Memorandum submitted by Deloitte Consulting
ONE PVS PILOTSLEEDS AND SUFFOLK LESSONS
LEARNED FROM THE PRIVATE SECTOR PARTNER PERSPECTIVE
Deloitte Consulting has been the Private and
Voluntary Sector (PVS) partner delivering the Leeds and Suffolk
ONE pilots since November 1999. In these two years we have, with
Employment Service (ES) and Benefits Agency (BA), learned many
lessons. These will be of considerable value to the Government
in ensuring that Jobcentre Plus is established in the most effective
and economic manner, and that the Private Sector is most effectively
engaged in future delivery of the welfare-to-work policy. We are
therefore pleased to have been given the opportunity to present
evidence to the Select Committee on Work and Pensions and look
forward to answering Members' questions and exploring with them
how the lessons we present can be successfully exploited.
To aid the Select Committee's work we have attached
to this document previous submissions on these topics. The first
is our letter of 18 December 2000 to Leigh Lewis, Chief Executive
of the Employment Service, (Annex A) resulting from a meeting
held with him on 7 December 2000, and a reply from Clare Dodgson,
Employment Service Chief Operating Officer, dated 5 April 2001
(Annex B). The second submission is our letter of 15 August 2000
to the Rt Hon Tessa Jowell MP, proposing changes to ONE (Annex
C). This is supported by a detailed review of the issues and problems
identified up to that point (Annex D). Members will note that
it contains many of the issues we describe in this paper.
The current contracts for delivery of the Leeds
and Suffolk ONE pilots expire on 31 March 2002. We have been invited
to extend these contracts via local negotiations for a further
12 months. Clearly, the lessons presented in this paper are an
important part of the negotiations we are currently conducting
on a potential extension.
ONE was designed to pilot new structures and
ways of working aimed at achieving five strategic objectives of
the Government's welfare-to-work policy. These are to:
Help deliver the Government's principle
of "work for those who cansecurity for those who cannot."
Change the culture of the benefits
system and the general public towards independence and work rather
than payments and dependence.
Increase the sustainable level of
employment by getting more benefit recipients into work.
Put more benefit recipients in touch
with the labour market (through the intervention of their personal
Ensure that more clients experience
a service that is effective, efficient and tailored to their personal
As the PVS partner for ONE, we understood from
the outset that the aims of our involvement were to:
Engage the Private Sector as a partner
in the delivery of the welfare-to-work agenda, and in particular,
Deloitte Consulting's experience of implementing and operating
welfare systems in other countries, notably in the USA.
Harness the Private and Voluntary
Sectors' experience in other welfare-to-work arenas, including
innovative approaches that had proved successful, to develop a
new model of supporting people in the journey to reaching sustainable
employment. In particular, Voluntary Sector participation was
sought to work with those most disadvantaged, bringing specialist
skills and programmes, as well as ideas for new innovation. By
its nature this aspect of the vision contained the potential for
failure as well as success. Its key objective was to provide individuals
who were at an early stage of their "journey to work"
with a learning process to build personal skills, positive attitude
and commitment to seeking work.
Pilot processes and structures to
be used in the development of future service delivery models,
thus assisting derivation of the most effective operational model.
Enable the Benefits Agency, Employment
Service and other key stakeholders to evaluate and understand
"what works" and to assess the potential advantages
of Private and Voluntary Sector involvement in future service
How well have the aims and objectives of the
ONE Pilots been achieved? It is the view of Deloitte Consulting
that valuable lessons have been learnt, but the pilots have not
realised their full potential value in terms of developing and
testing new processes, focussing on the "journey to work"
as a priority. A number of factors have constrained the ONE pilots
from exploiting the opportunity for trial and evaluation of truly
innovative activities. These factors are summarised:
Our contractual obligation to adhere
to the documented ONE process and meet process output targets,
inhibited innovation in responding flexibly to the differing needs
of different client groups in order to best achieve desired policy
Innovation was further inhibited
because the performance management regime and funding structure
for remuneration to the ONE PVS partner allowed no headroom for
experimentation. This performance management regime was appropriate
for a live service and made no allowance for the special circumstances
of a pilot project such as ONE.
The lack of an empowered single point
of authority, and lack of clarity in the role and responsibilities
of contract management, made it difficult for ONE to obtain timely
authorisation of trials of innovative practice, or timely resolution
of operational issues. Contract management also tended to give
disproportionate emphasis to compliance at the expense of supporting
innovation and flexibility.
