Inside Housing reports on the struggle that housing providers are experiencing with worklessness in their communities.
Nearly 60 per cent of social housing tenants are unemployed, so why are housing providers finding it hard to win contracts under the government programme designed to tackle worklessness? Nick Duxbury investigates.
It is fair to say that the government’s work programme has had a rough ride over the past few months. The programme is intended to support 3.3 million people back into work over the next five years at a cost of up to £5 billion, at the same time as reducing the benefits bill. But despite only being launched in June, it has already come under heavy fire for lacking transparency, excluding small charities and social enterprises while rewarding large private companies, and failing to deliver government targets.
Alarm bells began ringing last month when the National Audit Office published a damning report that forecast just 26 per cent of the largest group of jobseekers in the programme would get jobs - far fewer than the Department for Work and Pensions estimate of 40 per cent.
Shortly after, it emerged that Emma Harrison, the government’s ‘back-to-work tsar’ and chair of one of the 18 prime contractors delivering the work programme, A4E, received an £8.6 million dividend on the back of the company winning contracts through the programme. It was also revealed that four former employees of the company were subject to a fraud investigation. Although there was no implication of wrongdoing on her part, Ms Harrison stepped down from both roles two weeks ago.
Now social landlords’ role - or lack thereof - in the work programme is igniting fresh criticism. ‘I don’t believe the people we see are better off now than they were 18 months ago,’ states Howard Sinclair, chief executive of homelessness charity, Broadway, a work programme sub-contractor. ‘It would be timely for there to be a review of the programme.’
It certainly doesn’t appear to be working for the housing sector; despite 56 per cent of working age social tenants being unemployed - more than 3.5 million people in England - and the sector having a strong track record in tackling worklessness, just 35 social landlords are taking part in the programme. Furthermore, according to exclusive research by HACT, the housing action charity, and the Centre for Economic and Social Inclusion, just 20 per cent are engaging with it at all (see box: Must try harder). So, what’s gone wrong?
‘There is a feeling that there isn’t sufficient funding in the central pot to achieve what the work programme was supposed to,’ states Gordon Keenan, head of funding and partnerships at the National Housing Federation. ‘A lot of organisations across the sector are simply avoiding it because of its complexity, its funding approach and the lack of transparency around who is doing what and who gets what.’
Much of the reason revolves around how the contracts are formed. On paper the programme is cleverly structured, paying primary contractors on the basis of results - after a person has been in employment for six months, with higher rewards for harder to help claimant groups - with work then sub-contracted to social housing providers, charities and social enterprises through referrals. But this structure is riven with problems.
Because sub-contractors invest in their work programmes upfront, if they don’t get enough referrals then this makes the programme unviable for most small organisations. In September Inside Housing revealed that sub-contractors including homelessness charities and housing associations were suffering because they were not getting the number of referrals they were expecting from prime contractors. The NAO report reflects this complaint - especially the more lucrative ‘harder to help’ category - as well as frustrations at the amount of time it takes for clients to be referred.
According to Broadway’s Mr Sinclair, things are only just starting to change. ‘We have seen an improvement - we have had our first 23 appointments and expect to more than double that. But it’s tiny in comparison to what we were doing through a range of government funding initiatives before the work programme. It is nowhere near what we were hoping for.’
Quantity not quality
‘The big difficulty here is the price mechanism; the emphasis appears to be around price rather than quality,’ Mr Keenan explains. He suggests that the payment by results structure means that competition among prime contractors is curtailing the amount of referrals reaching landlords.
‘The work programme, at the end of the day, has the appearance of a post-code lottery. There seems to be willingness among a small number of primes to discuss feasible partnerships that make sense to the housing sector, but there are a significant number that are bound by business plans and budget costs that make it unfeasible for housing associations to become involved in a meaningful delivery process.’
A spokesperson for the Employment Related Services Association, which represents prime contractors in the welfare to work sector, challenged the claims of a postcode lottery. ‘Prime contractors do things differently, so just because a service is cheaper it does not necessarily mean it’s lower quality.’ However, he admits that a 50 per cent weighting is too great an emphasis on cost. ‘You get what you pay for,’ he warns.
According to a DWP spokesperson: ‘The recent NAO report stated a comparison of bid scores showed neither price nor quality predominantly determined the outcome.’
But landlords must also accept some blame for their low level of engagement with the programme. The HACT and CESI survey of 136 housing providers found plenty of room for improvement from landlords.
Matt Leach, chief executive of HACT, maintains landlords should play a greater role in the programme. ‘Regardless of views on the efficiency of the programme it is important that landlords engage with it,’ he says. ‘To make landlords’ existing work as efficient as possible, they need to take into account other local work like the work programme. Organisations are upping their game but there is a lot more potential for improvement.’
James Walsh, economic inclusion manager at Bromford Group, agrees. The 26,000-home organisation is a third tier sub-contractor and saw its first 60 referrals come through in February. He is confident the group will meet its target of receiving 185 referrals in the first year, dismissing current furore as ‘teething problems’.
‘That’s just the nature of the way contracts are being commissioned around results - it is a necessary evil,’ he says. ‘A high number of work programme participants are in social housing so it makes sense for us to be involved if we can.’
Must try harder
HACT and the Centre for Economic and Social Inclusion’s survey reveals that while 88 per cent of landlords are involved in tackling worklessness, 58 per cent don’t know the level of worklessness of tenants in their organisations. It found that ‘most housing providers do not prioritise particular groups when tackling worklessness, and many do not prioritise tenants’.
The survey also found that around three quarters of landlords are drawing on external funding and working with a range of partners to tackle worklessness and provide skills training, but that most are ‘indifferent’ to government initiatives, and only one in four is ‘engaging’ with the work programme at all.
The report calls for landlords to recognise the fact that they will ‘always be the junior partner’, but also for them to aspire to be the ‘senior force in tackling worklessness among tenants’.
HACT and CESI have designed a benchmarking tool for landlords to use to establish need and to help target unemployed tenants.
Read this article on Inside Housing.
The full report will be published shortly and will be available to access from the HACT website.
If you are interested in receiving further details on the HACT worklessness report commissioned by CESI and the resulting benchmarking tool please contact John Coburn.