Damian Green’s first challenge: delivering a fair and healthy employment-services marketplace

14 July 2016

Now, there hasn’t been much news recently has there? Nothing to get excited about or to roll your eyes in disbelief?

Well given this bland backdrop, we’re not surprised that the news you’re most excited about is the new Reform report for Big Society Capital on how to create a level playing field between sectors for Department for Work and Pensions procurement.

OK, I jest, but actually this is a very important piece of work. As resources get ever tighter in DWP-world and providers are asked to do more for less, it’s ever more important that the very best providers of employment services get the contracts that do exist. When you factor in that more commissioning (or co-commissioning) is going regional, high-quality skills in this area are essential.

Now, I can’t possibly write a blog on the Work and Health Programme without talking big picture for a moment. The size of the Programme as it currently stands is pitiful – a paltry £130 million (actually more like £80 million in its first year) or about 80 per cent less than spend on predecessor programmes. We know why this is. The Government believes there is a ‘peace dividend’, the potential to spend less on outsourced employment programmes because the labour market is doing well. However, with UK economic prospects looking less certain, it may well be that this needs rethinking. Even as it stands, the size of the programme won’t touch the sides of the well-known disability-employment gap.

That small detail aside, it is still really important that when this programme is designed and procured in such a way which allows all providers, regardless of sector, to have a fair crack of the whip. However, that’s easier said than done. Here’s a few lessons from us on how to achieve it.

First, DWP must design payment mechanisms based on the realistic resource required to work with those on the programme and must accept a fair sharing of risk. Given that the Work and Health Programme has been developed to support those who have disabilities and health conditions, this means programme design must utilise a sensible payment mechanism combining an up-front payment as well as payment by results.

Second, there must be clarity and transparency on the commercial bars related to the procurement. If track record is going to be taken into account, how will this work if there is a joint venture? If a parent-company guarantee will be required, why set it at such a high level given the small size of the programme? And how are going to ensure that third sector providers, without such a parent, can provide the guarantee in the first place?

Next, do not put in place ridiculous contract terms that make it more difficult for some providers to bid for contracts. Remember that these tend to be passed down the supply chains. Thus contracts terms for the Work Programme which in effect gagged providers have speaking publicly without sign off from the DWP were in nobody’s interest and definitely didn’t work for charities. Similarly, very one-sided indemnities and liabilities may look like they protect the public purse, but may be very difficult for trustees to stomach.

Finally, share as much information as possible up and down the potential supply chain. Providers need to be able to assess risk properly and that means commissioners sharing underpinning assumptions related to the financial model and performance assumptions. Any organisation signing up to a contract without such information does it at risk.

As I type, I hear that Damian Green has become the new Secretary of State for Work and Pensions. He has a lot to do. Let’s hope that delivering a fair and healthy employment-related marketplace that delivers for all jobseekers is one of them.

Kirsty McHugh, Chief Executive, Employment Related Services Association (ERSA)

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