Archive for July 22nd, 2010

The solution to increasing performance, encouraging new providers into the sector and supporting the supply chain can be achieved by placing an OBLIGATION on PRIMES to contract with particular providers. In our opinion this will strengthen the sector and increase performance exponentially!


  • How do you reduce the upfront costs for existing providers wishing to undertake delivery in particular lots?
  • How can we guarantee continuity, consistency and good delivery?
  • How does DWP do all of the above whilst securing increased performance and maintaining a competitive market?


By the introduction of “Threshold Providers”.

Quite rightly, there is concern about what the Work Programme will look like in relation to delivery, milestones, unit costs, and sustainability. There is also fear and concern around what the tendering process and lot allocation will look like for providers who have;

  1. Invested considerable resources in previous tender rounds,
  2. Have a good track record of delivery,
  3. Have positive historical links in an area,
  4. Good performance but they are small,

Invariably they also fell unrepresented and trodden on by a predisposition to market considerations.

The obvious questions are;

  • Who will be the successful PRIMES (or Super PRIMES)?
  • What does this mean for smaller providers?
  • Will the PRIMES merely subcontract with each other? (see our blog on the Work and Pensions Committee report findings which found that this was indeed the case in Scotland).

At Yes Minister we have been meeting and speaking with a large number of individuals and organisations. We have come up with what we think is a viable solution to sustaining delivery, supporting quality provision whilst facilitating a proactive mix of new and existing providers into the sector. We propose that DWP should;

  • Establish a performance threshold based on a league table of provider performance over the last few years. Providers who achieve the median threshold plus – say – 5% should form a new category of provider called ‘Threshold Providers’.
  • The threshold could be based on an amalgamation of performance offers and historic delivery.
  • These ‘Threshold Providers’ should automatically retain contracts if they are already delivering within a Lot or they should have preferred status for delivery in Lots with similar demographics.
  • PRIMES should be placed under an obligation – subject to due diligence and verification etc.. to enter into contract with these ‘Threshold Providers’.
  • Even if a new PRIME takes over a lot this principle should still apply until such time as the providers performance dips below the agreed threshold for 2 quarters or by more than 15%,
  • The introduction of ‘Threshold Providers’ will mitigate losses for those good performers who are already delivering and have invested in areas and it will provide an opportunity for continuity and for them to embed and improve their performance.

PRIMES may not like this, however if PRIMES are committed – and they all say that they are – to working with the best then this should facilitate that process whilst enhancing DWP’s Stewardship role!!


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Newsletter 22nd July

PRIMES should be obligated to sub-contract, Housing Benefit concerns, Skills consultation launched, skepticism about Merlin, DWP and its stewardship role

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Housing Minister Grant Shapps was challenged by Simon Hughes & Labour MP Karen Buck in the House of Commons about proposed changes to Housing Benefit. Simon Hughes called for Grant Shapps and DWP colleagues to meet a cross-party group of London MPs to ensure that the policy not unfair.

See House of Commons questions


The reforms will save nearly £2 billion in the financial year 2014-15 and marks the first plank of the reform of the benefits system.

Local Housing Allowance (LHA) will now be restricted to a maximum of four bedrooms for new and existing claimants. Alongside this, weekly LHA rates will be capped at £250 for a one bedroom property, £290 for two, £340 for three and £400 for a four bedroom property.

LHA rates will now also be based on the thirtieth percentile of rents of the local area. The Coalition argues that the impact of this reform is that hard working individuals and families will no longer have to subsidise people living in properties they themselves could not afford. From April 2013 LHA will be uprated by CPI.

To help make work pay from April 2013, people who have been on Jobseeker’s Allowance for 12 months or more, will have a 10% reduction in their Housing Benefit.

Working age HB claimants who are living in a property that is too large for their household size will have their benefit capped. To help the most vulnerable people who could be affected by this change, the Additional Discretionary Housing Payments budget will be tripled to £60 million a year from 2013-14.

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As we move towards the Work programme there are valuable lessons to learn and there is much that we can build on.

