Paying providers by outcomes
Do you think paying providers on the basis of the number of additional people they get into work is fair to providers and the taxpayer?
We will always expect some people to move into work without our help, but we think we should pay providers based on the number of people they get into work above a certain level. This would deliver better value for money than previous programmes that often paid for people who would have found work anyway.
Do you think this is fair to providers and the tax payer?
This discussion is now closed. Thank you to all of you who contributed.
At present there is an all or nothing approach from many providers – the transitional stages an individual will go through – possibly including but not limited to permitted work, voluntry work and work trials are not always fully supported by providers. Infact they are often very uninterest6ed in truly helping someone nearer the workplace if it is not stright into full employment within a few months.
I fail to see how only paying for a specific type of work will help this and not lead to further and possibly worse creaming.
I found myself pregnant on my third interview – at this point discussion turned from finding and getting me into employment to a total lack of interest – I have three years with my provider and they are still uninterested in helping me secure any kind of voluntry or under 16 hours work placement. This is not helpful.
The most problematic impact of the outcome payment models is the ‘cherry picking’ of customers who are most likely to succeed with the minimal level of support. This marginalises those customers who face the biggest barriers to employment, like people with autism spectrum disorders. People with autism want to work and can achieve paid employment. However, their route to employment often does not fit within the delivery models, created by the current contracting methods which heavily emphasise paying by outcomes. This means that they miss out on achieving the goal of sustainable employment. Paying providers by outcomes can encourage providers to deliver better services but we would like to see very careful consideration, by the Work Programme, of how this can be varied to ensure all customer can be effectively included. As a small provider in the third sector, we have had a DWP contract for the last 8 years. Although we would welcome the opportunity to demonstrate our ability to achieve quality outcomes for customers with autism, we are concerned about the financial risk for small providers like us of being paid by outcomes. To support a sustainable specialist third sector market, the Work Programme needs to ensure that the supply chain management process understands the operational capacity of this sector and tailors terms and conditions to sustaining consistent performance outcomes in a way that is not financially prohibitive for smaller specialist providers.
Papworth Trust is fully committed to a system which is based on payment by outcomes, however we have some concerns on a system which is based purely on the number of people a provider helps into work. We believe the Work Programme provides a real opportunity to help those who are hardest to reach, but recognise that unless the price for helping that group is proportionately more there will always remain an issue of providers reaching for the ‘quick wins’ and parking others.
Through an integrated model we further recognise there will be a proportion of people who are able to find work independently and this reiterates the case that a mechanism needs to be in place for paying providers differently depending on the types of barriers to work they face.
An accelerator model, where fees increase as the volume of people in work increase, will have the same creaming affect. It also requires very detailed experience of the client outcomes for all client groups to be accurate, which is not yet available for many of the Work programme customers.
To help ease the cashflow of providers, we believe the DWP will need to consider a form of staged payments. We suggest that staged payments are seen as payments for every period (e.g. month or quarter) those clients remain off of benefits. If there remains a larger final payment at the end of the programme, we believe the incentive remains for providers to support clients to maintain sustainable employment.
I would support a system of staged payments which started when the client entered work and continued as the client remained in work for progressively longer periods, provided that the overall cost of getting a client into work didn’t snowball as a result. For example, payments would need to stop after a year or two, perhaps with a final “bonus” payment at the end for clients who were considered harder to place.
There would also have to be safeguards against providers shuffling a client in and out of unsustainable jobs that never lasted longer than a few months. Otherwise, a provider could “reset the clock” each time the client entered a new job and receive the initial staged payment again and again, without ever bringing the Work Programme placement to a conclusion by getting the client into a sustainably permanent post.
Finally, providers should not receive indefinite, ongoing payments merely for having a client on their books. The point of the exercise is to get people into work, not to cycle them through endless CV-writing courses.
Like others, I believe crude targets can drive unintended consequencies. I think they should be matched by an equal focus on qualitative client satisfaction – which could include a client-led ebay type system.
