Four recommendations for a new approach to welfare-to-work to replace the Work Programme: specialise; think local; encourage risk; invest in evidence.
At the start of the summer, I was invited to give evidence to the Work & Pensions Select Committee inquiry on Welfare to Work. As part of our work on Innovation in Jobs, Nesta and Inclusion have been exploring the current employment support system, and we’ve found some big gaps where there’s a need (and an opportunity) for new approaches. The invitation was a great prompt to draw this thinking together into some practical recommendations.
The Work Programme - the main welfare-to-work support scheme - is doing fairly well compared to previous programmes. The private sector contractors who deliver the Work Programme have also found new ways to ‘sweat the model’, delivering the same sort of support more cheaply, although I was surprised by the relatively limited use of digital solutions and data.
On the other hand, we found very little in the way of genuine innovation - doing different things, as opposed to doing the same things better. In fact, there are significant structural barriers to more radical change. This wouldn’t necessarily matter if the current model worked really well - but it doesn’t. Even after completing two years on the Work Programme, only around a quarter of participants find a sustained job. While this compares well to earlier schemes, it’s still not all that impressive.
85% of disabled people on the Work Programme don't end up with a job. We have to get radically better.
There are particular problems for people with disabilities or long-term health conditions, especially mental health conditions, and for people over 50. After two years on the Work Programme, around 85% of disabled participants still don’t have a job. If we want to see better outcomes for these groups, incremental improvements to business as usual aren't enough. We need radical new approaches.
Here are four things the Department for Work & Pensions could do to stimulate this kind of step change.
Groups such as single parents, older people and people with long-term health conditions face particular challenges in getting and keeping work. The evidence shows that specialist services can do a much better job in reaching these people in the first place, and then helping them move into work in ways that are much better tailored to their individual situation. For example, the Individual Placement & Support (IPS) model has been shown to dramatically improve employment results for people with mental health conditions, but it still hasn't been widely applied in the UK. There would need to be enough funding for these services to be done properly, but the savings to the health and benefits bill from better results for these groups heavily outweigh the extra cost.
The existing Work Programme contracts are big beasts - large amounts of money, covering large areas of the country. Smaller, more locally-focused programmes would open up the system to new entrants, who can bring genuinely fresh approaches - although we know that government isn’t always great at buying from newer, smaller providers. Local schemes would also make it easier to build end-to-end relationships with schools, colleges and employers, so that support is really tailored to local employment conditions, as well as stronger links with other services such as health or social care.
If you want to see innovation, you need to pay for it! Nesta has pioneered the use of challenge prizes, and this method could easily be applied to generate new solutions to specific employment problems - for example, how to get people over 50 back into work. We’d also recommend ringfencing 2.5% of all welfare-to-work contracts for R&D - to develop and rigorously test new approaches.
To provide people with the right support, we need much better evidence on what works. At the moment, despite the huge amount of research in this area, and the big gaps in performance, there is very little use of evidence in employment support - we found that most providers rely on “gut feel”. There's an urgent need for a What Works Centre for the Labour Market, along the lines of NICE in health or the EEF in education.
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