United we stand! This is no time for a split in the Labour movement.

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United we stand! This is no time for a split in the Labour movement.

solidarity

It is time to be united in our attack on the most extreme right wing government in living memory. Tory spin continues to control the media who are set about attacking the Labour movement. The fact is that the electorate’s political view is more to the left than most MPs. Speak up for the NHS, for workers’ rights and pensions. Attack the press, nationalise the Banks. Build policies for nationalisation of Transport, Utilities and Energy. Support tax justice. Build affordable homes and put people back to work. That is how a people’s government, a Labour government will be elected. To leave political power with the Conservative Party and the Banks which feed them would be irresponsible for any left political party or trade unionist. The electorate has more trust in trade unions than Bankers. People are not fools.

Worker solidarity

Worker solidarity (Photo credit: Toban B.)

So, speak loudly, and let’s make those policies heard. Donors to the Tory party are directly profiteering from Coalition policies. This is a parliament under siege. Last year the Daily Mirror wrote on beneficiaries from the carve up of the NHS for profiteers. Yet, we were told pre election that “the NHS was safe in their hands”. It seems they couldn’t get their private hands on the NHS owned by the people quickly enough.

The policies are justified in the press by false statistics – a method even criticised by the Telegraph. Gove pursue’s privatisation of education when there is evidence that the best education systems in the world ban private schools. Yet they pursue policies to benefit their friends.

Private donations to the conservative party (Guardian) include hedge fund bosses such as – Michael Farmer, Lord Stanley Fink and Andrew Law – together contributed £636,300. Fink is the party treasurer

Last year Stanley Fink’s “education company”, Ark Schools, underspent 7.5% of the education budget for the 8 schools he controls and they are investing the money in the Cayman Islands instead (money that was meant to be spent on children’s education) and he’s not alone, as Open Democracy reports.

This Guardian report reveals how two donors to Tory party funds set up a company which has made millions from the Work Programme, which has failed to put people back to work.

Sovereign Capital, formed in 2001 by John Nash and Ryan Robson and three others, has for eight years owned the Employment and Skills Group (ESG), a training company with £73m worth of government contracts. Last Monday, ESG was sold to an investment bank for an undisclosed sum.

ESG has been awarded two lucrative contracts from Iain Duncan Smith‘s Department for Work and Pensions. It won a £69m contract in May 2011 for the work programme, the government’s scheme for unemployed people, in Warwickshire and Staffordshire, which runs until 2016.

The company was also chosen to run a £4m mandatory work programme contract across the West Midlands – paid to find work-for-benefit placements for at least 5,000 unemployed people over four years. The firm will receive an £800 bonus for every unemployed claimant it places in mandatory work.

Nash and his wife, Caroline, have donated £182,500 to the Tories since 2006 and are said to have financed David Davis‘s 2005 leadership bid. Nash was appointed to the Department for Education board in 2010 by the secretary of state, Michael Gove.

Government spin can’t hide the fact the the Work Programme is still not working

Alex Little has analysed the statistics on the Work Programme here, demonstrating the total failure of these policies, which were set up by the Coalition for the benefit of Tory donors

… the best that can be said is that for JSA claimants at least, the Work Programme is marginally better than nothing, but for ESA new customers, it’s still worse than nothing. Just under half of providers (18 out of 40) are meeting their targets for JSA clients (only just). None met their targets for ESA clients.

You’ll hear a lot of spin about how the Working Programme is ‘transforming lives’, but against the DWP’s own benchmark, it is still failing to meet even the minimum levels expected. So DWP are lauding the success of the Work Programme, but all providers are in breach of their contracts. Time to rethink the whole thing?

From alittleecon

This is a time to stand together against Austerity.

We will not let the Tory Press rip us apart.