High staff turnoverdue to
use of temporary staff and the continual attrition of ES and BA
secondees by their home agencies without replacements Cconstrained
performance and prevented the development of the broad range of
expertise and knowledge which individual staff require to perform
the ONE processes effectively.
Accommodation in unsuitable premises
damaged staff morale and productivity and raised health and safety
We consider the lessons learned in relation
to each of these points in more detail as follows:
2. CONTRACT REGIME
The current contract regime under which ONE
is required to operate is not conducive to determining the most
appropriate way to deliver to different groups of clients the
key policy objectiveor outcomeof "work for
those who can and security for those who cannot." The opportunities
that have existed for innovation, and flexible response to changing
circumstances and emerging evidence, have largely been missed
due to this constraint. The current contract management and performance
monitoring regimes are not well suited to the piloting of new
structures and processes to gain understanding of the optimal
performance model and the costs associated with it. They are better
suited to a stable, well-defined service model, in that they focus
on how the service is delivered, and whether the contracted volume
of outputs (eg events such as interviews) have been delivered.
They are also constructed on the assumption that there will be
little need for change during the pilot. This is inconsistent
with the aim of creating an environment to support the trial and
piloting of innovative practice.
Ongoing ONE evaluation has revealed a number
of aspects of the core ONE process where the ability to respond
flexibly to needs of different client groups could be beneficial,
for example: job placements and interview targets.
In the area of job placements, it has been explicitly
mandated by the Contract Authority that ONE pilots will be expected
to deliver a defined percentage of Employment Service's APA targets.
This directs operational focus and contractual discussions to
a single aspect of service delivery. However, over the life of
the pilot, it has become apparent that clients expect benefit
issues to be resolved before work prospects are discussed. It
is difficult for advisers to reorientate a client who is focussed
on immediate financial need towards employment issues. Areas where
greater flexibility could be beneficial include:
Current service obligations expect
completion of the benefit process for job ready applicants ahead
of the work component of the process. A "lessons learned"
paper has been issued by ONE Performance Monitoring Unit (OPMU)
suggesting process changes that can be adopted to give more flexibility
and increase performance. Its impact on service delivery ands
pilot staffing is still being assessed, though how benefits processing
will be separated from work-focussed interviews is still not finalised.
Contractual obligations drive staff
to deliver a standard service to individuals with diverse circumstances.
Notably, the standard process does not recognise the amount of
effort required to deal with many non-JSA clients who are beginning
the "journey to work" and face many barriers to accomplishing
it successfully. Such clients require levels of support and persistence
that are not accommodated by the service or financial model mandated
Interview targets, to be met by the pilots,
produce a standard and sub-optimal service. An example is the
"three-day interview target" (lately altered to a four-day
measure and no longer a basis for remuneration). Such a target
is based on the premise that a rapid service is a good service.
Clearly, a timely service is important for clients. But the current
performance has at its heart a conviction that output measures
are the appropriate way to assess and remunerate performance.
This militates directly against providing freedoms to undertake
the activities necessary to achieve the key outcome sought: a
return to sustainable employment. In some cases achieving this
outcome requires a longer period of time to assist clients make
sufficient progress on their "journey to work" and ensure
that they are truly ready to attend job interviews.
Requirements for Outcome Focussed Partnership
The rigidity of the contractual regime has also
militated directly against the partnership ideal. Many of the
constraints that have arisen could be eased by implementing a
performance and compliance regime that focuses on delivery of
the pilots' objectives and recognises the need for agility in
responding to opportunity for improved performance. In such a
model, based upon an open book financial regime, levels of mutual
trust and co-operation could be established that would ensure
the maximum opportunity for success.
Going forward and looking for lessons applicable
to the implementation of Jobcentre Plus, we believe that although
an overall definition of scope, and a framework for its delivery
is important, three key requirements are:
To provide freedom of action to tailor
the service to the individual client's needs and expectations.
Where security is paramount benefits processing needs the highest
priority. Where return to work is the client's immediate focus
this should be responded to as the highest priority.
To recognise that the "journey
to work" is different across the client base, so that ONE
and Jobcentre Plus put in place a means of supporting that journey.
Very often this will not be amenable to a standardised process
with a finite number of encounters or actions.
Customer satisfaction is the key
to a successful service, and a measure of this should be a key
feature of the performance management regime.
