UK unemployment
Long-term unemployment in the UK is rising amid criticism that the Work Programme is failing (Reuters)

Figures from the Department for Work and Pensions show that the Work Programme is still failing the most vulnerable jobseekers two years on, though performance on the government's flagship welfare-to-work scheme is steadily improving for the long-term unemployed with straightforward needs.

By the end of March, 132,000 participants in the Work Programme had found sustained work for six months or more. There had been 1.02 million referrals to the Work Programme, meaning it was still working behind the DWP's original targets.

Just 6,000 of those on Employment Support Allowance (ESA), which includes people with disabilities, have been helped into lasting work. The government set providers a benchmark of 16.5% of ESA claimants taking part in the Work Programme to find sustained employment - only 5.3% have so far.

"Despite the increasing success of providers in helping the long term unemployed into sustained work, it is taking far longer to help those on Employment and Support Allowance into jobs," said Kirsty McHugh, chief executive of the Employment Related Services Association (ERSA), which represents the scheme's providers.

"Many have been out of work for many years and have complex health and skills needs. Not all these needs can be funded through the Work Programme alone and it will need a concerted effort across agencies to help these jobseekers into employment."

Parking and Creaming

Work Programme providers have been accused by parliament's Work and Pensions Committee (WPC) of "parking" the hardest cases and "creaming" the easiest ones in pursuit of a quick payment.

"We remain deeply concerned that the Work Programme, as currently designed, is insufficient to tackle the problems faced by more disadvantaged jobseekers," said Dame Anne Begg, chairwoman of the WPC.

The Work Programme was launched in June 2011 by Work and Pensions Secretary Iain Duncan-Smith. Contractors carry out the Work Programme on behalf of the government and are paid by results based on whether a participant makes it into sustained employment, defined as employment for at least six months, either in one go or cumulatively.

Those contractors are set minimum performance targets by the government, and risk having their contracts terminated if they fail to meet them.

DWP statisticians also reported that 488,000 people of the long-term unemployed who joined the Work Programme in its first year spent at least some time off benefits.

"The Work Programme is helping large numbers of people escape the misery of long-term unemployment and get back into real jobs," said employment minister Mark Hoban.

"The improvement in performance over the past year has been profound and the scheme is getting better and better. And because providers are rewarded for success, the Work Programme is designed to give taxpayers a far better deal than previous schemes."

Flawed scheme

Many have criticised how the Work Programme is structured and say that the principle is good, but execution flawed.

"Poor performance against the DWP's minimum levels cannot be taken as evidence that providers are doing a bad job or that the scheme offers poor value for money: we simply do not know whether an alternative approach would fare better or worse in current economic conditions," said Ian Mulheirn, director of the Social Market Foundation.

"But what it does show is that the scheme was poorly designed with serious consequences for long-term unemployed people. The DWP's contractual minimum levels appear to have been plucked from thin air. Since providers are paid primarily for job outcomes, funding for this vital service for long-term unemployed people was calibrated to expected performance level which now appears way too optimistic.

"Since low levels of job outcomes cut provider revenues, spending on frontline services and support to jobseekers is substantially lower than the DWP had planned - even after deep planned cuts to spending on such programmes. Past experience in previous recessions has shown that this is exactly the opposite of what should be done to avoid substantial human, social and economic costs lasting well into the future."

The welfare-to-work industry is also critical of the scheme's design, particularly the targets they have been given.

"We remain concerned that the government's methodology for measuring provider performance is flawed," said ERSA's McHugh.

"Targets were set in a very different labour market and economy and need to be far more responsive to the economic conditions in which providers operate."

The WPC's Begg pointed to the recommendations made in her committee's report on the Work Programme.

Work Programme advisers are snowed under with caseloads - between 120 and 180 each - leaving the WPC "dismayed" and suggesting more resources be given to those working on the scheme. The committee also proposed moving to an individualised, needs-based pricing for job outcome payments.

"In the longer term, fundamental changes to the differential pricing structure are required. I urge the government to carefully consider our report," she said.

"Doing nothing and hoping things improve is no longer an option."

Long-term unemployment rose by 11,000 between February and April in the UK on the quarter before. Data from the Office for National Statistics (ONS) shows there are now 898,000 people who have been out-of-work for more than a year.

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