A speech by the Rt Hon Chris Grayling: Minister for Employment.
I would like to welcome you all today, the week when we reach an important milestone as we mark the first anniversary of the Work Programme. All of you here know the difference the initiative is making to people’s lives. Some of those people are with us today - employers with a motivated new employee, and employees with a bright career ahead of them. It’s great to see you all.
Over the past year I have visited every prime provider across the country and almost every region. Tragically many of the stories the same, “I’ve been unemployed for years”, “I’d lost confidence”, “I didn’t think anyone would employ me”.
But there is hope. Time and again I have met people who have either made it back into the workplace, often against their expectation, or those whose lives have been turned round and are starting to believe again.
One such an individual I met was Stephen Stubbs, a partially sighted man from Darlington in the North East. When we met in February he had sent hundreds of jobs applications but had had no success in making a connection with employers. He felt there was no one out there to help him and been without a job for 16 months.
At that stage he had just made connection with his local provider and was beginning to see the difference they made.
Within 8 weeks Stephen secured the first two interviews of his entire job hunt. The first was unsuccessful, but the second resulted in a job with the Student Loans Company. He credited the turnaround in his fortunes to the support of his adviser at Triage in Darlington; they offered him training, interview preparation and advice that transformed his approach to job seeking.
Stephen said it best: “They do not sit back and let you do all the work. They will actually sell you to employers. It was them who provided me with the links to the Student Loans Company, which allowed me to apply for the job; otherwise I would have missed it.”
You should all be proud of giving people the chance to realise their potential.
Over the past year you have all been part of a revolution. One that many who watch this industry are still coming to grips with. It’s a simple proposition. You do what you believe will work. But we won’t pay you unless you succeed, not just in helping someone find a job, but in making sure they stay there too.
There is no payment by results scheme quite like it anywhere in the world, as far as we can establish. And many other countries have beaten a path to our door to find out more.
Now I want to make one thing absolutely clear.
There have been some unwelcome headlines over the welfare to work industry over the past few months and that’s not something any of us can shy away from.
But the issues that we all know about were not about the Work Programme. It belongs to the future and not the past.
Over the past week alone we have had several reports that focus on the Work Programme. We were pleased that the National Audit Office recognised the steps we had taken in designing the Work Programme to make sure it looks after every pound of taxpayers’ money that is spent on it.
That reinforces just how different the Work Programme is from previous schemes.
We know that we are putting the onus firmly onto our providers to deliver results. And to put their own money on the line. There are no day one bonuses in the Work Programme - instead we have long term in work support to make sure people don’t just get into work - they stay there.
And for the first time we require providers to set out minimum standards for participants along with a complaints system to make sure they are treated fairly.
It’s been ironic in the past few weeks to see many in the media demanding to know where taxpayers’ money is being spent, whereas of course now most of the money being spent is being provided by the industry and not by us.
So what I want to do today is to set out for you where we have got to and where I believe we will be heading over the next twelve months.
Let’s start with the progress you have made so far.
The Statistics Act sets pretty clear rules within which we have to act. And that means making sure the data is properly collected and adequate for the job before we publish.
But there are some things I can definitely say about the Work Programme.
The Work Programme had a good start last summer and autumn, a difficult winter when the labour market was tough, and is enjoying a pretty good spring.
We now have emerging information from providers about what has happened to the first group of people who joined the programme in the first three and a half months last summer. If you include everyone, including those in the hardest to help groups, the job entry rate is approximately 22%. That adds up to around 60,000 jobs. When you take into account the people who have joined the Work Programme since the end of last September, the total number of unemployed people placed in jobs will now be well on the way to 100,000.
We don’t yet have reliable data about the number of people who are staying in jobs once they have started, and so are earning the first outcome and sustainment payments for providers, but it is already clear from feedback from the front line that a substantial majority are staying in work once they get there.
Bear in mind that over some twenty months of the Flexible New Deal, only fifty thousand people - around 10% - managed to stay in work for six* months. People I meet say that this is an industry that is well ahead of where it was at the same stage with the Flexible New Deal.