The members of the public we serve in Leeds
and Suffolk are entitled to receive a level of service at least
comparable to that they would receive if they resided in a part
of the country not served by a ONE pilot. Indeed, residing in
a ONE pilot area should result in a superior and more innovative
service, particularly for the journey back to work. Our staff
have received numerous letters from clients demonstrating that
the service we deliver exceeds some clients' expectations. However,
operating ONE under the same performance regime as non-pilot areas
fails to recognise and remunerate the improved client service
delivered by ONE. From a pilot management perspective our remuneration,
and thus our behaviours, are driven by the live service processes
We believe that the current output-based performance
measures militate against a truly client-focussed service. They
require management of the pilots to meet core Agency performance
targets rather than encouraging PVS Partners to satisfy client
needs in an innovative way. Absence of any customer satisfaction
measure in the performance regime means there is no counterweight
to this tendency.
Adoption of truly innovative practices on a
"learning" basis is also inhibited, as their implementation
brings the risk of some initial shortfall against the output-based
performance targets. This is because the ONE pilots have been
treated as part of the live operation of benefits processing and
job placing, in terms of both the performance targets for Output
Related Incentivised Funding (ORIF) and the activities and the
remuneration basis for innovations. Continuation of the ONE pilots
must be based upon clear objectives and an operational and financial
model to support them.
A funding structure that allows operational
costs to be recovered with security, whilst providing incentives
for innovative and outcome-based actions will enable Private Sector
partners to pursue the original vision of ONE. However, experience
has shown that the current ONE funding structure imposes a punitive
payment regime. The Guaranteed Funding is insufficient to meet
the operational costs of the pilots. This applies to both Leeds
and Suffolk. The regime for the latter is particularly onerous
as there is a large diseconomy of scale in providing the ONE service
in 12 offices across a large rural area.
The PVS Partner is reliant upon the ORIF funding
to make a significant contribution to income (though even at 100
per cent realisation it is not, in Suffolk, sufficient to enable
operating costs to be covered). However, in neither pilot has
full earning of the ORIF funding proved to be achievable, regardless
of the close management focus placed upon it.
Innovation funding has proved problematical
to access, due to difficulty in agreeing activities acceptable
to the Contract Authority. Delivery of innovation activities as
a learning process has been inhibited by the Authority's decision
to make access to 20 per cent of innovation funds dependent upon
This approach to funding has inhibited significantly
our willingness to implement change due to the potential to incur
increased losses. It has also changed the use of innovation funding
from learning activities into further pursuit of output targets,
particularly job placings.
We suggest the following future approach would
be effective and beneficial for a partnership between the Authority
and any PVS Partner.
Establishment of an "open book"
financial regime with a Balanced Scorecard approach to performance
management. This would provide assurance that no unacceptable
profit was being made in the pilots, whilst protecting the PVS
Partner from unmanageable and onerous risk. This would allow an
open and proactive approach to change to be adopted. It would
also allow open and full metrics to be derived. This would enable
insights into the cost and productivity bases of the pilot, factored
for changes in process and flexibilities in operation. Assurance
on value for money could be obtained by the measure of "delivered
service hours." Adopting these ideas would give considerable
benefit in scaling the Jobcentre Plus service, and provide data
on which to base expected productivity levels against differing
Agreement, from the outset of any
contractual period, of the innovation activities to be commissioned,
their funding and their evaluation methods. As part of this, agreement
should be reached on how innovation activity and funding would
be continued although inevitably some innovation activities would
need to be discontinued and replaced by others of greater perceived
value. Where major benefits are obtained from innovation, the
degree of freedom to implement change derived from the proposed
future approach to funding would enable their prompt incorporation
into the overall service offering.
The governance model has been less effective
than desirable. The absence of a clear governance structure, with
an empowered single point of authority to speak on behalf of all
affected client-side parties, has prevented timely and effective
actions in a number of cases. It has also prevented ready agreement
of unified service requirements and provision of facilities to
enable their delivery.
Local Authorities do not have an explicit contract
covering ONE. Pre-existing service level agreements with the Benefits
Agency have been used as a proxy. This has caused difficulties
in such areas as office lease arrangements, whereby for example
Leeds City Council have sought direct contractual discussions
with the PVS Partner. Additionally, we have been required to sign
and observe a range of service level agreements reflecting the
many client-side parties' specific standards. For example, the
large range of affected parties, each requiring individual discussions
and agreements, has been instrumental in the failure to be able
to introduce web-based electronic claim forms in an acceptable
timeframe and cost.