References and further reading:

  1. Britain under Siege, Think Left
  2. Daily Mirror: Tories rake in donations from fat cats hoping to cash in on NHS privatisation
  3. Firm established by two Tory Donors made millions from work schemes
  4. Alex Little: (alittleecon) Government spin can’t hide the fact the the Work Programme is still not working
  5. Guardian: City’s Influence over Conservatives laid bare by research into Donations
  6. Gove’s Selective Truth, Think Left
  7. Open Democracy: Mammon in the classroom: the men who’ve got their teeth into England’s £35 billion schools pie
  8. Robbing the People: the Ultimate Theft -Think Left
  9. New Statesman: Duncan Smith rebuked by ONS for misuse of benefit statistics
  10. Tory Ideology is all about Handouts to the Wealthy paid for by the Poor

The Work Programme Part 3 – Payment by Results and Unpaid Work Experience

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The Work Programme Part 3 – Payment by Results and Unpaid Work Experience

First posted on December 10, 2012 by 

 

“Payment by results”. It sounds good. Firms only get paid if they do well, so there is a powerful incentive for them to act in the best interests of the individual. Something is going very wrong though. About £4 in every £5 paid out to Work Programme providers is not being paid because a ‘result’ has been achieved. It is being paid for an ‘attachment’ to the Work Programme i.e. when an unemployed person starts the programme. Only £1 in £5 constitutes ‘payment by results’, and even then as we have seen, the value of these results is somewhat dubious.

The Government has actually taken these poor results and tried to spin it into a story about value for money for the taxpayer. Responding to the dire figures published in November, Work and Pensions Secretary Iain Duncan Smith said:

“I think we are on track. Payment by results is about saying the taxpayers need not foot the risk.”

In other words, he’s saying that even if the Work Programme providers performance is abysmal, it’s OK because the taxpayer only pays for results. Leaving aside the fact that that is just not true, as we’ve already seen, the idea that all that matters is value for money for the taxpayer is frankly bonkers.

We have an unemployment crisis in this country and every day we are forgoing millions of pounds in lost income because we have millions of people unable to find work. We are not making use of all these people’s skills and experience while they languish on benefits through no fault of their own. The idea that it’s OK that we are not finding work for these people because the taxpayer is not on the hook is crazy.

The Future Jobs Fund was scrapped by the Government because it cost too much. A cost of over £7,000 per job is widely cited, but a recently completed evaluation of the programme came up with somewhat different numbers. The programme was found to have a net cost to the Exchequer of £3,100, but provided a netbenefit to society of £7,800 per participant.

The idea that the only thing government’s should be concerned about is value for money, that cheaper means better is just illogical. It’s what society gains from spending by the government that really matters. The Work Programme may be cheaper than previous schemes (debatable I think), but the return on the government’s investment in the Work Programme looks like being very low (and maybe even negative) at this point. That makes no sense at all. Far better to spend more on a programme that will generate a greater return for society.

Payment by results is supposed to incentivise excellence, but achieving excellence is hard, even more so in an economy where there is a shortage of jobs. So instead of promoting excellence among Work Programme providers, payment by results seems to be promoting cheating or corner cutting (read part 2 for more on this). The result of this is that, far from creating an effective, unemployment reducing programme, it has created one which is barely (if at all) better than nothing.

Knock-on effects

Going hand-in-hand with the Work Programme appears to be the beginnings of a worrying trend in the labour market –  a growing casualisation of the workforce and – even more worrying – the rise of the unpaid work placement.

Casualisation

Casualisation, manifesting itself in the form of temporary, zero-hour or self-employment has exploded to such an extent that 3 million people now say they are underemployed, up by 1 million since the economic downturn began in 2008. So while Coalition ministers crow about falling unemployment, and 1 million new private sector jobs, it’s right to question just what sort of jobs they are, and what sort of precedent does this set for the future?

That’s not to say there is no place for zero hour contracts and temporary work. The key though is that there is a strong backstop in place to catch those who fall out of the system. Temporary work or zero-hour contracts are not so bad if there is a strong welfare state to fall back on (or a guaranteed state-funded job as I would like to see), but at the same time as the labour market remains weak, the Government are also weakening the welfare state at the same time by cutting working age benefits in real terms. Done in the name of deficit reduction, it’s the ultimate false economy. Cutting the incomes of those who spend most of their incomes mean less sales for businesses and less income overall. As Paul Krugman says:

“Your spending is my income, and my spending is your income. So what happens if everyone simultaneously slashes spending in an attempt to pay down debt? The answer is that everyone’s income falls — my income falls because you’re spending less, and your income falls because I’m spending less. And, as our incomes plunge, our debt problem gets worse, not better.”

