Five years on: ambition and reform

27 June 2016

What do we want from our public services? Well to put it bluntly, we want everything. We want them to be bespoke but universal, we want them to be both efficient and fair and we want them to be value for money AND high quality. We want them to be all things to all people – including customers, politicians and taxpayers.

No wonder our policymakers stumble when faced with such a list of demands. The story of our public services is necessarily one of trade-offs – policymakers pursuing the art of the possible against a backdrop of often startling political rhetoric, usually focused on the promise of ‘more for less’ and ‘we can do it far better than the last lot’.

Our public services have also, in many areas, been a stop/start story of ambition, often fuelled by individual policy entrepreneurs who have a passion for delivering better and differently and who have the skills to manipulate political structures and institutions towards a given end.

Employment support services are a marvellous case in point. Based to a great extent on US reforms of the 1990s, this example of transnational policy transfer has been generally one of success. Indeed, the UK is now seen as a world leader in terms of the outsourced active labour market, with governments from across the globe having visited to see how we organise our employment support services.

The main programme they’ve been to inspect has been the Work Programme, which this summer reaches its five year mark.  Designed to help the long term unemployed into sustainable work, this built on the learnings of its predecessor Labour governments, with a few radical twists put in place by Messrs Duncan Smith and Grayling.

But even these twists again were largely based on predecessor thinking – a strong focus on payment by results to move risk to the provider base; differential payments to incentivise behaviours; a ‘black box’ approach to allow innovation and bespoke services; and, crucially, a financial model firmly founded on the DEL/AME switch, with the programme ostensibly funded by benefit savings.

The question is, five years on, has the programme worked?

If you read The Guardian exclusively, you’d be forgiven for thinking the answer’s ‘no’.  The programme received a barrage of bad publicity in its early days. The political rhetoric came back to bite it, with the opposition making merry weather with Conservative claims that programme was going to be a ‘revolution’ in employment support and that it would deliver outcomes far higher than its Labour Party predecessors.

Now the fog has lifted, we know full well that the weaker results in its early days were directly related to the state of the UK economy. Programme targets had been based on strong economic growth, when actually the country was in recession.

Looking back now, commentators, including the National Audit Office and Work and Pensions Select Committee, are judging the programme a success. Since it started, 786,000 long term unemployed jobseekers have started a job on the scheme, over 520,000 of whom achieved a long term job. Given none of these individuals had managed to find work off their own bat or, in most cases, after a year with the Jobcentre, this is a success – both in terms of service output and taxpayer pounds. That’s not to say all has been perfect – far from it. It’s now widely accepted that the level of pricing on the programme for those furthest from the labour market was woefully inadequate, whilst operating a purely payment by results regime for such groups doesn’t drive the necessary investment.

But that important point aside, the programme has also shown a level of flexibility and adaptability that many other public services would admire. The composition of referrals has radically changed over the last five years.  As a result, providers had, and met, a heroic task, to change their models, their staff, the composition of supply chains, their partnerships – most everything – but within that same contract and financial model.

This is also not just a tale of large organisation success; far from it. Some of the organisations who have done best are third sector organisations, who will openly say that they have learnt a huge amount over the last few years about how to design and tailor services, based on a far greater analysis of needs and understanding of the impact of interventions. As a result, the quality of data many providers possess is exemplary – far better than anything held by Jobcentre Plus.

What an irony, therefore, that it is at this point that the government is rowing back from its previous level of ambition.

In 2017, the current round of employment programmes, including the Work Programme, will come to an end. Successor provision is set to be far smaller and focused in nature, with Jobcentre Plus set to deliver an expanded service. This appears to be based on two assumptions: first that the labour market will hold up; second, that Universal Credit will prove a game changer – faced with well-formed incentives and perfect information, jobseekers will, as rational actors, make the rational decision to go back into work.

Sadly, life for many people is a trifle more complicated than that.  We all hope the labour market does hold up AND Universal Credit fulfils its policy aims. However, we still have a stubborn cohort of long term unemployed in this country; youth unemployment which appears structural in nature; and a significant number of people who could and want to work who are on disability and benefit benefits.  These people need specialist advice and they’re not going to get that at an overburdened Jobcentre.

What we’re moving away from as a country is significant.

First, the changes signal an abandonment of any notion of a DEL/AME shift. There isn’t even a pretence that employment support will be funded from benefit savings. Second, it signals that government is happy for a thousand flowers to grow, in that employment support services in future are set to be funded through a wide range of small scale and shorter contracts, commissioned by a wide raft of players. This will offer opportunities in some quarters. However, it will also probably lead to a far more confusing landscape for jobseekers and employers, with lower level outcomes as a result. And third, it signals a wilful move from evidence-based policy making. There isn’t evidence that Jobcentre Plus is more efficient at employment support. Indeed, we do not even know how many people it gets into sustained employment.

So far now, at least, it appears public service reform is on the backburner.  That’s not to say it can’t return.  Who knows when the next mover and shaker will appear on the landscape?

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

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