26 Feb 2012
It has, to put it mildly, been an interesting week in the welfare to work sector. I even found myself whisked to BBC TV Centre for a live interview so I could add commentary to the war of words raging across the Internet and media. I don’t know if I bring anything new to the debate, but here goes!
I have worked in the employment market for over twenty years and in the welfare to work sector for three. Much has changed, however, certain themes have not.
Employers may not always select well, however, hiring the best people available to them is always their objective. Some prospective employees don’t have the required skills. Others may not know how to sell what they offer as a candidate. Still others get jobs but do not keep them, as they are ineffective at fitting in within the workplace. And finally there are people who for any of several reasons prefer unemployment to the work opportunities available to them.
Meanwhile, government is always looking at ways to reduce unemployment. They do this because it feels the right thing to do given their electoral mandate and the normally well-meaning intentions of the politicians. They do this because unemployment is socially corrosive; it is also very expensive. And in a democracy governments experiencing high unemployment tend not to get re-elected.
Government can employ civil servants to deliver solutions, or it can outsource. Where a provision is tightly specified a competitively procured contract will normally drive down delivery costs. However, the risk of tight specifications is that the deliverers can be mandated to provide services that are ineffective, and it can take a long while and considerable wasted resource before the government identifies the need for change and makes it. An alternative is to pay by results and not specify how these are to be achieved. Darwinian competition amongst providers will lead to innovation and improve the chances of successful outcomes. This is the model of the current Work Programme. Of course whatever model is chosen, the quality of outcome and value for money will be dependent on the procurement process and the extent to which there is genuine competition. Executed well, providers will generate profits however these should be far less than the additional value obtained by the customer.
The current political furore over work experience is somewhat ironic, as it is the Work Programme itself that is far more coercive than the workfare programme so much in the news. To me it boils down to a very simple question. To what extent do we as a country accept unemployment on benefits as a lifestyle choice? Notwithstanding fraud, a life on benefits is not comfortable. If one believes that it is the right of a citizen to choose this over work, then anything other than opted into training and support will be considered an injustice. If one believes that welfare should be no more than a safety net, enforced job-search and employment will be considered reasonable. If a person’s skills, domestic circumstances or location limit the quality of jobs open to them then so be it.
I have real sympathy for A4e. Human beings make mistakes, some are foolish and some are dishonest. When an organisation has thousands of staff, things will go wrong from time to time. If management step in and deal with the problem in a way that is generally regarded as correct, that should be the end of the matter. A4e have succeeded because over the years they have done a lot of things well. Destroying their business will do nothing to improve welfare to work provision. It will simply ruin one of the more experienced and effective large scale providers and deter talented managers and organisations from working in the sector. I don’t begrudge Emma Harrison her dividends. If procurement has focused on the best provision why should one complain when an organisation has found a way to meet its customer’s demands better than anyone else and also make money. If procurement is flawed or the fraud systemic then there is cause for serious repercussions. As matters stand today this does not seem to be the case.
So what next? I hope that the debate moves from A4e, Emma’s dividend and Tesco to our attitude to skills and employment. Our economy is weak, we have a less skilled population than is ideal and we are facing ever stronger global competition. If we don’t address these problems our employment choices will be the least of our problems.