PATHWAYS REVISITED
HEADLINE COST
- To March 2009 Pathways cost DWP £538 million
- In 2008-09 (year 1 of the national Pathways programme), Pathways cost £247 million, of which £130 million related to provision in Provider-led Pathways areas.
- In 2008-09, there were 650,000 new claims for incapacity benefits leading to 501,000 (77% of new claims) individual ‘starts’ to the Pathways programme from people required to participate.
- There were a further 77,000 individual ‘starts’ to the programme from longer term incapacity benefits claimants who had volunteered to participate, of whom around 90% have been engaged by contractors in Provider-led Pathways areas.
JOB COSTS
- 15% of claimants starting Pathways to the end of March 2009 had moved into employment, at a cost of £2,942 per job
- Pathways as a whole, including New Deal for Disabled People in Jobcentre Plus Pathways areas cost £451 per programme start,
- Compare this with £3,530 per job for the former New Deal 25 plus scheme for the long-term unemployed,
Jobs achieved through mandatory participation in Pathways would have been achieved without the programme,
Jobcentre Plus Pathways has performed better than Provider-led Pathways in supporting mandatory claimants into employment,
Support offered through Pathways (including the Condition Management Programme and the Return-to-Work Credit) appear to have no additional employment impact… That’s £94 million spent with no discernible impact WOW!
PERFORMANCE
Even taking account of the impact of the recession, contractors have underperformed against targets set out in contracts. Provider-led Pathways has NOT demonstrated better performance than Jobcentre Plus.
Consequently,
Contractors have not received payment in line with what they expected,
The Department removed earlier restrictions on allowing contractors to claim performance payments for people who volunteer to participate in Pathways. Contractors can now claim payments for helping an unlimited number of voluntary participants.
TOO BIG TO FAIL
Due to contractor underperformance and cash-flow difficulties, DWP invited contractors to submit individual applications for a proportion of the contract service fee to be paid early. During 2008-09 £24 million of service fees were paid in this way.
- Risk that contractors will pull out of their contracts because they cannot make them pay. Over half said they would not bid for a new Pathways contract under the same terms
- Despite being conceptually sound The Office of Government Commerce concluded that the contracted out model of welfare-to-work was still unproven.
With one third of prime contractors and two thirds of subcontractors expecting to make a financial loss. The contracting model the Department has chosen does not appear to be sustainable”
UNREALISTIC BENCHMARKS
In procuring Provider-led Pathways, the Department set ambitious benchmarks. The tenders subsequently submitted by contractors and agreed with the Department were significantly in excess of these benchmarks and [obviously were] not realistic.
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CONCLUSION
THE SPEND IS £3,362…… COMPARE THIS WITH THE COST OF NEW DEAL!!!!
DEDUCT THE 10% MANAGEMENT (£363) …..THE REAL COST IS £3,000.
Over promising, overspending, under performance: lessons will/must be learned
