Examination of Witnesses(Question Numbers
WEDNESDAY 12 DECEMBER 2001
86. May I welcome our witnesses for this afternoon's
session? We have an array of private sector talent to help us
with our inquiry into the ONE pilots. As a Committee we are trying
to understand what lessons can be learned to assist the roll-out
of the Government's project Jobcentre Plus. We have with us this
afternoon Mr Christopher Melvin, who is the Managing Director
of Reed in Partnership Ltd. He is joined by a colleague from Reed's,
Mr Stephen Martin, who is a Director of Strategy and Research
for Reed Executive plc. We also have Mr Richard Granger, who is
a Partner in Deloitte Consulting and Mr Peter Allred who is a
partner in Deloitte. Finally, we have Mr Mark Lovell, who is Group
Chief Executive of Action for Employment and Mr Paul Knight who
is the Regional Director. Gentlemen, you are all very welcome.
We are grateful to you and you are fresh from the field now, you
have had some experience of the ONE projects. It would be helpful
to start the afternoon's session if you could just say a word
about what the experience has been like, and whether you found
it different from what you expected, and whether there are any
lessons you think we as a Committee can learn from the private
and voluntary sector. The PVS models were deliberately set up
by the Government in order to try to bring some new innovation
in partnership, to see whether some of the business disciplines
which could be brought to the table could assist the active welfare
culture, getting people off benefit into work. In the last Parliament,
the Committee did a joint inquiry with the then sub-Committee
for Employment. At the time everybody seemed content, indeed some
were quite enthusiastic about the concept, the philosophy. We
now have the experience of some practical examples of the private
sector working in the area and I think we should like to hear
what you have to tell us about how you found it. Can we start
(Mr Melvin) It would be fair to say that
we have had a range of experiences across the ONE pilot in North
Nottinghamshire, some of which have been very good and some of
which have been less good. In terms of the good parts, the concept
of a one-stop service for benefit claimants is a positive one.
It allows an organisation to give a greater focus to customer
service; it allows the introduction of a work first' conceptso
that an individual who is claiming benefit can consider at the
same time how they might begin their progress back to the labour
market. It has also allowed us to do a number of innovative things
around working with people who are non-JSA claimants, particularly
lone parents and those on incapacity benefit, which has allowed
us to develop a service which addresses their particular needs.
A lot of the Government's investment over the last five years
or so has been around those people claiming JSA. There is a big
need within the country to tackle the high numbers of claimants
of incapacity benefit or who are lone parents, who want to get
back into the labour market but are having difficulty in doing
so. The ONE pilot has allowed us to learn how we can begin to
do that and we have had some success, principally over the last
six months. In terms of learning points and perhaps some of the
things which were less good, a lot of it stems from the way the
contract was written and the way the service was procured. I should
perhaps have brought a copy of the contract but I probably could
not have carried it because it is so big. It prescribes in great
detail exactly how the service should be delivered. While I think
it is vitally important that it is clear what service should be
delivered, that things like the benefits system continue to be
secure, that level of detail in terms of service definition does
prevent innovation. If you look at other welfare to work contracts,
for example employment zones, which allow contractors a much broader
opportunity to define the service they deliver, I would suggest
they are more appropriate if you are looking to purchase higher
outcomes, better value for money and innovation. Equally, the
contract was effectively capped, so it has a maximum value. What
that can do, is drive organisations to manage a business in a
way that minimises cost. Certainly from Reed's point of view,
our preference is to have uncapped contracts, whereby we can invest
and through additional performance, performance above what has
previously been achieved, get a return.
87. I guess, looking at the evidence, and we
are very grateful to you for putting in the work into the written
evidence which we have all had the advantage of studying, that
comes out as a theme. A quick question before we move on. How
would you mark the experience out of ten?
(Mr Melvin) I would give it 6.5.