The division of responsibility and boundaries
of authority between the local signatories and their contract
management teams and the central teams in Sheffield (eg OPMU,
CPD, ONE Expert Domain, etc.) and other parties, is unclear. Although
we now understand that the central team sets policy and local
teams deal with operational aspects, this varies depending on
circumstances. This has been evidenced during negotiations on
innovation funding and structuring; decisions that contractually
defined innovation monies will be withheld by the Authority to
provide innovation infrastructure support; and views on what services
qualify for output related funding. Indeed, decisions that we
have understood to be local responsibilities have been subsequently
transferred to the central team and thence to other teams with
whom PVS Partner has neither contractual nor operational relationships.
To achieve the stated goal of partnership it
will be necessary to provide within the Contract Authority an
empowered single point of authority. This will enable the PVS
Partner to interact effectively and focus continually on optimum
outcomes and the actions necessary for their realisation.
To overcome such difficulties, which give rise
to frustration and misunderstandings on both sides, for similar
pilots in the future we strongly recommend a single point of contact
and authority in both the PVS Partner and the Contract Authority,
both of whom are empowered to negotiate on behalf of, and to commit
their respective organisations. These commitment authorisations
should encompass contractual, service, performance and financial
matters. By this mechanism a clear, committed and shared agenda
to ensure optimum outcomes can be established.
Although local contract management functions
have been established their effectiveness is reduced, firstly
by the lack of clarity and focus in the overall governance arrangements,
and secondly by the ostensible perception by the teams of their
A clear definition of the role and responsibilities
of contract management in relation to the overall governance structure
will assist efficient performance. Lack of such clarity has led
to confusion and operational difficulties. Non-delivery of estate
accommodation and facilities, commensurate with contractual agreements
and the pilots' needs, is an example.
From a PVS Partner perspective contract management
appears to be concerned with audit and verification of process
observance, documentation production and output results scrutiny.
Whilst we understand the need to ensure probity, our experience
has been that these activities have been given a disproportionate
emphasis when measured against the need to innovate and react
quickly. These activities absorb continual pilot management resources
and reduce focus on the value-added areas sought from ONE: client
service and innovation.
We understand and accept the need to account
for the expenditure of public monies. We also believe it is important
that contract management serves the wider agenda of developing
the Welfare-to-Work regime. Looking to the future we suggest that,
should the Private Sector be involved in this area, then the "mechanistic"
elements of contract management be defined closely and agreed
between the parties. This would enable repeatable, defensible
and auditable performance measurement to be achieved. Statistically
valid sampling against understood and unequivocal criteria would
ensure rapid, economic agreement of Key Performance Indicators
and measurement against them. This would allow the Authority and
the PVS Partner to focus on delivery of value services and working
in partnership to ensure most effective use of resources.
Staffing of the pilots has been achieved through
a mix of ES and BA secondees and temporary staff acquired in the
labour market. Staffing has been volatile, regardless of the source.
Although many ES and BA staff have decided to return to their
home agency to take up promotion, others have returned to avoid
a perceived risk of "missing out" as the new Agency
has formed. This reflects a growing feeling that ONE is becoming
increasingly distant from the creation of Jobcentre Plus and is
de facto a "business as usual" operation to be subsumed
into or overtaken by the new service at some future unknown date.
The proportion of temporary staff has had a
deleterious effect on service delivery. By the nature of their
employment basis many of these staff have been transient. This,
allied to their lack of background in Benefits Agency and Employment
Service functions, has resulted in a large training overhead and
a consequent lack of productivity and performance. This issue
has now been recognised in the pilot areas and action taken, particularly
in Suffolk, though the amount of time remaining to the end of
the current contracted service period prevents the full benefit
from being gained.
Our staffing and performance records demonstrate
there is a clear correlation between the stability of the staff
and the productivity of the service and the number of job placings
achieved. There is also a clear correlation between the amount
of staff dedicated exclusively to work placement activities and
the number of placements achieved. Our records also show there
is a distinct time-lag between the introduction of the staff and
the focus on activities before the benefits emerge.
It is also clear that the ONE service model
is onerous for staff. It requires that all front-line staff (the
vast preponderance of ONE staff) have solid knowledge of all benefit
types, up-to-date knowledge of all legislation and conditions
affecting client status, and sound knowledge of the work and training
programmes and schemes available. In addition advisers are required
to deal with the general public for the majority of their working
day. These onerous requirements are a major factor in the high
levels of staff turnover we have experienced in the pilots.