You may remember that the recent NAO report cast doubts on the Work Programme’s ability to get as many people into work as expected. Their estimate was that of the conventional adult job seekers, only 26% would get into work and stay there. We know from data published by the industry that the job entry rate for all participants including the hardest to help is already 22%. The early indication I am getting from talking to providers about what is happening to those conventional adult job seekers - excluding the hardest to help - is that the proportion of job starts is already well above 26% in much of the country after nine months of a two year programme.
Now I don’t want to overplay this. It’s early days. The job market is still difficult. The industry is saying that it’s more challenging than they expected, and that achieving goals will be tough. But it’s been a decent start.
We know there are also big variations between providers. The range of performance between different providers on job entries goes from 18% to 26%, according to data from the industry itself. That’s a big gulf. Our leading providers are well on the way to achieving the goals we set out in the Work Programme tender documents and are blazing a trail for others to follow. But some have a lot of catching up to do.
Despite the tough jobs market I expect Work Programme providers to pull out all the stops to get people into sustainable jobs. Remember that each working day JobCentre Plus takes in something like 10,000 new vacancies. And that this is estimated to be around half the vacancies in the economy as a whole. That means millions of million people will get new jobs in the coming year. Your job is to make sure that the long term unemployed are among them.
I won’t settle for second best, and nor should those relying on providers to help them get their life back on track. It’s not acceptable that some providers should only be performing two thirds as well as their counterparts. Those who have already fallen behind should expect to feel the heat in the months ahead.
Competition is an important part of the Work Programme. I am not sentimental about who does what - my single goal is to help unemployed people back into work. This scheme never was and never will be about providing an income stream for charities or the private sector. And competition means that if you’re not coming up with the results, someone else will, and they’ll get the work.
I have no doubt that over the coming months, as organisations in the Work Programme find themselves falling behind their competitors, and sometimes drop out altogether, that some people will seize upon this as a sign of failure in the programme.
They will be absolutely wrong. It is a sign that we are breaking through to a new level of performance, of success in getting the long term unemployed back to work. The black box is specifically designed to chase out best practice, to make sure that the best rise to the top.
So I’m completely relaxed about the fact that some organisations will drop out of the Work Programme, while those that perform will get the rewards.
As the programme beds in we will take swift action to ensure that jobseekers are best served and if a provider is not living up to expectations we will increase the number of referrals to those who are. I make no apology for setting a tough challenge to providers and demanding the very best, so my message today is simple: it’s time to deliver or we’ll find someone else to do it for us.
We always expected there to be movement in the supply chain. But we also want fair treatment. That’s why we have launched the Merlin Standard. A set of behaviours prime providers are expected to adhere to in their relationships with their subcontractors. It is designed to encourage excellence in supply chain management by prime providers, to ensure fair treatment of sub-contractors and development of healthy high performing supply chains.
The other criticism is that we are somehow parking the hardest to help. Nothing could be further from the truth.
We have a payment system designed in a way that incentivises providers to help harder to reach claimants.
And ironically, because of the mix of people coming through the Incapacity Benefit reassessment process, we have providers saying they are not getting enough of the hardest to help people. So they are hardly planning to park them once they get them.
In fact the truth about ESA referrals is very straightforward. We have fewer ESA participants in the harder to help groups than expected. But we also have far more JSA claimants in the harder to help groups that expected.
In the middle, £6,000 bracket, which includes most of the JSA and ESA harder to help groups, we have more people on the Work Programme than expected. In the smaller, £14,000 bracket, we have fewer than expected.
And no one is being left at home without support.
Everyone on ESA who wants the support provided by the Work Programme has access to it any time they want. Indeed everyone in the Work Related Activity Group is sent for an initial induction session with providers to offer them the opportunity to volunteer.
What has happened is the mix of people coming through the incapacity benefit reassessment is different to what we expected. We have more people fit for work, and moving to JSA. We have more people needing long term unconditional support than expected. And those in the middle group, who would expect before too long to be mandated to the Work Programme, have proved to be sicker and further from the workplace than we expected. So it will take far more time than we predicted for them to be ready to make a return to work.
It is no more and no less complicated than that.
But there are today something like 700,000 people on the Work Programme. There is no shortage of people who need the help of this industry.
