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.

Why do the Lib Dems stay in the coalition?

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Why the LDs are not desperate (regardless of electoral prospects) to get out of the Coalition mystifies me … that is, it mystifies me for all those who are not Orange bookers and/or not the chosen few who enjoy a ministerial car. Apart from any other consideration, why do they want to stay and be tarred by association with George Osborne’s misguided destructive policies? Osborne’s economic strategy has even been criticized by the IMF!

Liberal Democrat Voice (1) does little to tell me ‘why’, although there are ‘voices’ there, which acknowledge, following the failures of AV and House of Lords reform, that being in government has not given them a ‘sufficient legacy’.  (That word ‘legacy’ has such a contemptuous ring…   reinforcing the conclusion that those activists and politicians are playing the ‘getting elected’ game rather than being passionate about improving the world.)

However, I was finally moved to write after reading John Kampfner’s extraordinary piece in the Guardian The Lib Dems are in a stronger position than the Tories – but hide it well – Cameron needs Clegg more than Clegg needs Cameron – so why won’t the Lib Dem leader show some muscle?’ (2)

John Kampfner writes:

Clegg trades on the fact that he is the first peacetime Liberal in a century to preside over government. That is no mean feat and, by the nature of coalition, requires compromise. The public appears to appreciate, better than the Westminster village, that give and take is a sign of a mature political system.

In what sense is it ‘no mean feat’ to happen to be the leader of a political party when another party fails to secure a majority, and to be prepared to accept the offer to form a coalition?

And given the LDs crashed-standing in the opinion polls, where does he observe the public appreciating that LD ‘give and take is a sign of a mature political system’.  Maturity?  Exactly what is immature about vehement opposition when faced with the disastrous policies that are being imposed on the UK populace?  Why is it ‘grown-up’ politics to stay ‘stumm’ as Kampfner suggests?

In fact, what ‘give and take’? On what, in particular, have the Tories compromised?  Yes, they organized (and sabotaged) a referendum on AV, and went through the motions of supporting (and sabotaged) House of Lords Reform.

The much vaunted Pupil premium was supposed to be ‘the reddest of the Liberal Democrats’ red lines’ with an additional £2.5 bn for the education of disadvantaged children.  But, in fact, the pupil premium was ‘robbing Peter, to pay Paul’… the majority being recycled from within the education department’s budget’ – largely from the abolishing of EMA

In June, ‘David Cameron promised to “take money from outside the education budget to ensure that the pupil premium is well funded”. ….  Cathy Newman’s verdict,
on Factcheck, was that ‘so far from bringing “real social justice and opportunity to Britain’s children”, as Nick Clegg claimed before the election, the pupil premium was just filling a hole in the budget’. (3)

Another LD ‘achievement’ was to raise the personal allowance, ‘taking the poorest out of taxation’, but Patrick Collinson in the Guardian dismissed it as an ’empty gesture’

As income goes up benefits will go down, and a million more basic-rate taxpayers are set to move into 40% tax band (4)

Shamik Das of Left Foot Forward made this clear (5):

As Chart B2 of the Budget 2012 Red book (pdf) shows, the cumulative effect of this budget and previous announcements is regressive for the bottom eight deciles. The ninth decile pay less proportionally than the poorest half of people. But the budget is progressive when looking at the richest 10 per cent versus the rest.

This process of the Tories ‘sort of supporting’ (and then sabotaging) is acknowledged by Kampfner, when he writes:

The Protection of Freedoms Act, which received royal assent in May, was a small but important step forward in limiting the authorities’ use of individual data. This is in danger of being more than offset by the hideous “snoopers’ charter” and plans to introduce secret courts for intelligence-related criminal cases, such as the use of torture. (2)

 

According to John Kampfner, Nick Clegg has a more coherent vision for social justice and social mobility, with which he advises Nick Clegg to stick….  However, I simply cannot see that Nick Clegg has ever advanced anything like a coherent vision.

A belief in social justice for the disabled, the unemployed, the low waged, is totally incompatible with voting through of the Welfare Reform bill and supporting the Legal Aid bill, let alone reducing the highest tax rate to 45% for the very wealthiest people.

