Don’t expect too much from any work programme

It’s the Oscar ceremony this weekend. I watch lots of films but don’t normally tune in to awards shows. Too much nip and tuck on display. And the women are almost as bad. Much more fun are the gongs for the worst films. The latter has its equivalent in the Golden Bollock prize for rotten political gimmicks or policy ideas. Judging by this morning’s report from the House of Commons Public Accounts Committee, this year’s winner might be the government’s flagship Work Programme, which appears to be seriously underperforming relative to expectations in getting benefit claimants off welfare and into sustained employment. But is such criticism fair?

Those sticking the boot into the Work Programme reckon it’s poorly designed, with funding and contractual arrangements that put too little pressure on lead private sector providers to deliver outcomes for hard to place clients while effectively pricing specialist voluntary sector groups, familiar with helping the most disadvantaged, out of the system. The programme’s defenders retort that it’s too early to make a proper assessment of performance – the scheme launched in summer 2011 and available data only tell us how well things went in the year to summer 2012 – and, anyway, a flat-lining economy makes progress difficult.

The ‘too soon’ defence has some merit, though this can’t be sustained for too much longer and fresh information is on the way, but the economic background argument is weak given the surprising strength of employment growth in the past year. The economy may indeed have flat-lined but falling real pay has priced workers into jobs at a rate far faster than one would expect were GDP rising at or above its trend rate of growth. Many more people are finding jobs it seems, just not that many from the Work Programme.

This adds weight to the idea that the Work Programme has a design flaw. Basic to this is that the lead private sector providers invest their own money up front and only receive a payment from the government if they meet or exceed performance targets. This looks like a good deal for the providers, jobless and taxpayer alike. However, providers are finding that the amount they have to put in to make a serious difference to the job prospects of the hardest to help is higher than the financial return they are likely to make. Providers therefore focus on the most employable, some of whom would probably have job got jobs anyway, and leave the tougher nuts to one side in the hope that either job prospects for the latter will also improve or, less likely, that the government will stump up more cash to make a higher level of up-front private sector investment in the hard cases worthwhile.

This design flaw has been evident from the outset and will remain an underlying problem for the Work Programme even if, as I suspect, performance data improve as the system beds down. Yet the basic fact that both critics and defenders of the Work Programme prefer to ignore is the generic difficulty facing welfare to work schemes of this kind.

Like many employment analysts of my generation I’ve kept tabs on the long succession of employment programmes that have come on gone during the course of the past three and a half decades. They are always introduced to a political fanfare and promise to banish long-term welfare dependency as we know it. They also always disappear, usually quietly, to be replaced by an equally over-hyped grand plan. The reason is that most schemes do okay but are never able to live up to unrealistic expectations, mainly because the amount of money spent on them is always too low to deal with the numerous barriers to work confronting those they are expected to help. This universal truth holds whatever the programme and regardless of whether it is fronted by the private, public or voluntary sectors.

In all probability therefore the Work Programme will work reasonably well and will be much better for the long-term jobless than doing nothing at all. But neither it or its inevitable successor will live up to expectations so long as the palliative of helping people move off welfare into work is not accompanied by fundamental solutions to the economic and educational inequalities that makes them move on to welfare in the first place.