Archive for May, 2010

Richard Johnson, managing director of Serco Welfare to Work, on how the new coalition government may affect the welfare-to-work sector

“Lord Freud has now spent over three years thinking, talking and planning for the next generation of welfare-to-work services. We saw much of his work clearly set out in the Conservative Manifesto, and then transposed into the Coalition Agreement.

I think there are potentially some enormously exciting opportunities created by his proposals. There is the potential for the extension of intensive assistance to far more people currently trapped in social exclusion as a result of their unemployment.  By recognising the enormous costs of maintaining people long-term on benefits, and by creating a mechanism for using savings in those costs to fund service delivery, we are untapping considerable resources to extend the scale, the scope and the depth of our provision.

This is perhaps an opportunity to take out some of the unnecessary complexity in the ‘systems’ that surround unemployed people. Perhaps this is a chance properly to focus assistance on responding flexibly to the individual needs of people accessing welfare services. We could sidestep the agendas that so get in the way of people securing sustainable, independent futures. We could ensure that all the expertise in our frontline delivery is properly aligned, with real value derived from the money that is spent, with duplication removed and meaningful outcomes maximised. We could even start to see welfare to work finally join up, in funding and delivery, with associated services such as criminal justice, housing and health. Call me a dreamer, but we might even get some coordination between employment and skills.

There is a chance to create something here that brings public, private and third sectors into positive partnerships. Making that ‘p’ word work is, I think, dependent on how these services are contracted and subcontracted. It also requires a sea change in the transparency in this ‘industry’, with real performance data shared openly. Currently, Serco are the only prime contractor to publish weekly performance reports. How else can we drive up the quality and the performance of our services (and these two things are inextricably linked)? How else can we hold this provision accountable for the lives of the individuals we want to reach?

We are moving, I believe, towards two distinct tiers of contracting – possibly more. We may have a smaller number of prime contractors. Their contracts will be outcome-based, with payments linked to long-term sustainability. Below this first tier will be networks of subcontracted provision, which may in turn also subcontract. The challenge, of course, will be to ensure that:

  • These tiers are adding value and not simply creating additional overhead;
  • Expertise is drawn in to address the full range of complex needs falling out of social exclusion;
  • Subcontracts drive performance through partnership, with mutual benefits realised for both prime and sub;
  • Funding arrangements are ‘fit for purpose’ probably with a variety of payment models depending on who is delivering what at which tier;
  • The interface with Jobcentre Plus, and other public bodies, is facilitative and focused on jobseeker need.

It would be really nice to think that this new contracting framework could also mitigate ‘creaming’ and ‘parking’. As far as I am concerned, this is probably its most exciting implication. Under our current welfare to work contracts, providers are able – possibly are even incentivised to – focus on the people closest to work and purposefully ignore those a considerable distance away. The model we designed at Serco attempts specifically to minimise the potential for this cynical prioritisation of service delivery and to free up resources for people most in need, but it is hard to escape the necessity to manage within finite budgets. Using the savings from reduced benefits payments, the so-called AME/DEL switch, may well go a long way to completely change this perspective. Once you start to recognise that this individual spending a lifetime outside of employment is costing so very, very much in that lifetime of benefits (never mind the social and fiscal costs of them and their family to all other social/welfare services), then you can also start to demonstrate the real social return of investing in expensive, quality, outcome-focused solutions to very complex personal problems.

The devil of all this is, of course, going to be in the detail. We face a very tricky transition now between existing provision and the new Work Programme contracts. We all recognise the weaknesses in our current systems, but we must be very careful not to lose all the experience and commitment that also currently exists. Organisations have invested heavily in recent tenders. It would not be a sensible time to ignore the cost of that. A new infrastructure was put in place for the first phase of FND and is still developing. Colleagues in Jobcentre Plus have managed with exceptional professionalism the pressures of the last 18 months, and now face the challenges of significant change along with us.

It is going to be important to keep sight of the opportunities that are being offered here to shift fundamentally the impact of welfare to work. Change is rarely easy. It is eased, however, when people work together, when there is openness and honesty, and when there is such a clear and strong shared objective.”


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Welfare reform: the quiet man gets loud

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Ixion Holdings Ltd – a Not-For-Profit organisation – acquired Computer Gym (UK) Ltd on 30th April 2010. Ixion specialised as a contract managing agent in brokerage, skills, employer engagement and new media. Its acquisition of Computer Gym means that  Ixion has now added both operational delivery and an extensive track record of provider services to its portfolio.