Not a good idea as who sets the standard ? Not all people are equal and those who maybe physically challenged would, due to no fault of theirs, end up with no pay or be unpopular. Also I have been aware of situations when a standard is to be set of the timing one of the fastest at whatever is used. There is no acknowledgement of individuality and disability in this piecemeal way of doing things. So another form of calculating wage must be found if possible.
Payment by outcomes must be structured in such a way that providers are actively dissuaded from ‘cherry picking’ the easy to place candidates thus generating outcomes but lacking quality. The Work Programme must be set up in such a way that it is financially viable for providers to give those furthest from the workplace the support they need.
There would need to be a measure which ensured that all eligible claimants were helped by the contracts and that the payment by results does not create a competition between providers for those people most likely to enter the labour market.
It is also critical that any client who has been in reciept of JSA for more than 9 months is made a priority for support given that it is proposed that after 12 months JSA they will lose an element of their housing benefit.
Another poor scheme, where are these jobs we keep hearing about what training skills are they offering, why should we pay for a jobs bureau when there are plenty of them already
Firstly I would echo the previous comment on ‘what about being fair to the individual’.
In my experience output related payments (in this case jobs) leads to corners being cut and the interests of the client group coming last. We all know (or all should know) of the methods sometimes employed to maximise outputs and this can lead to pressure being put on clients to take unsuitable, low quality, temporary or marginal jobs. If an output related model is adopted then great care needs to be taken to ensure that jobs are of suitable quality and pay and are not short term/seasonal where that is not what the client requires. As mentioned by previous contributors, a model scaled to pay (ie the more the pay the more the provider gets) and longevity of the post (last provider payment after, say, 1 year) would provide some safeguards. Having said that, my experience in goverment funded programmes dates back to the 80s and indicates to me that all moves to output related payments results in some degree of the all-important ’soft’ input being lost. In short, what many clients need is confidence boosting and self esteem input not shoe horning into work before they are able to sustain work.
What about fair to the person these organisations are supposed to be supporting?
As a highly qualified engineer with decades of experience, who also happens to be a disabled person, my encounter with a Pathways to Work training provider was disastrous (all my complaints were subsequently upheld). They lacked the slightest clue about access, disability or privacy concerns. They did at least have the professionalism to recognise that they were completely out of their depth and refer me urgently back to JCP, raising the question of why I had not been placed on ESA as soon as the complexity of my disability was understood by the DEA, who seemed more interested in convincing me I should apply for minimum wage positions. A more profit-oriented business with incentives for placement dangled in front of them might still have tried to shoehorn me into positions that were clearly unsuitable — I was explicitly told the system in place would not allow the provider to take account of the constraints my disability creates. Simply attending the interview at their inaccessible premises destroyed the next week of my life.
Disabled people face extensive discrimination in employment. I was forced out of my career with a ‘national champion’ because of their refusal to provide the flexible working conditions my condition requires, and this was probably a company significantly better than the average in accommodating disabled employees. Half a dozen different employment advisors have told me to ‘forget the private sector’, no matter that disability discrimination in recruiting is illegal under the DDA/EA. My encounters with the DWP/JCP/training provider system to date have convinced me that the existing system actively reinforces that discrimination rather than challenges it. A system that offers incentives for placements, without simultaneously monitoring whether people are being forced into positions inappropriate for their needs and abilities is worse than worthless, it actively supports perpetuation of discrimination in the employment of disabled people.
In order to ensure that Work Programme providers only receive payment for people who would not otherwise have found work, people should only be referred to them after a minimum job-hunting period of six months, perhaps longer. The only exception to this would be when a worker was considered hard to place – for example, if someone happens to have a disability, they should be referred to the Work Programme as soon as possible.
Payments to the Work Programme provider should be based on a percentage of the new employee’s salary. For example, 10% of the first £10k, 5% of the next £10k and 2% of the remainder. That way, they have an incentive to get people into the highest-paying jobs they can. To make sure that these jobs are sustainable, the payments should be staggered: one third when the new employee starts work, another third if they remain in work for a year, and the final third after two years.