Unpaid Work Experience (Or Workfare)

Wrapped up with the Work Programme has been the rise of mandatory unpaid work experience. Work experience has gained a lot of negative coverage in the media in recent years. A lot of this has focused on schemes outside of the Work Programme, but it is less known that it is very common for Work Programme participants to be mandated to do unpaid work experience.

The Work Programme uses the ethos of the ‘black box’ approach. This means providers have the freedom to do whatever they feel necessary to help a Work Programme participant get back to work. Often, it seems, this takes the form of unpaid work experience. This is mandatory. If participants refuse to take part, they can have their benefits sanctioned.

This practise of sending benefit claimants is growing in scope. It was recently announced that ESA claimants (those deemed unfit for work, but placed in the work-related activity group) can be mandated to do unpaid work experience for a time period without limit.

This phenomenon of unpaid work experience has now become so prevalent that private firms, with the collaboration of Jobcentre Plus and the DWP are now advertising ‘job vacancies’ that are actually unpaid placements. Here’s 2 examples:

WORK EXPERIENCE PLACEMENT WITH A POTENTIAL JOB-ARGOS- Speak to an adviser about YLY/37795

A tweet by  says ‘We advertise paid employment through Universal Jobmatch ‘ hmm what is this then? :jobsearch.direct.gov.uk/GetJob.aspx?Jo… 😀

There is a real danger I feel that this can become so normalised, that it becomes standard practise for certain employers to only hire on a ‘try before you buy basis’. This is just wrong in my view, but it just seems to have almost passed unnoticed in the press. It just shows how bad things have got when things most people would usually balk at just become the new normal. All decent people should oppose this in the strongest terms.

This post has strayed somewhat from its original theme, but just to try to draw the 3 parts of this series together. Here are the key points:

  • The Work Programme is an expensive failure. If we didn’t have a Work Programme, we would have expected more long term unemployed to have found work.
  • Work Programme providers are providing very little of value for the millions they are being paid. Instead, they are using a number of techniques to extract additional cash from the public purse.
  • Payment by results just doesn’t work
  • The Work Programme is giving rise to all sorts worrying trends, notably unpaid work experience.
  • It seems to be becoming normal for employers to expect jobseekers to work for them for free for a period before offering them a paid role. This can only displace paid employees. It needs to stop.
  • Real terms benefit cut and benefit sanctions are pure false economies. They will ensure unemployment rises, not falls and will bequeath a smaller economy than would otherwise be the case. It will end up costing us all more.

The Work Programme Part 2 – Having a laugh at the public’s expense

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The Work Programme Part 2 – Having a laugh at the public’s expense

First posted on December 3, 2012 by 

In part 1, I discussed the DWP’s recent release of performance data for the Work Programme. Despite quite modest targets for year 1, across the board, Work Programme providers are failing. In this second part, I want to  give a few examples of why I feel the already dire performance figures to date create a misleading picture of how much added-value is actually being generated by the firms contracted to help individuals on the Work Programme. I think the reality is actually much worse than is generally thought.

Before I start, I just want to make clear that I am not picking on a particular provider here. Although firms like A4E have been singled out in the media for a large amount of criticism, the performance of providers across the board is poor, and what follows seems to be taking place within a number of providers.

The following examples appear to be evidence (although anecdotal), that Work Programme providers are adopting a number of techniques to maximise their revenue without actually investing time and effort into individual jobseekers themselves. To me this constitutes a misappropriation of funds, but I don’t expect DWP to investigate any time soon. In one case as you will see, the transfer of funds from public to private without any value being added by the company is officially sanctioned.

