James Purnell promises longer and larger welfare contracts

Work and pensions secretary James Purnell said yesterday the government would commission larger and longer welfare-to-work contracts from providers, in an overhaul of how it delivers employment programmes.

Its commissioning strategy promised that large providers, many of which are expected to be from the private sector, would win contracts across large areas, and then sub-contract employment support services to smaller providers.

Payment for results for large providers

Purnell said providers would only be paid for results once an employee had completed a six-month period of work, up from the current three months, which could be extended to up to 18 months in the future. In return, providers will then be rewarded with longer and larger contracts, up from three to between five and seven years.

James Purnell said: “I want to see solutions which focus on every single individual, not just the ones who are motivated to work.  Contractors will be paid by results and customers will get the long-term support they need to ensure they get into the world of work and stay there.”

Charities’ advice role could be undermined

But Kate Green, chief executive of the Child Poverty Action Group, warned that forcing small and voluntary providers to sub-contract to large private companies would undermine their role as independent advice providers. 

“There have been corruption problems with private welfare providers in the United States and if a company goes bust claimants will be left in the lurch,” said Green.

Under the strategy, the Department for Work and Pensions will let out 80% of the contracts to “reliable” providers, leaving the remainder to new entrants.  However, the Local Government Association argued that funding for work and skills programmes should be managed by councils, not central government.

LGA: Councils should take charge

LGA chair Simon Milton said: “Decision-making and funding needs to be placed closer to the level of where people live and work, so that groups of councils working with other bodies can ensure that the different services needed by a long-term unemployed person help them to work.”

Ian Charlesworth, chief executive of the Shaw Trust, which provides employment services for disabled and disadvantaged people, said the strategy must acknowledge the complex reasons that lead people to claim benefits.

And Emily Frith, from social care charity Turning Point, said it was vital that the strategy integrated employment, health and social care services so that at-risk people did not “fall off the conveyor belt of the treatment journey”.

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More information

Turning Point

The Shaw Trust