(Mr Granger) This has been a curate's egg. It has
been excellent in parts and quite rotten in other parts. The contractual
processand I know there are lawyers presenthas been
largely adversarial and inappropriate for the services which have
been procured. On every occasion we have offered what we think
is a more inclusive and equitable approach, including open book
accounting to remove any suspicion whatsoever that the private
sector are profiting massively from this process, it has been
refused and you have some evidence of that in the documents we
submitted to you. Our experience in Leeds and Suffolk gives us
the unique opportunity to compare a high density urban area which
has a complex economy, with a rural area which has labour market
and transport issues. Our experience has been very different in
the two pilots. The differences have not been driven by the local
economic differences. The differences have been driven by the
style of contract management. At one point in Leeds, there were
more contract managers managing the people working in the pilot
than there were people managing the pilot. There were at least
a dozen people working full time asking for statistics and managing
our delivery from the client side. That led to an awful lot of
overhead in terms of data being collected and was a continuous
distraction in Leeds from focusing on members of the public coming
through the door. Contrast that with Suffolk, where we achieved
a much better partnership approach with the ES, BA and Local Authority
people, and the overall tone of the relationship has very much
been one of sorting problems out and focusing on service to the
public rather than ensuring that the runners on the drawer
where the contract is are well oiled because it keeps getting
88. Same question to you. Mark it out of ten.
(Mr Granger) In Suffolk I would say eight and in Leeds
I would say four.
89. That is interesting. Why have you decided
not to extend the contract?
(Mr Granger) We thought we were going to have a negotiation
regarding the commercial terms and we wanted to extend the contract
and we wanted to extend it for two years. There has been no negotiation,
because the officials arrived with a fait accompli and
they were not given the opportunity to discuss extending for two
years. We do not believe that a one-year extension is beneficial
to the staff involved, to the public we are serving or to ourselves.
90. That is very interesting. We might come
back to that.
(Mr Lovell) Our experience of the ONE pilot has been
broadly positive, mainly because we understood from work we have
done previously precisely what we were entering into. We expected
an eight and a half inch contract, we expected a degree of bureaucracy
in being able to pursue innovation in service delivery. The elements
of that were very clear at the outset from the perspective we
have come from. You have to take that in the context of the feedback
I give you because I also recognise many of the issues which have
been tabled previously. I shall do the same as Chris in terms
of the favourable and the areas-for-improvement analysis. In North
Cheshire there has been a very strong push for a localised autonomy
to make decisions around what needs to be done for the individual
client. It was something we pushed very hard for and which was
delivered. In comparison with some of the points Richard has just
made, that is absolutely necessary in order to make something
like ONE work effectively. That has been a very positive aspect
to the provision. The opportunity and rate of learning through
this as a pilot has been very, very good. We have not found the
process and procedure have stopped us iterating what needs to
be done for the client. The actual structure and process of decision
making is not designed to support the type of service delivery
which ONE was attempting to implement. You can sidestep that,
you can work with it and you can work within the structure if
you get used to doing it. That is something you have to bear in
mind when you are in these types of pilots. In terms of the performance
outputs, the period of time which was allocated to ONE was very
short. The extension is going to be helpful but another couple
of years would have been significantly more beneficial. We do
recognise that the machinations of government do not necessarily
work like that. The opportunity for innovation has been significant
but probably only in a number of areas, the main one being the
culture and ethos of the way the service is delivered.
91. I want to come back to integration.
(Mr Lovell) I grant that it is something you will
pick up on later. The most important thing which became clear
to me, having read the transcripts of previous submissions to
this Committee, is that the main innovation you can bring is in
the way people approach delivering the service and the way it
is managed. Achieving some of those things is the most important
thing you do in getting the ethos of Jobcentre Plus, as it is
being designed now, into a service being delivered two years in
advance. You are working in a cocoon in the middle of another
culture, that is the way we operated. In terms of areas where
I think it could be improved, the bureaucracy of the decision
making process can be freed up by pushing it further to the front
line where it needs to be, so you can focus on the client services.
The funding structure was an admirable attempt to look at supporting
innovation but it does not work and does not incentivise or support
innovation. You could pay us a flat rate fee, you could break
it down into a series of chunks, a bit for innovation, a bit for
performance, a bit for management fee, but it makes no difference
to our approach. We have made that point clearly over the past
two and a half years and will continue to do so. The final point
I would make on areas for improvement is that ONE started off
being marginalised in communication terms and continues to be
so. There has been a poor communication flow to us as an organisation
concerning the way one interacts with the future development of
Jobcentre Plus. Communication has been slow and there is a need
for significantly more openness and transparency of approach to
these types of pilots, with which we would be perfectly comfortable.
92. That is very helpful. For the sake of completeness,
we have a 6.5, we have an eight, we have a four. I am just trying
to see whether we can get a pass mark.
