FT Article – Welfare to work contract goals doubted

I read it with interest and whilst many of the issue raised were relevant, I would challenge some of the views cited and present a different perspective as an incumbent supplier.

Over the past 20 years, we have operated many ‘payment by results’ models in welfare and other markets, in international markets as well as in this country. This is where A4e started in 1991, going beyond the required retraining of unemployed people and running pilots where payment was based on delivering job outcomes instead. More recently in Israel, the model set by the government required us to deliver 35% savings in the welfare costs before we were able to secure any results payments. A very interesting ‘Invest to Save’ model.

The UK government has designed a challenging commercial model but it will operate alongside significant changes to the underlying welfare system, as well as earlier entry for groups of relatively easier to help clients. Performance metrics will be stretching, but based on our previous experiences, my view is that results are achievable.

It should not be a surprise that some organisations without specific delivery experience and expertise cannot make the ‘numbers add up’. This is not the market to enter if an organisation is not experienced in delivering services to the customers who will be on Work Programme.

There are a number of ways to mitigate risk and many finance institutions are rapidly gaining the expertise to be able to make considered investment available to suppliers. This ‘education’ process is an important part of the role that the operators in the market must play with the financial community to enable the funding required for broader payment by results models to be used in other areas of social policy. I spend considerable time on this issue and there is healthy interest and good input from the financial community.

The development of relationships between service providers and financial institutions is critical to public service reform and whilst difficult, a necessary evolution of the markets. Betting on reworking the contracts is not the answer. Using expertise and the ‘black box’ nature of these contracts to iterate services to success is what will be required. Welfare to work is absolutely the right place to pioneer the payment by results approach and, as the expert service providers receive the financial backing they need, we can look forward with optimism, rather than scepticism, to establishing a system that sets a global standard.

Resource: mya4e.com