within every prime contractor’s supply chain.”

“However,” she said, “what we also need to address is the appropriate sharing of clients relevant for self-employment so that the right opportunities are being taken for those clients on an individual basis”.

The Employment Related Services Association (ERSA) has blamed a backlog of work-capability assessments for the difficulties faced by some subcontractors in delivering the scheme, and Atos, which carries out the assessments, has completed just 56,000 since January despite Government targets to process 11,000 cases a week and provide 20% of Work Programme referrals. Early estimates indicate that the actual referral figure is between 3% and 5%.

In a written parliamentary question to employment minister Chris Grayling last week, MP Stephen Timms asked what steps were being taken to address the shortage of referrals. Mr Grayling responded that referral arrangements were matters between prime providers and their supply chain partners.

He did say, however, that the DWP has set standards of supply chain management and fair treatment of subcontractors, and that “providers will be penalised for non-compliance”.

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2 responses to “Prime providers starving Work Programme subcontractors of referrals”

  1. Viv Leach, Member of the Institute of Consultants says:

    It is so sad to hear that the Work Programme is not providing the solutions intended to help people back into work. Perhaps the Government should go back to brass tacks and utilise Job Centre Advisers in the way they used to operate.

    Many years ago, when I moved and was seeking work in the North East of England I sat in front of a Job Centre Adviser who had a box of job vacancies in front of her. She telephoned two potential employers and arranged two interview appointments for me straight away! Glad to say I was offered both positions and I chose the best fit!

    Now, it appears that Job Seekers are sent off to do their own research and apply along with the many hundreds who are doing the same. This must be very dispiriting for those seeking work. So its a whole chain of command that is suffering: Gov not getting level of results it requires; contractors and sub-contractors with backlogs due to logistical and pricing problems and the end users who are surviving in a mine-field of confusion.

    For me, its time to for a rethink to go back to basics with JC operatives acting more like recruitment agencies and contacting employers directly, though maybe that solution is just too simplistic !

  2. Albert Wright says:

    Viv – I think your solution is too simplistic and Dawn, although I believe what you say is true, I don’t know how we can fix it and think self employment needs to come with a Health Warning, now more than ever.

    Viv – it’s my understanding that the model you describe for the way Job Centres used to work is decades out of date.

    The Job Centres are looking for the quick wins with the most recently unemployed and have not worked with people who have been unemployed for over 6 months for many years.

    With only around 30% of available jobs actually advertised via job centres, doing your own thing was always a good idea.

    With the present high numbers unemployed, fewer jobs being advertised in local papers or Job Centres, finding the employers with a vacancy is getting more and more difficult and will only get worse over the next few years when the cuts in the public sector start to bite. These are not happy times.

    Regarding the self employment option under the Work Programme, it is not being promoted by Job Centre Plus staff as much as it was when New Deal for the Self Employed existed as a separate programme and this was one of the questions I wanted to ask Chris Grayling at a recent London FSB dinner but time ran out.

    Dawn is right to say not all Prime providers have made provision to offer a self-employment option to their clients but unfortunately for NEN members there is no obligation for them to do this.

    My hope is that those who do, like Avanta / TNG / InBiz, will be able to show that having a self employment option increases success rates and so provide the evidence for more emphasis to be put on this route by other Primes in their own interest.

    My fear is the proof will not be forthcoming. Competition for customers in a situation of an overall decline in demand for most goods and services is causing many exsisting small businesses to reduce prices (often destroying profitability) to survive. Most one and two man bands currently have excess capacity and the only consequence of new businesses coming into many market sectors will be to drive prices down further. The UK is not currently short of trades people or shops or market stalls or restaurants or business advisers in most locations.

    The only people who may prosper are likely to be printers and those providing promotional services as the rest of us do more and more marketing to fewer and fewer customers.

    Hence the need for a Health Warning – to encourage most of those seeking to enter self-employment for the first time may well be the wrong thing for us to be doing just now, unless there is a clear market need.

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