Surrey-based Computer Gym (UK) Ltd has been rebranded as Ixion CG Ltd and delivers a portfolio of market-leading Employability, Reducing Reoffending and Workforce Development training initiatives.

Darren Coppin, Vice President of Ixion CG, stated, “This acquisition is a considered strategic response to a market sector that needs to benefit from demand-led, fast-acting, larger-scale contractors and subcontractors that have a track record of delivering results for funders and the beneficiaries themselves.”

John Govett, Ixion Holding’s CEO, stated, “the group now has the scale, capacity and credibility to transform business outcomes and peoples’ lives across entire learning journeys and the UK. The complementary skills, services and track records will count in the ever competitive world going forward and the scale, governance and support we both now have from our parent, the £140m turnover Anglia Ruskin University, is a real asset in the changing public sector environment that we work in.”

Tony Wallace, Managing Director of Ixion CG confirmed that, “the company aims to support large Prime Contractors and local third-sector organisations in unlocking the potential of unemployed, ex-offender and working individuals through training, to help drive forward the UK economy as a whole.”

Contract Group Head of Communications Amanda Planting on Amanda.planting@computergym.co.uk for any further information, or click on this link: http://www.ixionholdings.com/tabid/84/Default.aspx .

Well done!

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The report “State of the Nation” was unveiled this morning.  It is a damning assessment of life in the UK. The Government will use it to inform policy decisions as it tackles poverty and worklessness

The Key points

  • almost one in ten people live in persistent poverty,
  • There are 800,000 more working age adults in poverty than in 1998/99
  • 1.4 million people in the UK have been on an out-of-work benefit for nine or more of the last 10 years
  • 670,000 households in the UK are eligible for benefits and tax credits of over £15,600 per year
  • health inequalities are higher now than they were in the 1970s
  • there remains a large gap in educational achievement between children from rich and poor backgrounds, with a 39 percentage point gap in gaining 5+ A*-C GCSEs between those living in the most and in the least deprived areas
  • 5.3 million people suffer from multiple disadvantages in the UK
  • people living in the poorest neighbourhoods will, on average, die seven years earlier than people living in the richest neighbourhoods

Against international comparisons the report concludes that income inequality in the UK is at its highest level since comparable statistics began in 1961.

In the UK, the proportion of children growing up in workless households, and the proportion of young people not in work, education or training, is higher than in almost any other European country.

Many have rightly concluded that we are in for a hard time as we pull ourselves out of the economic crisis, however this report suggests that for many they were already having a hard time ……..

...the credit crunch?

what credit crunch …? they have never had credit, they have always been poor, disadvantaged and left behind…

Have they have been failed by successive governments ……. or have they been failed by  providers…(?).

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Who are they and are they being effectively used?

We need a suite of specialist menu provision which provides expertise in areas that we otherwise would not have. The presumption is that these providers are already funded or that their services can be ‘spot-purchased’ thereby providing added value to the client journey

… is this really happening and are we seeing real innovation?

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Under the previous administration the preferred model for funding welfare to work provision was one where the risk was transferred to Prime contractors and then to the wider provider base. This model is theoretically workable however; the unit costs associated with the current tranche of flag-ship programmes like FND 1 and 2 and  PEP render the model almost financially unworkable.

Prime contractors will utilise their service fees to kick start the process and alleviate some of the cash flow difficulties that they and their sub-contractors will encounter.

Whilst there are risks throughout the whole supply chain, smaller providers and sub-contractors find themselves in a precarious position wanting to participate but feeling and believing that they cannot afford the risk of participation or indeed of non-participation. As the old adage says; ‘they are caught between a rock and a hard place’

But are the risks really so high?

Are providers failing to see the light at the end of the tunnel?

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The civil partnership between DEL and AME is imminent – whether or not the Invest To Save Pathfinders (ISB) are rolled out in 2011. Providers will get paid using the cash from future benefit savings: i.e The Treasury will refund (or finally cough up!). this partnership demolishes the historical dividing wall between Annually Managed Expenditure and Departmental Expenditure Limits. What does this means in reality? Well, re-read the second sentence……!!

The government is (rightly) committed to the Invest To Save model – ‘a stitch in time [ultimately] saves nine’  – but we should be aware that the idea of increasing spending now in the hope that it will reduce spend later is highly speculative and risky.

One of the big challenges to the ISB pilots is that payments will only come from direct ESA saving, not savings made from Housing Benefit and Council Tax Benefit


Do you think this civil-partnership will work

– no not the Clegg/Cameron partnership silly –

the DEL/AME one?

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