The government has vastly over-estimated the numbers of unemployed people who can be helped back to work through the Work Programme, according to a National Audit Office report.
The spending watchdog said today that the flagship welfare-to-work programme is likely to help 26 per cent of jobseekers aged over 25 back into work, compared to Department for Work and Pensions estimates of 40 per cent. The discrepancy means that many of the private sector providers delivering the programme could face “serious financial difficulty”, warned the report.
Moreover, the NAO said that the IT system to support the Work Programme is still not fully operational and that the replacement processes that are being used could increase the risk of fraud and error. This was because of “the rush to get the programme up and running” according to Margaret Hodge, chairwoman of the Public Accounts Committee.
Referring to the DWP’s assumptions, the NAO report said: “Its performance assumptions were based on data from previous schemes, which varies in quality and completeness. In the absence of complete information, both the department and providers have, however, made aggressive assumptions about the level of performance that can be achieved by the Work Programme and at what price. Value for money will depend largely on the extent to which the department can hold providers to the offers they have made... it is possible that, at some point in the Work Programme, adjustments will need to be made to the terms and conditions of providers.”
The DWP will need to be vigilant that providers do not cut corners in pursuit of their ambitious targets and concentrate on candidates who are easier to help, the report added.
A committee of MPs was told as early as last January that over-ambitious targets for returning people to work could be the 'achilles heel' of the Work Programme. Last summer it was estimated by a think tank that nine in ten providers would miss their targets.
However, employment minister Chris Grayling said: "Payment by results is a totally new approach for government and its success simply cannot be assessed in the same old ways. I'm really disappointed that the NAO is producing a report which is partially based on guesswork, when it's private companies and not taxpayers who are carrying the risks.
"Unlike the last government's welfare-to-work schemes, we only pay when companies succeed in getting the long-term unemployed into sustained employment."
Katja Hall, CBI chief policy director, said that it is too early to judge how the Work Programme is performing. However, she added: “While the Department of Work and Pension’s scale of ambition and desire to get things moving should be applauded, we agree that the pace at which the programme was rolled out posed a number of challenges to both providers and the government.
“The CBI believes the Work Programme is a significant step forward from previous welfare-to-work schemes, with the potential to deliver both quality outcomes and value for money for jobseekers, employers and taxpayers alike.
“In the current economic climate, what’s important is that businesses, government departments, local government and other stakeholders work with Work Programme providers to ensure that the scheme is successful at getting more people into jobs.”