From 2012: Private Eye on the Work Programme’s Future Failure

In their issue for the 10th -23rd February 2012, Private Eye discussed a government report predicting that the work programme would fail, and put forward ways in which it could be bailed out. The article ran:

Welfare reform
Nice Work

The National Audit Office (NAO) report on the coalition’s £5bn Work Programme (under which private contractors are paid to get people off benefits and into work) predicts that the scheme will fail. But it also suggests how the firms who run it might be bailed out.

The programme, the brainchild of work and pensions secretary Iain Duncan Smith, is meant to avoid the “limited success” and “disappointing … performance” of past initiative thanks to payment-by-results. Contractors fund the scheme up front (hence the dominance of well-capitalised private firms in the programme) and are only pa9id when their clients find and keep a job.

The NAO thinks there is a significant risk, however, that Duncan Smith’s target of 40 percent of the mainstream unemployed finding work under the scheme is “over optimistic”. History, it says, suggests 26 percent is a more realistic figure. Payment-by-results targets that are too optimistic mean that: “It is possible that one or more providers will get into serious financial difficulty during the term of the contract.”

If firms do start going bust Because they don’t reach targets, what are the options? Most, according to the NAO, involve some form of bail-out. “It is likely that providers will seek to recalibrate the prices and other contract conditions during the lifetime of the contracts,” it predicts. In other words, the big contractors will try to renegotiate easier deals. Though the NAO says the government must be “robust in its negotiations and maintain competitive tension between providers”, in the past the Department for Work and Pensions has helped by offering better terms and referring “more easy-to-help participants”.

The second option is to let a provider go bust and give its contract to another firm. But the department has a limited number to choose from and, as the NAO says, “the rates offered to the new provider will be subject to renegotiation”. Easier terms, in other words.

The last option is for the department to bring the work in-house; but with all its welfare-to-work eggs in the private contractor basked, it doesn’t have the machinery to do this.

Recession and rising unemployment make failure by a contractor even more likely; and the auditors warn that while the government “has plans for dealing with a single prime contractor failing, it has not developed plans for dealing with multiple providers failing within and across geographical areas.”

Whatever happens to the jobless, some people cannot lose, however. As the recent accounts of Work Programme contractor A4E show, the firm lived up to its slogan of “improving people’s lives” by giving outgoing chief executive Bob Martin a £1m exit bonus on top of his £300,000 salary.A4E boss Emma Harrison did even better. The firm increased dividend payments by 400 percent, paying £10m to shareholders in 2011. As she owns 85 percent of the shares, most of this went into her pocket.

Subsequent events have borne this article out. Johnny Void in particular has published numerous articles describing how the workfare schemes have comprehensively failed. Mr Void has shown that many firms have effectively falsified their successes by only taking on people, who could easily be found a job, precisely as predict in this article.
In fact, you are far more likely to get a job by simply looking for one yourself, than by going on workfare.

The article shows further that the NAO predicted all along that the scheme would fail, and the government would have to bail it out for it to stand a chance of working.

And the case of A4E and its bosses, Bob Martin and Emma Harrison follow numerous other case where the chiefs of firms that have massively failed in their hype, have awarded themselves massive bonuses and pay. Well, the trend was set with the banks, and where they led, other industries followed. Private industry flourishes, and only the taxpayer and the unemployed get exploited.

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3 Responses to “From 2012: Private Eye on the Work Programme’s Future Failure”

  1. sdbast Says:

    Reblogged this on sdbast.

  2. From 2012: Private Eye on the Work Programme’s Future Failure – Beastrabban’s Weblog | Vox Political Says:

    […] In its issue for the 10th -23rd February 2012, Private Eye discussed a government report predicting that the work programme would fail, and put forward ways in which it could be bailed out, writes the Beast. […]

  3. rainbowwarriorlizzie Says:


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