Tricks of the Trade

One of the benefits of living in the age of the internet is that people who before found it almost impossible to get their voices heard can now do so. Through blogs and social media, stories are being told about the Work Programme from the people actually referred onto it. The same stories seem to come up again and again. Here are three of the most common ones.

1. Already found a job? Just sign these forms

This technique is actually officially sanctioned in certain instances by the DWP, and is written into the Work Programme guidance (chapter 4) which can be downloaded here. When someone is referred to the Work Programme, there may be a gap of a couple of weeks before that person is officially ‘attached’ to the Work Programme.

If you look at paragraphs 71 to 76 of the guidance it explains how if a claimant finds work between referral and attachment, the provider can try to attach the individual before they start the job. In practice, this means meeting with the individual and completing some paperwork. If they are able to do so (and perhaps provide them with some token help like a bus pass or vouchers for work clothing), then they are eligible to receive the outcome payments should that person remain in work. This could earn the provider several thousand pounds on top of their £400 or £600 attachment fee.* Kerching!

This ruse also applies to people who actually are on the Work Programme. The claimant may have found work themselves after finding the Work Programme support poor. Here’s and example of what I’m talking about from this blog:

“They rang me up today to check how I was doing,” he wrote, “and when I told him I had a job he seemed to perk up a bit. He said he’d give me £100 “petrol money” if I signed some paperwork to let him contact the DWP.”

To me, this sounds like a bribe, but DWP seems absolutely fine with it. I suppose they term it “in-work support”.

Now in cases like this, the provider may argue that it was the help and support they provider that helped the person find work, but how sure are we that this is the case? A lot of people’s experience of the Work Programme seems to be a monthly 20 minute face-to-face meeting with the provider, and maybe the odd phone call. Not the individually tailored, bespoke support we were promised. Which brings us onto the related trick 2.

2. Creaming and Parking

Creaming and parking is the phenomenon whereby providers identify job ready claimants (they may be graduates or other high skilled people), and focus all their attention on them, while ignoring, or providing very little support to those who are harder to help. They still receive their attachment payment for those they ‘park’, and if any of these people get jobs anyway (and the law of averages suggests some will), then all the better, they can apply trick number 1 and claim the outcome payment. Research commissioned by the DWP highlights that creaming and parking may be an issue (see here), saying:

“Some of the reported  experiences of participants and providers suggest, at face value, a degree of creaming and parking; for example, many providers openly reported seeing their most job-ready participants more frequently than those with more severe barriers to work.”

So it seems to be a case of help the ones who would probably find work easily anyway and ignore the rest until they (hopefully) find work on their own.

3. Working Tax Credits are a provider’s best friend

Hat tip to the Johnny Void blog for alerting me to this, but it seems that Work Programme providers seem to beencouraging claimants to declare themselves self-employed in order to trigger a job outcome payment. Apparently, if a person works self-employed for over 30 hours a week (although in reality much less), but earn under a certain threshold, they can claim working tax credits of up to £50 per week. This is only about £20 less than Jobseeker’s Allowance. A person doesn’t need to earn anything to receive WTC, but would only need to work a few hours a week to earn as much as JSA. I don’t know how prevalent this is, but it seems that one provider in particular may be making the most of this apparent loophole.

So these are a few of the wheezes Work Programme providers seem to be using to inflate their job outcome figures (which in part 1 we saw are still woeful). These practices and others like them seem to be widespread and not just used by one provider. Added together, they sum to a large amount of (admittedly anecdotal) evidence that Work Programme providers are delivering even worse value for money than people think. The whole programme seems to amount to nothing more than a giant rip-off, a transfer of huge sums of public money into a relatively small number of private companies and individuals, in return for very little of value. Some people it seems, are having a laugh at the public’s expense.

This was originally intended to be the 2nd of a two part post on the Work Programme, but I’ve now realised I need a 3rd part to explore why we persist with the payment by results model despite its seemingly obvious failings.

*H/T again to this blog post for drawing my attention to this practice

For more information on problems with the Work Programme, and the Government’s welfare policies in general, I recommend following @boycottworkfare and @johnnyvoid on Twitter.