And as for social mobility…  Has John Kampfner seen the fallen rate of applications to University after the introduction of £27K student tuition fees, and the impact of removal of EMA?

He must also know that there are over 1m unemployed 16 to 24y olds.  Does he realise that new official figures covering the academic year to April 2012 reveal the number of 16 to 18-year-olds starting on-the-job training schemes increased by just 1.4pc, to 104,500 (6)Whilst in the North East, North West and South West, apprenticeship starts have dropped.

Furthermore, the quality of those apprenticeships is highly questionable.

A BBC investigation has found that Morrisons supermarket employed more than 1 in 10 of all apprentices across England last year (7).

In addition, where is the social justice in the government rolling out workfare on a massive scale?

Tens of thousands of forced unpaid work placements have already taken place.

The government intends 250,000 workfare placements on the Work Experience scheme alone. If each placement is 8 weeks of 30 hours work, this is 60 million hours of forced unpaid work.

850,000 people are expected to be referred to the Work Programme by the end of this year. However, due to the “black box” approach the government uses with the private providers, it has so far refused to publish how many of those are being forced to work without pay.

The Mandatory Work Activity scheme has recently been expanded to a capacity of 70,000 places a year. (8)

This all sounds less like social justice or mobility, and more like increased profitability for businesses like Morrisons.

We were told that the LDs went into Coalition with the Tories because the UK was on the verge of becoming like Greece.  That the Labour government had irresponsibly overspent on public services, and it was effectively a national emergency.  It was said that Vince Cable u-turned his pre-election economic assessment on seeing the figures, and then agreed with Osborne’s plan for expansionary fiscal contraction (more like inherently contradictory  … expansionary and contraction).

Not only was the national debt inflated by the ‘socialisation’ of banking losses rather than by public spending (9), but there was absolutely no possibility of the UK being like Greece, a country without its own currency and no central bank (Will Hutton called the suggestion risible).

There was no national emergency, on the scale suggested, as the graph below shows (10).  The UK has had much worse national debt and was in a much better position than many other countries.

In any event, expansionary fiscal contraction was an improbable solution to a banking crisis and a global lack of demand. (I struggle to believe that Vince Cable does not know all this.  Just as I struggle to understand the legitimacy of his u-turn on economic strategy.)

Unfortunately for the UK population, but as predicted (11), it has not turned out well.  As Polly Toynbee notes:

Mervyn King has just delivered a more dire judgment than any before, of zero growth this year – far lower than expected over the next two years. Bank lending has seized up, exports are down, the balance of payments is the worst for 15 years. Meanwhile the Trussle Trust is opening four new food banks a week. (12)

Nevertheless, John Kampfner, faint but pursuing, concludes:

‘The Lib Dems have taken the blows, over tuition fees and more. They have lost the opportunity to modernise our moribund constitution. They have kept stumm for the sake of stability, and been accused by the left of treachery and by the right of petulance. Clegg has two and a half years to put a strongly liberal stamp on government as it seeks a path out of the economic mire.

That is a desperately tall order but, as the past two weeks have shown, success comes to those who show muscle and no little guile.’

Fine, fighting words (although I suspect NC is pretty comfortable with Cameron’s world view) but Polly Toynbee offers the opposite advice that the LDs should get out before its too late:

With David Cameron and George Osborne lashed to a failed Plan A and no sign of shifting, lashed to a failed Plan A, the one credible reason for the Lib Dems to break the coalition is to save the country from yet worse damage. Given what Clegg has led his party to vote for – benefit cuts for the poor, tax cuts for the rich – it is almost too late. But for each recession month that they stay on, tolerating all this, the Lib Dems lose credible reasons for ever making the break.

Personally, I have to admit to a fair degree of sympathy for the ordinary grassroots LD whose cognitive dissonance levels must currently be topping even those of grassroots Blair/New Labour believers.  They are having to justify the dismantling of the NHS, the dismantling of local democracy in education, replacement of Trident, dissing of the green agenda, nuclear power, a new runway at Heathrow, taking benefits away from disabled children and so on… for what?  To prove that coalition works?