There should be no payment for placing people in voluntary work or unpaid positions like work experience or internships, as these people would presumably continue to claim benefits. Training positions like apprenticeships do pay a wage, however, so the Work Programme provider should receive a standard wage dependent payment for them.
No premium should be paid to a Work Programme provider for hard-to-place workers (for example, disabled people) until those people have held their new posts for at least a year. Such a premium should be kept under cost control by making it a small percentage of total salary (perhaps 2%), with a minimum premium of perhaps £250 to maintain the incentive for lower earners.
I totally disagree with this. Welfare to Work is not about finding people the highest paid jobs, it is simply about getting them into WORK and enabling them to sustain that work. As a welfare to work provider, my focus must be on meeting a clients realistic and achievable short-term employment objectives. Yes – we also identify longer term aims and provide guidance on how achieve them in the future, but we are not there to pander to the unrealistic ambitions of clients who say ‘that job or nothing’. Harsh, but the real world.
Turning now to the suggestion of not paying for the provision of Volunteering or Work Experience. For many clients who are long-term unemployed, or indeed have never worked, in order to stand any chance of securing, let alone sustaining any job this first step is essential. I could list the benefits: Establishing a working routine, updating out of date experience, gaining an up to date reference – the benefits go on. However, arranging and supporting this still costs money – no – it’s not a job YET and they may well still be claiming benefits, but this is an essential piece in the jigsaw of taking someone from the dole queue to a point whereby they will be seen as employable and have the skills to sustain a job.
As far as “realistic and achievable” objectives go, if a Work Programme provider pushes a candidate to apply for a job that really is out of their reach, the employer will say “no” and the Work Programme provider will not get paid. It doesn’t matter whether the payment is fixed or based on a percentage of the achieved wage. Given that fact, there’s every reason to incentivise a Work Programme provider to help their client get the best *sustainable* wage possible. Among other things, it helps stop the provider pushing people into dead-end minimum wage jobs simply because that’s the easiest way of collecting a fixed-rate payment for each person they get into work.
Note that giving the provider an incentive to help their client secure a better wage does not let the client say “that job or nothing” – I agree with you on the “real world” part. If the Work Programme provider does let the client get away with unrealistic expectations, the client won’t find work and the provider won’t get paid.
Reading what you say about volunteering and work experience, you do have a point I hadn’t thought of. Perhaps the provider should receive a fixed payment for the first unpaid position they find for their client, but not for any subsequent ones? That would stop them cycling people through unpaid posts just to collect payments, but still let them achieve the benefits you list.
“Welfare to Work is not about finding people the highest paid jobs, it is simply about getting them into WORK and enabling them to sustain that work.”
And this is where concerns arise.
A 19 year old who left school at 16 with minimal qualifications, no ambition towards a career, and has never worked, then maybe any job will actually get them into the world of work, off benefits etc, and a stepping stone or incentive to move on to other jobs.
A trained engineer, such as David, who has a disability, is stymied by employers, not lack of skills or training or incentive.
Its not an “unrealistic” ambition to wish to remain in the job sector he is qualified to do, or a job of equal stature.
You seem to be suggesting that any job will do.
A “realistic and achievable” …”employment objective” for David would be with an employer who utilises his skills and experience, and can provide reasonable adjustments to assist David.
Not for him to be placed into the first available position, then as service providers pat yourselves on the back on having placed a “difficult” client.
You wont have placed him – you will have sold him short, denying his true potential.
Neither David or his disability are at fault here. He doesn’t lack skills, qualifications or experience to do the job, he lacks the employer who will employ him because of his disability.
As a service provider I feel you have shown your true colours – anybody in any job, as long as you get paid for it.
I take your point as to how I may have come across. Please believe that we do everything we can to support clients into the ‘best’ available job, provided such a job exists. Indeed a client on our ESF funded provision would certainly enjoy exactly the type of less overbearing service you describe. However, here we are talking about ‘Mainstream’ provision which is something altogether very different. This is a far less ‘tolerant’ environment and one in which we are being paid to support Jobcentre in ensuring the client meets their obligations under their ‘Job Seekers Agreement’ – as such, ‘ a job’ – ‘any job’ that takes them off benefits is more what it is about. I do welcome that more emphasis is now being put on sustainability of employment – we are not about ‘setting people up to fail’ and that was certainly a flaw in the previous programme. This does not remove the fact that people may have to accept jobs below their capability or ambition.