The Work Programme Part 1 – Worse Than Doing Nothing

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The Work Programme Part 1 – Worse Than Doing Nothing

First posted on December 1, 2012 by 

This is the first of a two part blog on the Work Programme. This part looks at this week’s data release, and part 2 will look at some of the tricks Work Programme providers seems to be using to ‘enhance’ their figures.

This week, the DWP finally released the first performance figures from the Work Programme, the Government’s flagship welfare to work programme, and boy were they poor. In the first 12 months of the programme, just 2.3%* of people referred to the Work Programme have found work which lasted for at least 6 months.

At the outset, the DWP estimated that if the only support long term unemployed people received was the standard Job Centre Plus offer (basically access to job points and fortnightly signing meetings), then 5% would find sustainable work anyway. The Work Programme providers had a minimum performance target of 5.5%. DWP expected this to be exceeded, but in fact every single provider has failed to meet this contractual obligation. What this suggests is that the Work Programme is worse than doing nothing. Read that again. Worse than doing nothing.

As you might expect, the Government and the providers themselves tried to put a positive spin on the numbers, arguing that since the programme started, 207,000 had moved into work at a cost of £2,000 per job, and over half of participants had had a break in their benefits since starting the programme. Ian Duncan Smith in particular likes to think if someone has come off benefits, they must have moved into work, but lets just look at those figures again.

878,000 people have been referred to the Work Programme, and 207,000 (according to the providers) have had at least one job start since starting the programme (24% of those referred). And yet around half (which equates to almost 450,000) have had a break in their benefits. So less than half of those coming off benefits actually found work. Is the Work Programme about finding people work or getting people off benefits?Providers seems to be more successful at the latter than the former.

If we take the 207,000 figure at face value, does this signify success as is being suggested? We know that in the first 14 months of the programme, 31,000 people moved into work and stayed there for at least 6 months (or 3 months in the case for former ESA claimants. To do this, they must have moved into work by the end of Jan 2012. ERSA (the industry’s trade body) helpfully break down job starts by month, so we know that up to the end of Jan 2012, just over 64,000 individuals started a job, but of these ‘jobs’ only 48% of them lasted long enough for the providers to claim a job outcome payment. It’s probably slightly worse than that because providers can still claim a payment if an individual gets a job, leaves it and starts another. So if someone does 3 temporary jobs lasting 2 months each, the provider can claim that as a job outcome. What sort of jobs are they that so many last less than 6 months? It seems that the definition of ‘job’ seems to be changing. I’ll explore this a bit more in part 2.

Looking at the Government’s chief argument then – value for money, while the headline number is £2,000 per job, if you break that down, it’s about £14,000 per job sustained for 6 months or more. Let’s not forget too that of the over £400m paid out to providers in the first 14 months, at least £350m took the form of ‘attachment’ payments – the £400 or £600 providers receive per participant just for accepting them on the programme. Ultimately though, the value for money argument is spurious, because as we’ve already seen, if we had spent nothing on welfare to work programmes, we would have expected more people to move into work. Once more then, the Work Programme is worse than doing nothing. The Work Programme seems to be very good at shifting public money into private hands, but less so at the job it’s apparently designed to do – finding work for people with complex needs.

That’s Part 1 then. Part 2 will go into more detail about the problems with the programme, why it’s such awful value for money, and what an alternative might look like.

*UPDATE: Via Twitter, @boycottworkfare points out that the performance figure for the first 12 months is not 2.3%, it’s actually worse, only 2.1% See this Fullfact post for an explanation.

Sources

ERSA – The trade body for Work Programme providers

DWP ad hoc analysis of numbers of individuals starting Work Programme and then having a break in their claim. (As an aside, I have a real problem with the DWP’s use of ‘ad hoc analyses’. They seem to be being used to muddy the waters about what is really happening, the opposite of what statistics should be used for. My very first blog post was on this topic. Read it here.)

DWP official Work Programme statistics