The Work Programme – Its economics and early performance
The FT ran another gloomy article on the prospect for Work Programme suppliers yesterday. This one picked up on the Office for Budget Responsibility and other reports coming out following the Autumn Statement. The economy is tough – we all know that. Competition for jobs is fierce, but jobs continue to be created, refilled and advertised by business.
Those people who are moving into work from the Work Programme should be proud – these are tough labour market conditions – they have done well. The support we are giving to people has to be sharp and effective. As I blogged recently, the work with employers to get a 2:1 ratio on referrals to jobs start is exceptionally good in such conditions. We continue to iterate and innovate the service to get people into – and keep them in – work.
This week we will move past 7,000 people who have started work since being on A4e’s Work Programme, since it launched. Each month, the numbers have increased and continue to do so; over 2,500 last month alone. Sustainment is higher than we forecast so far, as is the rate of picking people up and moving them back into work if they fall out. Vacancies are still healthy and employers are talking to us about sector routeways for longer term skill gaps.
The reports on the macro-economic picture – as presented in the FT – do not always present an accurate picture of the way welfare programmes and their economics operate overall. We recently did a piece of work for the financial community which showed how you can decouple the economics of welfare and the types of jobs we move people into, from the macro-economic analyses often used to speculate on how suppliers will fare. As with all businesses, cash flow is king, not ‘profit’ and ‘loss’.
So, the important thing in operating payment by results programmes in the early phases is the cash movement. On Work Programme, volumes are flowing well, the Department is paying on our results efficiently, and so, for A4e as a business, we can move payment down to suppliers too (who have around 35% of our referrals, and include a wide range of public and Third sector organisations). And because job entry rates are sound, with better sustainment than we planned for, the cash position is better than we would have anticipated at this stage. This is not to say it is easy – payment by results programmes are not designed to be, they’re designed to work better for taxpayers and for people who really need the services. Some operators will struggle, but that is how the market functions. It is neither dire nor a time of crisis. It is also important to remember the most significant part of all of this – the changes we are making to people’s lives, all 7,000 of them and counting, in helping them find work.
That said, it remains an imperative to do more on job creation. New business start ups and enterprise are so important, not just for the Work Programme but to the wider economy. Our enterprise figures on the Work Programme are robust: so far, 390 people have launched their own business since July, and 139 of these in November alone. This means almost 400 new business are helping create jobs and putting money into local economies. On the New Enterprise Allowance, 188 have started business so far. This is really good, but we know that more needs to be done.
I was chatting to our team in the North West which has been running an enterprise and start up consortium for five years, which showed me the real potential of enterprise under the Work Programme. They create 1.5 jobs for every new enterprise created and in the last seven years – working with many fantastic sub-contractors and 44 of the 46 local authorities in the region – 7,000 businesses have been created. All by people living in what we refer to as ‘disadvantaged areas’ or who are ‘hard to reach’ customers. That’s 10,000 jobs. These rates have not diminished since 2008. Enterprise is vital important as the economy recovers.
So, as I will keep banging on, Work Programme is making a really good start and we have so much more to do. Let’s have some coverage on the positives as well as the challenges we all know we face!
One comment
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It would be good if we in Wales (A4e) working on the work program had the opertunity to support our customers who would like to move into self employment, as most of the support for this customer group are ESF funded we are unable to give these customers our full support as we do not have that experience or expertise