It s a while ago, but I think it is still very relevant.  On 3rd March 2010 The House of Commons Work and Pensions Committee published its report on the Management and Administration of Contracted Employment Programmes. The Committee examined DWP Commissioning Strategy and FND in 2009.

One of the conclusions drawn was that whilst DWP saw itself as having a “market stewardship” role “there was no evidence of this happening in practice’. The report examined several examples of potentially unfair treatment of sub-contractors and added ‘….Whilst we do not know how widespread this problem is, neither does the Department and we call on them to clarify what constitutes fair treatment of subcontractors and ensure that prime contractors meet these standards. [the statement goes on]………the Department has shown no willingness to get involved with even the most serious cases”.

However in response to the question;

“…If there was evidence that a subcontractor was not making enough money to be able to run the service that they were providing, [or if] they were effectively subsidising the work that they were doing as part of the contract from other sources of income, would you ever want to be involved in that?”

Alan Cave responded;

“If that situation were arising because of a breach of a code of conduct, we would be involved.

Again the commercial relationship is with the prime contractor. They are responsible for delivering what that contract needs to deliver in totality, so we hold the prime contractor to account for that”.

Mr Heald: In Glasgow we met one company who had been delivering a particular contract for seven years, they did not get the subcontract, and now what has happened is the large prime company has taken over their offices and their staff and so they have lost out. Is that not a bad example to be setting?”

Mr Cave:That is an example of competition, is it not? They have lost to competition and the consequence of that is that the prime contractor who ran the competition has had the staff and the..”

Mr Heald:This is exactly the attitude that I was hoping you might push back on. In Scotland one of the things that rather surprised us was that in the first round of Flexible New Deal the three prime contractors who had put in had each named the other two as their main subcontractors, so it did not matter who won, the big boys did. That is what worries us. Some of these small organisations which have done very good work and which are the most innovative in the niches and really delivering on the streets may end up getting parked”.


VERY Interesting……  we need to be mindful of this.  See our piece on “Threshold Providers”

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The House of Commons Work and Pensions Committee published its report,

The Report is skeptical about the new Merlin accreditation standard. We are very concerned that in cases where the prime contractor is in breach of contract with the Department the Department says it would not get involved”.

“‘We also note that decisions made by Merlin will have implications for the viability of individual subcontractors and for service delivery, and conclude that it makes sense for the Department to make these decisions itself, allowing it to ensure the market develops in a way which is stable, robust and meets the needs of customers’

There are a number of questions that obviously spring from this,

  • Is the standard necessary?
  • Is it owned – should it, can it – by the industry or is it the preserve of an elite?
  • What can we learn from experience in New York?
  • What are the consequences and implications of an ‘unsatisfactory’ grading?
  • What are the legal ramifications?
  • Independence, objectivity & conflict of interest: Is there an ELEPHANT in the room?

Clearly these and other questions are been analysed at the highest levels…

Our critical appraisal is coming shortly …..

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At the recent Welfare to Work Convention Employment Minister Chris Grayling MP explained that he did not expect or foresee local authorities bidding into the framework he explained that….

“One of the reasons why we’ve established the framework as an approach is because it does offer a greater degree of contractual flexibility for local authorities to form partnerships with the providers in their area.  If they choose to do so to direct additional funding into meeting individual needs in those local authority areas I see no reason why whether its consortia or whether its groups of organisations working in different forms why local authorities can’t be part of that.  What I don’t think is that local authorities can take on the overall capital responsibility for payment by results.  If a local authority wants to set up a standalone company, raise the funds through the capital markets to be part of the process that’s fine it’s a local decision.  But we’ve never believed that local authorities could themselves be private contractors because effectively it’s the public sector passing risk to another part of the public sector”

DWP is “…encouraging organisations of all sizes from the public, private and voluntary sectors to consider getting involved, either by bidding as a prime contractor or working with others on a partnership/sub-contract basis”

Are these two positions consistent?

We know of two local authorities preparing to apply to the framework.

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