‘Flawed’ Work Programme contracts costing millions, say government auditors

1 July 2014

Tens of millions of pounds is being paid in bonuses to under-performing contractors responsible for the Government’s flagship back-to-work scheme, government auditors have warned.

Flaws in contracts mean the Department for Work and Pensions (DWP) has to pay incentives for the Work Programme to even the worst performing providers, the National Audit Office (NAO) said.

The bill for such bonuses is likely to reach £31 million in 2014-15, it added. The DWPdisputes the report’s figures. Unusually, the report was not signed off by the DWP prior to publication on the grounds that it did not reflect its view of the “relevant facts”.

The NAO said the programme had “improved after a poor start” and could potentially offer value for money over the long term. But it raised concerns, saying problems with contracts and performance benchmarks had led to “unnecessary” costs. It suggested firms may have received £11m between June 2011 and May 2014 “for performance they may not actually have achieved”. The amount of overpayments could rise to £25m, it warned. It suggested the system put in place to keep track of workers – with contractors expected to contact employers 27 times during a two-year period – was delivering patchy results, with some employers not bothering to return calls.

And it warned that the system for rewarding suppliers for good performance – based on the number of people finding work as a proportion of the number of people joining the programme – was flawed. While firms should be receiving £6m in bonuses this year, they were actually likely to receive £31m.