Thank you for your courteous reply.
I believe that there is quite a large group of unemployed people who need a less “tolerant” environment. (Group 5 outline below).
The problem is that with the Government denying that ill people are ill, they too will be on JSA, regardless of what their GP states.
In fact many, many more people will be either on JSA or the WRA group of ESA from February of next year, increasing by around 8,000 a week nationally.
They will then become part of that “mainstream”.
Pay per person will lead to parking and creaming.
Paying more for “harder to place” people who are disadvantaged by circumstances beyind their control, will lead to people being placed inappropriately, being forced (under the rules of conditionality)to undertake inappropriate activity, and resulting in people in an employment situation that does not reflect their talents and abilities, and may be detrimental to their health.
There are, to my mind, 5 groups of people;
1) Sick and ill, who will be on JSA, possibly ESA WRA.
2) Functioning disabled, who will be on JSA or ESA WRA.
3) Unemployed and seeking work, JSA.
4) Unemployed with caring responsibilities – Income support, CA, JSA.
5) Unemployed and not seeking work, JSA.
Group (3) will be obliging, group (5) will need quite forceful encouragement, and inevitably sanctions.
Group (2) will be frustrated by employers.
Group (4) may have limited knowledge of the help and support available, or the opportunities.
Group (1) will be a significant group, unemployable, unreliable, too ill to work.
I actually doubt that a solution can be found that allows service providers to “provide” without financial bias being an influencial factor.
I dont believe there is a solution that will benefit all concerns, except hoping that the Service Provider is capable of differentiating between the needs of each group, that there is voluntary participation for some groups, and for the voluntary section a “pay per activity” scale.
It is quite difficult, (though I really would like), to give a better thought out response.
However with the combinations of ESA, ATOS, and financial sanctions having such a big impact in the future, it is almost impossible.
I honestly think that the Service Providers will, as the Job Centre employees, become perplexed by the customers they have to deal with who are obviously too ill to work.
Any insight how you will deal with this issue?
I couldn’t agree with your analysis more. I have alluded to this in other posts and I like your five ‘categories’. I have suggested similar in a 4 category approach: ‘Can work – will work’, ‘Can work – won’t work’, ‘Can’t work – won’t work’ and ‘Can’t work – will work’.
Of course many challenges for both providers and government fall out of this; fair treatment of people with health issues being the biggest challenge of all. There are different factors such as: dignity in the way people are treated, respect and support for those who ‘want’ to work but face massive health challenges, acceptance and human treatment of those whose health condition is such that although with massive support they may be able to work, simply don’t want to and should not be forced to (I think there is general public feeling that this is an acceptable choice). You must then add in the ‘assessment’ of these individuals, which I think many Welfare to Work professionals currently find inadequate and inhumane. However to balance that, there are a small number of people who try to play the system and it is only right that they are identified – the public on the whole expect that also.
“I honestly think that the Service Providers will, as the Job Centre employees, become perplexed by the customers they have to deal with who are obviously too ill to work. Any insight how you will deal with this issue?”
Again, I agree and like you am unable to come up with a ‘silver bullet’ solution. Firstly there must be more confidence than presently exists in the assessment of clients. Secondly, I think the newly proposed payment model will help, as it will only reward providers for clients who have gone into and ‘sustained’ work (I understand maximum value will not be achieved until a person has been in work/off benefits for 2 years). However, whilst this will encourage ‘post employment support’ and not setting people up to fail, just to claim a job start, it still won’t overcome the possibility of ‘parking’ some clients in the ‘too difficult’ category.
