Tuesday, August 23, 2011

The Government’s Work Program Is under Threat of Financial Collapse.

Ian Mulheirn

The government’s Work Program gives monetary incentives to private and not-for-profit providers for getting the unemployed into work. However, the Social Market Foundation’s, Ian Mulheirn discusses new research which finds that the program is now at risk of financial collapse due to contractors failing to meet the minimum requirements to due to the unreachable performance standards expected of them. Such a collapse would be bad for job-seekers, subcontractors and the taxpayer.

The Government’s flagship back to work scheme, the Work Program, is in peril. The bold new scheme, which pays private and not-for-profit providers by results for getting the long-term unemployed into work, looks likely to substantially undershoot the Government’s expectations, putting it at risk of financial collapse.

Widespread provider failure or a late bailout would be bad for jobseekers, expensive for the taxpayer and fatal for many subcontractors, especially not-for-profit providers. In the light of this new evidence and the deteriorating labor market outlook, DWP should revise its minimum performance expectations, and introduce more credible incentives. It should also establish greater transparency about how it derived its estimates of minimum performance, and clarify how they would vary if economic conditions deteriorate, to create greater certainty and strengthen accountability. And, to advance the Government’s aim to be the “most transparent government in the world”

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