(Mr Lovell) It would get eight.
93. That means that over the piece this is a
positive piece of territory. Jobcentre Plus does not seem to have
any kind of explicit private sector involvement that we can see.
Is this something which disappoints you? This is a yes/no question
to all three of you. Would you have preferred to have the chance
to go into the new Jobcentre Plus formula as it is currently constructed?
Yes or no?
(Mr Melvin) Yes.
(Mr Granger) Yes.
(Mr Lovell) Yes.
Chairman: That was easy. That has been very
helpful. I do not want you to be extensive in your answers because
we have a lot of areas to cover, but that has been very, very
helpful as a scene setter. Let us go into some of the finer points
94. A series of questions about partnership
and partnership working. In written evidence to the 1999 inquiry
by the predecessor to this Committee, a very strong impression
was given that the successful private companies would be part
of a private and voluntary sector consortium, in other words the
voluntary sector were going to be integral not external partners.
Can you tell us more about the voluntary sector engagement in
your successful bids and in the management and running of the
(Mr Melvin) We put together a consortium
of organisations in the bid which included SEMA, NatWest, ourselves
and the Shaw Trust who are a voluntary sector organisation and
do a lot of work with people with disabilities. The Shaw Trust
have continued to work with us during the time we have worked
in North Notts, principally through seconding staff, including
people in management positions, to work with those clients who
are disabled and also in our engagement strategy with other voluntary
sector organisations in North Notts, particularly benefit claimant
groups and groups which have an interest in the services which
are provided to benefit claimants.
(Mr Granger) We started this process in Spring prior
to the contract going live in 1999, with the intention of looking
to put around 50 per cent of the services through voluntary sector
organisations. We had one of our colleagues, Stephen Silver, working
full time to put together those arrangements. There were several
barriers to doing that, not least of which was the funding regime,
where, despite requests to ensure that the voluntary sector organisations
were fully funded for the work, that has not been possible because
of the output-related funding regime. We found ourselves in a
position where the output-related funding regime has put the prime
contractor, our organisation, into a situation where we have had
to fund the difference between the amount of money that we should
like to allocate in terms of work and percentage of the contract
to the voluntary sector, versus the amount which has been coming
in. We have raised that and asked for co-operation to increase
voluntary sector involvement and that has been a big problem.
We have had a number of voluntary sector organisations involved,
primarily during the start-up phase, delivering training. I would
single out in particular the National Council for One-Parent Families
and Maeve Sherlock. I have to declare an interest here because
I have since become a trustee of the National Council for One-Parent
Families. Having an organisation like that delivering training
to both civil servants and people who are new to the delivery
of benefits and work advice was extremely successful. What has
been more difficult has been putting labour market mobilisation
schemes in place, where the funding is both delayed and adversarial.
Looking specifically at some work we did in Leeds with the long-term
unemployed, we have not been able to overcome that contractual
barrier. I personally would have liked to see a lot more of the
"V" bit of the PVS pilots.
(Mr Lovell) In terms of the approach we took with
the voluntary sector, we engaged a number of partners very early
on pre-bid and also continued to engage them during the implementation.
There were two areas where we wanted to focus it: one on buying
them in and communicating the strategy for ONE, because there
was nervousness in the voluntary and community sector around that;
and also making it clear that we were prepared to build in as
much as possible the viewpoints, the issues and the concerns of
those organisations we were working with. It was a very localised
strategy. We found that worked very positively. We had a manager
whose specific focus it was to go out and talk to partners in
the voluntary community sector. That worked well, to the extent
that it became ingrained in the way we deliver the service now.
That strategy was strong. There are issues around areas where
you manage hand-offs and where you integrate with services provided
by other organisations. Perhaps there are some funding issues
behind that, but we have found that the development of a two-way
communication process and particularly to be seen as part of the
infrastructure of BA and ES, and to take that out to organisations
proactively, was something which was welcomed and responded to
95. What voluntary sector organisations were
you involved with?
(Mr Lovell) A very broad range.
(Mr Knight) It was a very broad range of local organisations
specific to the area such as the anti-poverty forums and representatives
on all of those. Then from the national organisations who operate
on a local level.