Finally, contrary to popular belief, (and with the possible exception of ESF); unlike the heady days of the old ‘New Deal’ there is currently little money to be made from welfare to work provision. In the dying days of the last government it was recognized that providers were getting rich quickly at the clients expense and new contracts attempted to…[truncated by the system]
Finally, contrary to popular belief, (and with the possible exception of ESF); unlike the heady days of the old ‘New Deal’ there is currently little money to be made from welfare to work provision. In the dying days of the last government it was recognized that providers were getting rich quickly at the clients expense and new contracts attempted to address this. However, what was then introduced swung things too far the other way and providers are now very ‘wary’.
This forum was developed for ‘views from customer representative organisations to help [the DWP] develop the new Work Programme.’ Therefore I do not think that welfare to work providers should be putting forward their views here. They represent their own vested interests, not the interests of the ‘customer.’
Reading through the comments on all pages of this forum, there are very few if any comments from “customer representative organisations”, so relying solely on them would have made this consultation rather empty. There is plenty of comment (quite rightly) from individual customers and some comment (ball park 25%) from ‘providers’. As a charity with a far wider remit than our ‘welfare to work’ activity and who know the ‘customers’ well, I would suggest that we have plenty to contribute to this forum as our objectives are ‘customer’ rather than ‘profit’ driven.
I think there is one thing on which we can all agree (customers and providers alike). The most recent contracts let by the DWP (Pathways and Flexible New Deal) were a total shambles. I would have though any input from whatever direction that is ‘constructive’ is worthwhile. For the most part this forum is proving to be a very effective form of dialogue from which the government can learn a great deal.
Remember that to a certain extent you must accommodate the “vested interests” of providers; otherwise there will be no providers bidding for the contracts! I think the old expression ‘throwing the baby out with the bath water’ sums it up rather well.
This is unworkable. In creative media ‘jobs’ are often hard to define. PAYE employment is becoming impossible in this industry. Results are not always apparent – or economic. We often have young people whose lives are altered completely because we provide motivation and hope – rather than the prospect of rejection, crime and prison.
I’m very concerned that civil servants are now pre-occupied with financial returns without ever considering the social value of voluntary employment or training.
When considering the impact of payment by outcome on the performance of sub-contracted provision, it is interesting to note the House of Commons’ Public Accounts Committee report which said that private sector providers “seriously underperformed” and had lower success rates than Jobcentre Plus. This would seem to commend the JCP model, which I am pretty sure was not based on payment by outcome.
Perhaps it’s time to move away from complicated reward payment structures…contracts could still be tightly performance managed (and terminated if key vulnerable groups were not adequately represented in employment outcomes, or if job sustainability was not satisfactory). This might end the tendancy towards “creaming” and “parking” that exists in some (but not all) sub-contracted providers, brought about by the focus on the reward paid per job outcome.
NB sorry should have been specific – the report was about Pathways to Work.
There is a real danger with paying providers for getting customers into work, that those furthest away from the labour market will be side lined for customers who can provide a ‘quick win’. Customers who will be entering the work programme as a result of the IB migration will have numerous barriers that will be difficult to address and could be particularly expensive to move into work. Indeed with cases like this, the provider is likely to have to work with the customer for considerable time before seeing a return on their investment. What will be in place that ensures that the provider does actually do something with these customers? What will stop the provider from just ‘going through the motions’ with difficult customers?
Surely, in a away, creaming off the quick wins is actually quite a sensible way to address the problems? Every person back in work is one less person paid by the state. Once the easiest cases are resolved, the harder ones remain. So progressively the provider will have to get better at this work. Which naturally follows with the learning curves in these providers.
Not necessarily. In a normal economy, there’s a constant flow of people becoming newly unemployed. That raises the possibility that a Work Programme provider could make an easy profit from the corresponding supply of people who constitute “quick wins”, whilst only going through the motions with the rest. That easy profit might not be the maximum profit possible in the long term, but would be a faster, safer return on investment, so the people deciding what to invest might well decide to settle for it. To avoid skewing the business case that way, you have to give the provider an extra incentive to help those harder cases into work.
There would have to be a major emphasis on providers getting people into work that is long-term.
Providers should be paid (not full fee) for clients who are still in work after six months, but not get the rest of the fee unless the client is still in work after a year.