We believe the lesson has been learned here.
Jobcentre Plus is, we understand, being developed on the basis
of segregation of duties and areas of specialisation. We believe
that should the ONE pilots continue under PVS Partner management
the same principle should be applied. We also believe that ES
and BA staff within the pilots should be actively encouraged by
their home agencies to stay, this being promoted as a sound career
choice, of benefit to the employee as well as the new Agency.
ONE pilots in future should be viewed as vehicles to facilitate
the emergence of Jobcentre Plus sites, not "business as usual"
Further, at some point the Authority will assume
operational responsibility for the work currently undertaken in
the ONE pilots. It is therefore important that transition plans
are agreed and executed so that the pilots transition into the
Jobcentre Plus organisation and operation with minimum disruption.
Stable staffing is a pre-requisite for this.
It was originally intended that ONE would be
delivered from offices specifically allocated to the pilots and
equipped accordingly, including access to those agency systems
that would prove most beneficial to delivering a superior service.
The reality has been different. ONE has been accommodated, especially
in the Suffolk pilot, in premises unsuitable for the purpose.
This has damaged morale and productivity, as well as raising health
& safety issues.
ONE has been accommodated in those estates that
could be made available rather than in facilities specifically
designed and fitted out for the purpose. It has sometimes resulted
in an intrusive environment for staff and clients, whereby conversations
have taken place in a mainly public environment with no opportunity
to meaningfully take off-line support activities for advisers
or for clients to wait in privacy, with facilities helpful to
those disadvantaged, for example lone parents.
Inability to access the Authority's legacy IT
systems has meant that ONE lacked the basis for an integrated
office system for caseload management, claims processing and vacancy
searches. Such facilities would have been instrumental in raising
In Leeds, Great George Street is recognised
as a flagship site irrespective of the lack of BA and ES colleagues.
In contrast, in Suffolk a "flagship" Benefits Agency
site, Rishton House in Lowestoft, was planned to be available
to ONE early in the pilotto address branding and productivity
issues. This site is now becoming available, two years after the
pilot commenced and eighteen months after it was formally promised
to be operational.
Additionally, in many locations ONE facilities
are located on upper floors of buildings, with poor signage and
difficult access. Clients often enter the Employment Services
premises initially, leading to confusion and, on occasions, immediate
submission for jobs, thus affecting the results expected from
ONE in terms of submissions and placements. This has led to tensions
between ONE and Employment Service, not least over responsibilities
to clients and apportionment of credit for outcomes achieved.
These lessons seem to have been learned as is
evidenced by the offices and services being provided now for Jobcentre
Plus. In the short term an urgent priority for continuance of
the ONE service must be provision of an environment more suited
to both client and staff needs.
7. THE WAY
ONE is now approaching the end of its originally
contracted duration; 31 March 2002. Deloitte Consulting has been
invited to extend the period of service. We are in discussions
with the Contract Authority over such an extension.
In taking the ONE pilots forward we believe
that two key objectives need to be addressed in parallel: to continue
providing the maximum value through adherence to the ONE vision,
and the transition of the ONE pilots to the Jobcentre Plus model,
thus allowing their easy assimilation at the end of the contract.
We therefore recommend that any future delivery
of the ONE service be managed against performance indicators that
measure quality and value as well as outputs. These indicators
should be client focussed rather than Agency process focussed.
In this, client satisfaction and quality of advice and support
should be paramount. They should also measure progress over a
period of time, ie the journey towards work for disadvantaged
clients, and behaviour changes towards jobseeking and employment,
rather than "hard" event-based measures.
Simultaneously, we would recommend the establishment
of an innovation agenda jointly with the Contract Authority, including
its objectives and performance indicators. Again, we would recommend
these address behavioural and social factors rather than being
surrogates to achieve Agency target-driven outcomes.
In pursuing both these agendas there should
be recognition of the changes Jobcentre Plus will bring, and the
ONE pilots should continually modify the service delivery to align
with the emerging processes. This will necessitate flexibility
of staff, process and change of focus on activities. Under such
a regime "hard" event-driven output targets would be
inappropriate and would in fact inhibit the ultimate goal: pilot
operations that can be made ready to be subsumed by Job Centre
Plus with minimal further transition.
Finally, we would recommend these are delivered
from estates that have been upgraded to redress the shortcomings
identified and to serve as a further means of transitioning to
4 December 2001