96. We had evidence from Dial UK last week and
you have mentioned the Shaw Trust this week and I was wondering
whether it was the voluntary sector in the area of disability
which seems to be most engaged because of their very specialist
knowledge and whether voluntary sector agencies, with the exception
of the National Council for One-Parent Families, really have not
been involved. Is that a fair assessment or not?
(Mr Knight) No, ours is a broad band right across
all areas. There is a broad range right across every area where
there could be concern for our clients.
(Mr Melvin) We have been involved at two levels: one
in North Notts at the strategic level, so that they have been
reassured that the compulsory service for people like lone-parents
and incapacity benefit claimants is an appropriate one and they
have had an opportunity to contribute to it. We have also been
involved at a local level through referrals to services that they
provide for claimants.
97. What about in Leeds?
(Mr Granger) In Leeds we had a number of voluntary
sector partners assisting with the delivery of training in the
ten weeks which were available. I was interested to read the transcript
of last week's Committee. For the record, we did approach Mencap
and Dial and in both cases their position when we approached them
was that they did not wish to participate in the pilot, due to
their opposition to the work-focused nature of the proposed process.
Perhaps we were not sufficiently seductive in massaging the work-focused
nature of the process and the compulsion elements of the new process
which we had been running in the pilots. We have had an operation,
for which we did not receive further funding under our revised
innovation proposal this autumn, focused on the long-term unemployed,
which is being run out of a shopping centre in the middle of Leeds.
We generally had positive experience. NACRO have acted as a very
effective bridge between ex-offenders, the welfare system and
employment opportunities. They have brokered employment opportunities
with employers and providing specialist advice on the disclosure
requirements for ex-offenders. That has been very successful in
both Leeds and Suffolk.
(Mr Lovell) One additional point to bear in mind in
the engagement of the voluntary sector organisations is that there
is the delivery aspect and there is the strategic angle. Locally
in North Cheshire, we engaged with hundreds and hundreds of small
local organisations to ensure that our advisers were able to tap
into expertise, resource and knowledge which was going to be beneficial
to those clients coming through the service. In that delivery
category there are two elements in Mencap and Dial, particularly
if you are looking at mental health issues and disability issues:
there is a contracted role, because of their peculiar area of
expertise and the number of clients you get through that; and
there is a role for funded services which is something which it
is perfectly feasible to look at. We may be considered to work
in competition with organisations for that neat area of service
delivery, but the engagement locally worked well. There were national
agendas which were separate to the local relationships you develop,
at the strategic level again working towards full participation.
We found that involving organisations both in the training and
also in consultation around how to roll this out worked very well,
but we found a big difference between local arrangements and then
how you worked nationally with those organisations. We focused
very much on the local arrangements.
98. So the problem has been at the strategic
level but not the delivery level.
(Mr Lovell) No, we do have input at the strategic
level. We tended to consider that the relationships at a national
level were not relevant to what we were trying to achieve in North
Cheshire and we were getting support from their local outlets
to an extent that was beneficial to the client groups.
99. I have asked about the voluntary sector.
What about welfare rights groups or other specialist employment
providers? Was there any partnership working across those? Can
you give me examples of what worked well what did not work? What
were the problems as well? Remember that is what we are trying
to identify here: what went well and what failed.
(Mr Melvin) We deliberately brought Shaw Trust into
the partnership both for their ability to deliver services to
people who are disabled, but also because they have a good standing
amongst voluntary sector groups. That allowed them to bring together
for us a forum of groups, which at a strategic level we could
use for their closeness to the client to ensure that the service
we were proposing to deliver was appropriate. That worked well
and people like NACRO have a keen interest to ensure that those
leaving prison are given an early entry to such services. Through
their good offices we went into one of the local prisons in North
Notts and did a weekly session with people who were about to be
released. It is that sort of partnership working where
they do not necessarily have to be involved in the direct delivery
of the service but if they feel they can give us ideas
and contribute to how we deliver our service their clients are
going to get a better service from us, then they will work with
(Mr Lovell) Mapping the hand-offs on those you are
talking about, welfare rights and things like Employment Service
as well: if you map the hand-offs you can do, it is about making
sure that you are working within the capacity of the organisations
you are working with. We did that at an early stage and found
that continued throughout the life of the programme. We had similar
examples to Chris's. You will find that is directed by the front-line
advisers and it is their call and responsibility to make sure
that they continue to add to that network and database of organisations
to work with. To be honest I think that is one of the areas where
ONE has worked very well.