The Work Programme is a vital part of our welfare reforms, just as we are making sure that people will always be better off in work than on benefits, we need to make sure people have a real chance to gain sustainable employment.
The importance of the Incapacity Benefit reassessment process is that we need to see who can return to work, even if it is in a different role to before. The latest figures we have shows that 37% of those reassessed are fit to work, some of them have been on benefits for 15, 20 years and are now having to find their way through a jobs market totally different to the one they knew two decades ago. Your efforts, combined with a more flexible approach through Jobcentre Plus is providing the most personalised back to work support there has ever been.
We simply cannot afford to have people languishing on benefits.
Your organisations are in the best place to forge links with a local jobs market and scoping out opportunities with employers. Last year in a speech I said “there is no limit to our aspiration”. It was true then and remains so now.
I was delighted to hear in Edinburgh recently that Ingeus worked with Nandos as they were opening new premises to offer not one or two candidates but 35! Ingeus provided the employers with an end to end recruitment process and now 15 people, half of the entire staff at the new restaurant, grillers, cashiers and serving staff have all been recruited from the Work Programme. The local manager believes those people from the work programme bring with them such diverse skills, experience and the desire to work that they are his best employees.
Since its launch a year ago we have expanded the Work Programme to help other harder to reach groups.
We took action to boost the prospects of the young unemployed. Through the Youth Contract we are offering employers a wage incentive of £2,275 to take on a young person from the Work Programme, and providers say there are already signs that more companies are looking to recruit from the scheme as a result.
We also launched support for prisoners, ensuring that the Work Programme will support them from the day they are released. Getting former offenders into work is absolutely crucial to tackling crime. The rate of reoffending in Britain is far too high, and we had to come up with solutions to reduce it. In the past we just sent people out onto the same streets where they offended in the first place with virtually no money and very little support. By getting you to find and keep them in employment we are working to change that.
Yet some people still ask what the Work Programme is all about. What do we mean when we say it is a black box scheme? I like to use this story from Whitechapel to explain.
A group of 25 Bengali women, all referred by their Jobcentre Plus to the Work Programme not only devised a way of getting work, but also contributing to their community and potentially saving the NHS thousands of pounds a year.
The women keen to become self-employed and had been attending weekly enterprise sessions run by The Twist Partnership. The sessions sought to inspire people to use their experiences to find a way into employment. The women realised that together they all knew of the health problems and social isolation that many Bengali people in London suffer, especially the older generation.
They knew better than anyone the reasons why bad diet, lack of exercise and ignorance about health services continue to be problems for the Bengali community.
The group approached doctors at the Royal London Hospital and received enthusiastic support. Aided by the Team Up initiative run by the London Deanery which aims to get Junior Doctors involved in community projects and with the help of a grant from the medical charity London Catalyst, they launched a Healthy Women’s Club.
I met them just after they launched the project back in March and was impressed by the way they had used their skills and experiences to create a real grass roots organisation. And to provide their community with a much better platform to find work.
This is what the Work Programme is all about. It’s about leaving it down to providers to decide what help will best serve the needs of the individual - and only paying if it works. It’s about delivering a personal service that gives each individual the best chance of finding work. I’ve seen the way it is transforming lives, and the positive first steps we are making. No one’s suggesting it’s going to be easy, but work never is easy.
The Work Programme started against a hugely difficult backdrop in the labour market.
There’s no doubt that it makes your job more difficult.
It also started in double quick time.
People across the industry made huge efforts this time last year to deliver change at a pace that caused real surprise across Whitehall. They didn’t think it could be done. But it was.
But the real work has come since then.
And I think you’ve made a pretty good start.
But there is a lot further to go.
Not everyone is going to make it.
But what we are doing is making this country a world leader for Welfare to Work.
We are providing a vehicle to bring forward all the skills and innovation in your industry.
Yes it is survival of the fittest.
But it is also survival of the best.
Best at getting the long-term unemployed into work.
Best at transforming lives.
And that’s something we should all be proud of.
*An inaccuracy in the original published copy of the speech was corrected at time of delivery. This copy has now been amended.