This would mean that clients continued to get support from providers, who only get paid in full if employer and employee are satisfied. Providers would, therefore, not gain from placing people in unsustainable employment.
Clients moving frequently into & out of unsuitable work might otherwise be a money-making opportunity for some providers.
Payment made for simply placing someone in employment should be set at a minimum level, as this would prevent reliance by providers on temporary work via agencies. Further payment should only be made when the client has been in sustained paid employment for at least 1 year.
The total available for each client should be based on the barriers they have to achieving sustained employment – differing amounts for someone out of work for a year, out of work for more than 3 years, out of work because of disability or health problems, etc.
For those with the biggest barriers, placement within voluntary work should enable providers to claim a reduced amount (say 50%) of what they would initially receive for placing someone within paid employment. If the client stayed within voluntary work for at least 1 year, the provider would be paid a reduced amount (same percentage received for initial placement) of what they would normally receive when a client was in sustained paid employment for 1 year.
If a client in this voluntary element achieves paid employment while engaged in voluntary work, the provider would be paid as follows:
1.6.11: Client starts voluntary work. Provider gets reduced initial amount.
1.9.11: Client starts paid employment. Provider gets difference between reduced initial amount and full initial amount.
1.6.12: Provider gets reduced ‘1 year amount’.
1.9.12: Provider gets difference between reduced ‘1 year amount’ and full ‘1 year amount’ (Assuming Fred hasn’t been fired!)
For the vouluntary placement, the provider would have to provide evidence that voluntary work was the only reasonable option available and explain how the voluntary work engaged in would lead to a clear and substantial increase in the client’s chances of achieving sustained paid employment. The vouluntary work element would need to be the exception rather than the rule – providers could have levels set, restricting the number of clients who would enable payment to be made for providers who placed clients in voluntary work.
If a provider simply felt that someone would benefit from voluntary work (to gain work experience, etc) but couldn’t show it was the only reasonable option, the provider would still be able to place someone in voluntary work for the desired reasons, but such placement would attract no payment.
Without some kind of voluntary element where a provider can be paid, they may see little reason to concentrate on those with the biggest…[truncated by the system]
How is someone supposed to survive if they are going to do voluntary work?
Clients would still be in receipt of benefit while doing voluntary work, so they would not be at financial loss. Any travel expenses would have to be met by the provider. This would be similar to what happens on the work experience element of Flexible New Deal, but offers clients greater work experience.
So would people get the equivalent of the minimum wage? And would they be forced into this with punitive measures if they did not want to do the “voluntary” work? With this model, the government ends up paying people to do a job and paying again to the employer for employing them. It is also amounts to forced labour, and if the minimum wage or equivalent is paid, the person will might remain in poverty. If it not paid at minimum wage or equivalent then surely this would not be legal.
I do not know whether paying commission to service providers is fair on anyone. It appears to be an attractive model at first, until you think about. It puts pressure on the service provider to match a client with a job, otherwise they don’t make a profit. This means that providers effectively act as employment agencies, persuading client’s to take jobs which might not be suitable for long-term employment, and persuading employers to give people jobs, candidates that those employers might not otherwise consider. In this triangle, the service provider might make their profit, but the client might end up with a job that they a ill-matched to succeed in, and the employer might find that the employee doesn’t fit-in and needs a lot more support than anticipated.
Different “tariffs” should be paid to providers based on
1)how much support is required
2)That they are placed in a job
3)The subsequent time they have spend the continous employment of that job.
An interim payment at a percentage (greater than 50%) made when someone is placed in a job on the basis of points 1&2. If that person remains in that job for i.e. 6 months they get the balance. Where a provider “proves” placements have resulted in people being employed for a year following there endeavours a further discretionary “bonus” payment could be paid. This last element would provide further incentive for companies to ensure excellent in the support and efforts they deploy for people finding work in the longer term.
Sustainabiliy is an issue especially for thos harders to place and furthest from the work market. There needs to be consideration in the payment structure to incentise all partners to deal with this issue. Otherwise you will get a number of repeat referrals back to the begining of the service, with a high cost burden in the long term for the tax payer.