Select Committee on Works and Pensions Minutes of Evidence

Examination of Witnesses(Question Numbers 86-99)




  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 with Reed?

  (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' concept—so 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 process—and I know there are lawyers present—has 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 brought out.

  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 now.

Miss Begg

  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 PVS pilots?

  (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 very positively.

  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 us.
  (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.

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