This week figures were released for the Work Programme, the best known outcomes based commissioning programme in the UK. It has widely been reported that these figures represent failure. In the thirteen months between June 2011 and July 2012 a total of 837,000 people were referred to the programme. Of these, providers have achieved “successful job outcomes” for only 31,000. Therefore only 3.7% of those referred to the scheme have found sustained work placements. Is this a blow for outcomes based commissioning?
Critics certainly think so. Labour has accused the scheme of being “worse than doing nothing”, and many have pointed to the cost of the programme compared to the relatively meagre impact it has had. But before the whole approach is rubbished, it is worth focusing on what has been achieved, and what lessons there are for other outcome based commissioning approaches.
Firstly, a point on the figures. A successful job outcome is defined as “someone referred to the Programme… who has found and sustained employment for at least six months, either cumulatively or at once”. That means that any people referred to the programme after January 2012 would not have had time to achieve a job outcome, even if they had been placed in long-term employment on the first day of their referral. The number of people referred to the programme prior to January (i.e. the population who could realistically have achieved a job outcome) is only 519,000. Taking that as the base from which successful job outcomes could have been achieved, then the success rate would be 6%. This figure is not entirely accurate because of a slightly different way of calculating the job outcome rate for those previously claiming sickness benefits, but it is at least a more optimistic picture than the 3.7% figure that has been widely reported.
This doesn’t negate the fact that the providers have still missed the targets set by DWP at the outset of the programme by an average of around 30%. Yet in June 2011 when minimum performance levels were agreed, the DWP did not know that the UK would enter a double dip recession. That will have had an effect on the overall potential success rate. It will have been harder for providers to hit their targets because of unforeseen circumstances, but payment by outcomes means as a result the taxpayer will have paid less, which is not true of non-outcome based approaches. Payment by results is supposed to transfer some risk to the provider. It is therefore less costly if providers miss targets than if state run agencies missed targets but remained a fixed cost expense.
If nothing else, these issues show just how complicated outcome based commissioning can be. Measuring the impact of real programmes in the real world is not straightforward, and misunderstanding these measurements risks undermining an approach which has real potential to make a significant improvement for those trying to find work and for the taxpayer. Outcome based commissioning is a new approach and many schemes will face difficulties at the outset, but given time and given the right management, it is an approach that could deliver real benefits. It’s worth the effort, and it’s certainly better than doing nothing.