Welfare to Work

Richard Johnson, Managing Director of Serco Welfare to Work on Cameron, Clegg and the future of Welfare

Richard Johnson, managing director of Serco Welfare to Work, on how the new coalition government may affect the welfare-to-work sector

“Lord Freud has now spent over three years thinking, talking and planning for the next generation of welfare-to-work services. We saw much of his work clearly set out in the Conservative Manifesto, and then transposed into the Coalition Agreement.

I think there are potentially some enormously exciting opportunities created by his proposals. There is the potential for the extension of intensive assistance to far more people currently trapped in social exclusion as a result of their unemployment.  By recognising the enormous costs of maintaining people long-term on benefits, and by creating a mechanism for using savings in those costs to fund service delivery, we are untapping considerable resources to extend the scale, the scope and the depth of our provision.

This is perhaps an opportunity to take out some of the unnecessary complexity in the ‘systems’ that surround unemployed people. Perhaps this is a chance properly to focus assistance on responding flexibly to the individual needs of people accessing welfare services. We could sidestep the agendas that so get in the way of people securing sustainable, independent futures. We could ensure that all the expertise in our frontline delivery is properly aligned, with real value derived from the money that is spent, with duplication removed and meaningful outcomes maximised. We could even start to see welfare to work finally join up, in funding and delivery, with associated services such as criminal justice, housing and health. Call me a dreamer, but we might even get some coordination between employment and skills.

There is a chance to create something here that brings public, private and third sectors into positive partnerships. Making that ‘p’ word work is, I think, dependent on how these services are contracted and subcontracted. It also requires a sea change in the transparency in this ‘industry’, with real performance data shared openly. Currently, Serco are the only prime contractor to publish weekly performance reports. How else can we drive up the quality and the performance of our services (and these two things are inextricably linked)? How else can we hold this provision accountable for the lives of the individuals we want to reach?

We are moving, I believe, towards two distinct tiers of contracting – possibly more. We may have a smaller number of prime contractors. Their contracts will be outcome-based, with payments linked to long-term sustainability. Below this first tier will be networks of subcontracted provision, which may in turn also subcontract. The challenge, of course, will be to ensure that:

  • These tiers are adding value and not simply creating additional overhead;
  • Expertise is drawn in to address the full range of complex needs falling out of social exclusion;
  • Subcontracts drive performance through partnership, with mutual benefits realised for both prime and sub;
  • Funding arrangements are ‘fit for purpose’ probably with a variety of payment models depending on who is delivering what at which tier;
  • The interface with Jobcentre Plus, and other public bodies, is facilitative and focused on jobseeker need.

It would be really nice to think that this new contracting framework could also mitigate ‘creaming’ and ‘parking’. As far as I am concerned, this is probably its most exciting implication. Under our current welfare to work contracts, providers are able – possibly are even incentivised to – focus on the people closest to work and purposefully ignore those a considerable distance away. The model we designed at Serco attempts specifically to minimise the potential for this cynical prioritisation of service delivery and to free up resources for people most in need, but it is hard to escape the necessity to manage within finite budgets. Using the savings from reduced benefits payments, the so-called AME/DEL switch, may well go a long way to completely change this perspective. Once you start to recognise that this individual spending a lifetime outside of employment is costing so very, very much in that lifetime of benefits (never mind the social and fiscal costs of them and their family to all other social/welfare services), then you can also start to demonstrate the real social return of investing in expensive, quality, outcome-focused solutions to very complex personal problems.

The devil of all this is, of course, going to be in the detail. We face a very tricky transition now between existing provision and the new Work Programme contracts. We all recognise the weaknesses in our current systems, but we must be very careful not to lose all the experience and commitment that also currently exists. Organisations have invested heavily in recent tenders. It would not be a sensible time to ignore the cost of that. A new infrastructure was put in place for the first phase of FND and is still developing. Colleagues in Jobcentre Plus have managed with exceptional professionalism the pressures of the last 18 months, and now face the challenges of significant change along with us.

It is going to be important to keep sight of the opportunities that are being offered here to shift fundamentally the impact of welfare to work. Change is rarely easy. It is eased, however, when people work together, when there is openness and honesty, and when there is such a clear and strong shared objective.”

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