2 Controls and Standards
10. The Department has taken steps to improve controls
in its employment programmes, particularly those in its largest
programme, the Work Programme. It has reduced the number of contracts
it oversees. Under the New Deal there were 1,300 contracts and
600 contractors compared to the Work Programme's 18 contractors
and 40 contracts. This enables a greater focus on the controls
of each provider. In designing the Work Programme, the Department
has also introduced a clearer definition of outcomes and checks
to ensure that those outcomes are achieved before payment is made.[21]
The Department now undertakes 100% checks that individuals for
whom companies claim have been off-benefit. The Department also
checks a sample of cases against HMRC records to ensure the individual
is in work. If these tests fail, the Department will recover any
overpayment and, where the data is based on a sample, will extrapolate
the amount to be recovered on the basis that the sample was representative
of the whole.[22] This
computer system went live at the end of March 2012 and outcomes
before that time are being checked retrospectively.[23]
11. Some of the controls that relate to the Work
Programme do not, however, apply to some of the smaller programmes.[24]
For example, the Mandatory Work Activity scheme does not have
the same payment controls embedded into it and there are no systematic,
independent checks with employers before payment is made. Without
checks with employers the Department is dependent on information
held by the provider and the risk of fraud remains.[25]
12. In addition, while the Department's controls
against financial fraud in the Work Programme are stronger than
in previous schemes, risks still remain. The Department has created
new incentives which may increase the risk of fraud in other areas.
Under the Work Programme it is possible for a provider to be paid
for outcomes that it did not generate such as claiming a payment
for someone starting on self-employment without any support from
the provider.[26] The
Department does not have a clear process to assess whether the
contractor has helped the employee or not and in evidence the
Department felt they should not be concerned about this.[27]
13. Complaints serve an important function in highlighting
poor service quality or potential improper practice.[28]
But the Department does not systematically collect claimant feedback
and complaints, and there is no independent whistleblowing line
to the Department and no clear process by which the concerns of
MPs can properly be addressed by the Department, particularly
if their concerns relate to more than one provider.[29]
The Department considers that individuals should approach the
provider if they have a complaint or approach their jobcentre,
and if this doesn't work they can approach the independent case
examiner.[30] This is
an absurdly complicated process for the average claimant. Work
Programme clients may also find it difficult to formulate a complaint
because the service levels the Department expects are sometimes
expressed in a vague way and are not clearly set out.[31]
The Department has deliberately left it to the individual contractors
in the Work Programme to specify the minimum standards they would
use with these being considered by the Department to be contractually
binding.[32] As a result,
the minimum standards vary significantly between contractors and
some are particularly vague, such as to "keep in touch with
clients".[33] The
agreed minimum standards are fixed for the duration of the contract
with no contractual mechanism for encouraging improvements.[34]
Moreover, the actual performance levels the Department is looking
to enforce are not limited to the minimum performance standards
but others that are also set out, in a variety of contractual
terms.[35]
14. The Department regards a failure to comply with
the minimum standards specified by contractors as a breach of
contract. However, there is no clear mechanism which enables clients
or employers to complain if standards are breached. The Department
does not publish details on whether or not providers are complying
with these minimum standards or with the wider performance standards
it requires.[36] This
is one example of a lack of transparency in the way the employment
programmes operate. The Department has not published its internal
audit reports into allegations of fraud in its providers, and
in particular, A4e.[37]
Many of these allegations have attracted public interest and the
significant number of allegations received by the Chair and other
members of the Committee and subsequent coverage in the press
are evidence of a lack of public confidence in some providers.[38]
Lack of transparency risks undermining the bona fides of the whole
Work Programme and reducing confidence in providers and the Department's
scrutiny arrangements.[39]
15. The level of transparency of some companies providing
welfare to work does not compare well with publicly quoted shareholder-owned
companies where there are shareholders' meetings and a higher
level of transparency.[40]
An important factor in governance is the ownership structure of
the company. Providers are contractually obliged to inform the
Department of a change of ownership, but when specifically asked
about the ownership of A4e, the Department was unable to tell
us whether the Chair of the company was also a shareholder.[41]
16. Much concern about the Work Programme exists
because the Department has not published data which would enable
informed judgements on the performance of contractors to be made.
Lack of transparency merely serves to heighten lack of confidence
in the programme and the providers working in it. ERSA (the employment
providers' trade association), the press and Government ministers
have quoted outcome data on the Work Programme without it being
complete or comparable with any targets which would enable any
assessment of whether the Programme was delivering as expected.[42]
17. The Department maintains that reliable data
on job outcomes is not yet available as most claimants have to
be in a job for six months before providers receive an outcome
payment.[43] This position
is, however, at odds with the fact that the Department has set
outcome performance targets in the Work Programme contracts,
operational from June 2011 which have to be achieved by the end
of the first year of the contract and which will have to be monitored
using the information available now.[44]
For example, one of the performance requirements in the Work Programme
contracts is that providers should achieve, by the end of
the first year of the contract, outcomes for certain groups set
at 10 per cent above the 'non intervention rate' (the percentage
of people who would have found work without the help of the programme).[45]
The non intervention rate has been set by the Department at 5
per cent.[46]
21 Q 55 Back
22
Qq 59-60 Back
23
C&AG's Report, para 2.3 Back
24
Q 38 Back
25
C&AG's Report Para 2.13 Back
26
Qq 71, 90 Back
27
Q 72 Back
28
C&AG's Report Para 4.12 Back
29
Qq 38, 95 Back
30
Qq 95, 98 Back
31
Q 99; C&AG's Report Para 4.2 Back
32
Q 64 Back
33
Qq 65, 140 Back
34
Q 144 Back
35
Q 64 Back
36
Q 79 Back
37
Q 29 Back
38
Q 31 Back
39
Q 33 Back
40
Q 37 Back
41
Qq 122-124, 127 Back
42
ERSA press release 21 February 2012, Daily Telegraph 29 June 2012,
DWP press release 9 July 2012 Back
43
Department's press release 9 July 2012 Back
44
Work Programme contract Clause 2.12, http://www.dwp.gov.uk/docs/work-prog-draft-terms.pdf Back
45
Work Programme contract Appendix 2 Part A, http://www.dwp.gov.uk/docs/work-prog-draft-terms.pdf Back
46
Work Programme Invitation to Tender - Specification and supporting
information Para 3.14, http://www.dwp.gov.uk/docs/work-prog-itt.pdf
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