News

According to a report in the Financial Times today, the government could be facing a huge cut - estimated by some as up to 80 per cent- in participants in its welfare to work programme because many private providers signed up to the Work Programme Framework Agreement do not believe they can carry out effective employment programme provision without upfront payments to get the jobless and those on incapacity benefits into work. The Financial Times has reported that as part of the upcoming spending review, the Treasury is seeking to make big savings - up to 25 per cent - in the Work and Pensions Department's administrative budget.

In order to make headway with these savings, plans have been proposed by Lord Freud and Chris Grayling not to make any upfront payments to providers carrying out employment and back to work provision. Instead it has been suggested that providers should be paid entirely out of the benefit savings that are created as people move into work. This approach necessarily requires large-scale initial investment, which they majority of providers do not feel they will be able to raise in the current climate. It is rumoured that the Treasury has been consulting via a CBI working group on whether there is any scope for providers to be paid only by results or whether a similar approach to the current programme needs to be adopted, in which providers are paid 30 per cent of the contract value upfront. If contract values do need to be paid up front, this could result in welfare to work programmes being "drastically reduced" - possibly by up to 80 per cent - to balance out cuts to the Department's administrative budget.