This is why the profit motive has no place in our public services

The DWP isn't just off the rails but careering down the embankment.

The DWP isn’t just off the rails but careering down the embankment

Government auditors are like the best headteachers. They don’t need to raise their voices for their message to be heard and understood.

And so it is today with the latest National Audit Office report into Iain Duncan Smith’s work programme. The report states it is possible this flagship scheme might eventually provide value for money.

The problem is, the auditors note, three years in to the programme it is still underperforming, failing the very people it was set up to help and rewarding some very profitable private companies for these failures. It is worth repeating, it has been three years almost to the day since it was launched – surely it should be working by now.

So what does the report say? Well, for the most recent cohort to complete the programme, ‘job outcomes’ – I assume they don’t just call them jobs because it doesn’t have to mean long term, sustainable employment – are not just below the government’s original forecasts or what the providers anticipated when they bid for the contracts, but still below the minimum performance levels expected. Three years in.

If you are sick or disabled the picture is even worse. Performance levels for people entitled to Employment and Support Allowance are appalling but that is not all. One of the most shocking revelations in this quietly damning report is that prime contractors – those that won the contracts and are either running schemes or sub-contracting them to others – have “reduced what they plan to spend on the hardest to help”.

Providers told the NAO they now plan to spend 54 per cent less than they originally budgeted for on helping the most vulnerable people.

This is exactly what we said would happen under a wholly privatised, payment by results, system.

And not only is this direct evidence that providers are cherrypicking the easiest to reach cases and neglecting the most vulnerable, the NAO says the Department for Work and Pensions has “limited ability to identify issues such as parking of harder-to-help participants”.

This renders ministers all but powerless to intervene in their flagship back to work scheme when it turns out the scheme is failing to achieve its objectives.

This is the market at work. This is why the profit motive has no place in our public services, particularly those public services where provision that does not discriminate or exclude is essential to ensure the most vulnerable people get the help they need.

There are ideologues who will say, “Yes, but if the companies fail they won’t be paid”. Wrong. The NAO says contractors fear for the viability of the work programme but say they still expect to make a profit from it.

The DWP “may be paying contractors for performance they are not actually achieving”, the auditors report, and this year an estimated £31 million could be paid to providers when on “an accurate measure of performance” they would only be entitled to £6 million.

This is an absolute scandal and, set alongside the catastrophe that is universal credit and the backlog in claims for the new personal independence payment, is indicative of a department that is not just off the rails, but careering down the embankment.

It is not the job of the NAO to scream and shout. But the rest of us can and should make as much noise as possible about how Duncan Smith and his ministers are cheerfully implementing policies that punish the most vulnerable in our society.

These kind of audits are important because they make the case for us that this work should be brought back in-house to be done by experienced jobcentre staff who will treat the unemployed, sick and disabled with the respect they deserve, and as people to be helped, rather than as cheques to be cashed.

Mark Serwotka is general secretary of the PCS union

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6 Responses to “This is why the profit motive has no place in our public services”

  1. clarebelz

    How can the work programme be successful at all? There are 8 million ‘inactive’ people of working age in this country, and only an average of 500,000 jobs in our economy at any one time!

    Really, we need to move away from these pointless programmes and start thinking about how to tackle the issue of an ever increasing pool of unemployed people – due to automisation and computerisation as well as companies moving jobs abroad. If the jobs just aren’t there then surely a ‘citizen’s income’ would solve many of the problems. No need for expensive work programmes! Imagine the money saved.

    Most people want to work, and some could find a few hours here or there but this badly impacts on benefits received. I’m chronically ill, and universal credit was first explained, it was touted that the disabled would be able to work a few hours a week, that this would be encouraged, but as usual, by the time the rules were worked out, you had to in fact earn £212 per week to even qualify for Universal Credit.

    Under the current system, I could earn £20 per week doing something, but my symptoms are so severe sometimes that I can’t do anything at all. Unfortunately, the rules concerning this equally make it impossible. If after a year I can’t prove that I can work 16 hours I have to stop doing anything at all! This is just crazy!

    A citizens income would allow people like myself to do something now and again to earn a little extra without impacting on my income. For others, it wouldn’t dissuade people from work as the amount paid would only cover basics, but it could mean that people are able to work part time and have some kind of life as well. More jobs around for everyone.

    No government no matter who they are, is going to solve these problems using current ‘thinking’ and we really need to be looking at how we improve life for everyone, not just those at the top. A happier country would result in less crime, less domestic violence, less family breakdown, again saving the countrys coffers perhaps billions in the process. We have to try something new.


  2. Leon Wolfeson

    Indeed. I wasn’t in favour of a citizen’s income until about a year ago, but I was persuaded by friends.

    You’re overlooking other effects, too. For example, if I want to start a business, with friends, I don’t need to worry about how I’ll eat while I get set up and make our first product. It changes the risk model in *awesome* ways.

  3. clarebelz

    I didn’t really appreciate the implications of a citizen’s income myself until I looked into it.

    For example, before I did my degree and was bringing up my children, I was a housekeeper/gardener, but could only ever work part time. I received tax credits however of around £7000 per year. Now just because I received that amount, it didn’t mean that I was unwilling to work. Yes, theoretically I had to work in order to receive it, but that amount wasn’t exactly going to keep me was it? Perhaps if I lived a very frugal life mnnn; liked my red wine too much. I would just about have managed though. More importantly, even if there were no strings attached I would still have wanted to work because I’ve always loved working.

    Now that I’m too ill, something like that would be a great boost just to get started in whatever area that I could, just a few hours a week. I too couldn’t take the risk at present, not with my health, and certainly not financially. I couldn’t make a living out of what I could do. But, I know that doing what I am able to do could enrich peoples’ lives. Imagine that multiplied by many thousands!

    A bit idealistic I know, but the whole stinking mess of this life needs changing, and it would likely be more successfully altered for the good with both ‘top down’ and ‘down up’ (if there is such an expression) thinking.

  4. Leon Wolfeson

    There is – the term’s “Bottom-up”.

    Good post.

  5. queirozf

    Get into computer programming. It’s a fun and challenging profession, there’s lots of jobs available, you can work from home (it helps if you’re ill) and everything you need to learn is on the web for free.

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