Firms get up to £13 720 for getting a person into a job. Currently there is a small attachment fee of £400, which is to be phased out over the next few years as companies build up their success and therefore can afford to take people on at their own cost. The biggest single payment is for a job outcome, paid when a person on JSA has been in employment for 6 months or a person on ESA has been in employment for 3 months. However the money really starts coming in when people have stayed in jobs beyond the outcome period, as the companies then get between £117 and £370 every four weeks up to one or two years. Presumably these people are no longer getting support from the Work Provider, so the Provider can just wait for the money to come in every four weeks.
Poor performance of the Work Programme has been linked to the state of the economy, which is worse than was expected when the WP started. However CESI said the target of 5.5% should be revised down by only 15%, to just under 5%. The headline figure of 3.4% getting a job is still too small.
However, whilst headline figures look poor, they mask the fact that with each month more people join the programme, without an equal number leaving because their allotted time (2 years) is up. The appropriate figure is not the percentage with a job outcome out of all who have been referred, but the percentage with an outcome within a set period – not including people who have not been on the programme for that length of time.
So to know how well the programme is doing, we first need to decide how quickly we think they should find jobs for people attached to it. Assuming that taking up to 12 months is acceptable, then the success rate is around 8.4%.
Fact check does mention this, but not until near the end of the report. By this time, there has been a lot of comparison of the 3.5% figure to the DWP target of 5.5% and suggestion that the WP is worse than nothing. ESA figures were submitted to the same incorrect use of maths to get 1.5% finding work; the reality is that 4.1% of those who joined the programme in June-Aug 2011 had work a year later.
Fact check does not provide any data on whether the WP is worse than nothing. To know this, we would need to know what percentage of jobseekers who had been out of work for 6 months prior to Jun-Jul 2011 and who were not placed on the WP got jobs within a year.
Keeping a job is not just about job outcomes, it is also about staying in work after that time. For people from ESA, 2000 sustainment payments were paid out. This works out as the average ESA referral not staying in work for more than six months (otherwise there would have been more sustainment payments). I haven’t done the equivalent calculations for Jobseeker referrals, but the length of time people stay in work after reaching a job outcome is a crucial piece of information that the government has rather disappointingly not given us,
Cost wise, fact check has neglected sum important figures.
Until a person gets a job, Work Providers receive only £400 (attachment fee). It is therefore not very expensive to have a lot of people on the programme, if being on the programme was all that mattered. However the key thing is that for the Work Programme to be counted a success, people need to get into and stay in work. This rapidly raises the costs.
At the lowest end, a Work Provider gets a £400 attachment fee, £1200 job outcome fee and 13 sets of sustainment payments at £170 each – a total of £3810. At the highest end, the figures are £400, £3500 (all but ESA ex-IB claimants are £1200) and 26 sets of £370 – a total of £13720.
The first thing fact check has forgotten is that sustainment payments occur every four weeks for either 52, 80 or 104 weeks (1, 1 ½ and 2 years). So most of the money that a Work Provider will get for getting a person into a job hasn’t been paid yet.
Secondly, so far only 8.4% of people got jobs within a year. That’s approximately 9 people not getting a job to every 1 person that does. The cost of that one person’s job includes the attachment fee for the other 9 who didn’t got jobs (although if people get jobs in their second year on the programme, the ratio of attachment fees to jobs will decrease; also this fee won’t continue to occur after the first few years of the WP).
All of this means that one job found this year costs between £7410 and £19120.
This means the WP is currently more expensive than the Flexible New Deal, Employment Zones, New Deal for Young People and New Deal for 25+.
So the key facts are:
WP success is 8.4%, not the 3.5% used by Fact-Check to compare to the 5.5% target
For ESA claimants, success is 4.1% not 1.2%
The WP is currently more expensive than the other programmes considered by Fact-Check