I have always respected John Kampfner as a journalist, then Editor, at the New Statesman. For the man, who so comprehensively exposed Blair’s failings, to be turning himself inside out trying to justify the LD leadership’s current position seems so very sad.  The upper echelons of the LD leadership do not deserve it.

Related post:  https://think-left.org/2012/02/16/the-nhs-and-tina-mrs-thatchers-ideological-anti-democratic-political-legacy/

(1) http://www.libdemvoice.org/

(2) http://www.guardian.co.uk/commentisfree/2012/aug/09/libe-dems-stronger-cameron-needs-clegg

(3) http://blogs.channel4.com/factcheck/spending-review-the-price-of-the-pupil-premium/4555

(4) http://www.guardian.co.uk/money/2012/mar/21/budget-personal-allowance-rise

(5) http://www.leftfootforward.org/2012/03/budget-2012-impact-per-decile/

(6)  http://www.telegraph.co.uk/finance/jobs/9470715/British-apprenticeship-figures-suggest-drive-has-stalled.html

(7)  http://www.bbc.co.uk/news/business-17584151

(8) http://www.boycottworkfare.org/?page_id=663

(9)  https://think-left.org/2011/12/21/gordon-brown-did-not-spend-all-the-money-the-banks-did/

(10)  http://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/

(11)  https://think-left.org/2012/04/25/dont-say-you-werent-warned-george/

(12)  http://www.guardian.co.uk/commentisfree/2012/aug/13/coalition-olympic-cheer-will-subside

TOMORROW’S PEOPLE

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By Liam Carr First posted at liam carr.blogspot

Students completing their training and being assessed on the job for NVQ Level 2 in spectator safety were given the job of stewarding the Jubilee river pageant. They were told by their training provider, a company called Close Protection UK, to sleep rough in London on the night before the Jubilee1. They had no access to toilets or changing facilities.
Tomorrow’s People Logo

This is not how any training provider should should treat students. For the duration of that Jubilee weekend (while the majority of the country had a weekend off) these students were, in effect, working without pay for a security firm. No distinction should be made between them and any other student on a course, they should therefore expect their working environment to be a safe one. Training providers should also treat their staff in a dignified way – clearly this has not been the case with both male and female students forced to change into their uniforms
in the street.

Tory Tree

If these were students at a college there would be an outrage. They have failed to in their duty of care. If an employer was to treat workers like this there would be repercussions, and maybe a tribunal. Will the reaction be any different because some of these students have been unemployed for some time? The answer is yes. Public opinion of the long-term unemployed is that they are some how different from working people. This is a deep seated form of mild prejudice which I think may be a hangover from a time when there was a job for anyone willing to work. In Consett and the surrounding area, before the steelworks and the mines closed, there was no good reason to be unemployed. The statement that “There is work for them that want it” was true.

This has not really been the case at any time since the Thatcher Government. Unemployment did fall after 1997. Under this Coaltion government unemployment is back to Thatcherite levels. There is now a food bank in the Salvation army hall in Consett; the last time that there was a food bank there, there were striking Miners collecting food; now it is young families desperately trying to find a job when there are too few jobs to go around.

A not so tenuous link can be traced from the scandalous treatment of the Jubilee Stewards to the door of David Cameron in No. 10: The charity Tomorrow’s People set up the training, they are given Government funding in order to provide work experience for the work program, the same scheme on which unpaid workers found themselves stacking shelves in supermarkets. The CEO of Tomorrow’s People is a Tory donor and is also a Conservative Peer.  Even the Tomorrow’s People logo is scarily similar to the Tory tree.

The work program is a flagship policy of the Coalition. Shoddy treatment of students means that this flagship is not exactly floating like the Royal barge. The Government are rudderless; inadequate training combined with a stubborn refusal to address the issues around job creation, mean that the 1 million young people who are out of work are being left to sink.

1. http://www.guardian.co.uk/uk/2012/jun/04/jubilee-pageant-unemployed?fb=native