Evidence shows that privatising welfare actually wastes money


4:11 pm - September 13th 2010

by Don Paskini    


      Share on Tumblr

An absolutely devastating report from the Public Accounts committee should make all political parties rethink their approach to reforming welfare.

The ‘Pathways to Work’ programme was launched nationally between 2005 and 2008 to help reduce the number of incapacity benefit claimants ‘through targeted support and an earlier medical assessment’.

It is delivered by contractors in 60% of districts, with Jobcentre Plus providing the service in the remainder.

By March 2010, the programme had cost an estimated £760 million. The numbers on incapacity benefits reduced by 125,000 between 2005 and 2009. Pathways contribution to this reduction has been much more limited than planned…

Private providers have seriously underperformed against their contracts and their success rates worse than Jobcentre Plus even though private contractors work in easier areas with fewer incapacity claimants and higher demand for labour…

The report says contractors have ‘universally failed by considerable margins’ to meet their contractual targets for helping claimants who are required to go through Pathways.

These have performed worse than Jobcentre Plus areas, although recent improvements have narrowed the difference.

Despite being paid £100 million in 2008-09, providers claim not to have made a profit from their contracts. The Department agreed to pay £24 million in service fees early in view of contractor cash flow problems, although we consider the need for this was questionable given the large size of some of the organisations involved.

The Department had an objective to build a healthy market, but has failed to develop an adequate understanding of the supply chain.

It has not monitored how well prime contractors are sharing rewards and risks with the more than 80 specialist sub-contractors involved, and we have concerns that effective small private and voluntary organisations working in local communities are being asked to take an unfair share of the risk by prime contractors.

    Share on Tumblr   submit to reddit  


About the author
Don Paskini is deputy-editor of LC. He also blogs at donpaskini. He is on twitter as @donpaskini
· Other posts by


Story Filed Under: Blog ,Reform

Sorry, the comment form is closed at this time.


Reader comments


Millions of pounds’ worth of waste! Now which “Campaigning Group” will be hot on the trail of this one?

One might think that the so-called Taxpayers’ Alliance (Accounts? List of donors?) would be that group, except in their world, there would be an array of “back to work providers”, which sounds rather like what has been trialled here.

very interesting … I wonder how they allocated cost in the areas where Jobcentre Plus provided the service. If they have a good estimate, it should be possible to come up with a “cost per job found” number for the two alternatives (although post suggests would still not be comparing like with like). If the contracts were written so that the private firms did not get paid if they failed to meet targets, then perhaps the important story is not money wasted (if they weren’t paid) but sheer ineffectiveness.

Bear in mind the following. The “customers” were cherry-picked to place the ones thought most likely to find jobs on the scheme to show it in a favourable light. The basis of the scheme was to offer a choice of providers to the “customers” with competition driving standards up. IDS will scrap that giving each provider a regional monopoly. Payment by results wasn’t liked by the providers (see if you can guess why) so they now want the money up front or they won’t play. Osborne prefers not paying anyone at all and leaving the unemploed and sick to rot. A turf war between a well meaning buffoon and a grotesquely overprivelleged snob

The problem is of course and I’m disabled i use to get gifts from VCR players to a new suit to you name it Camera, if I change from one provider to another. Go back to when Labour came to power a year later every empty shop in my town became a provider of training, I was sent to train on IT basic the lad sat in a shop the training room was a toilet with a plank of wood over the toilet with a lap top on it, and a chair, I was told to write a story about what i like to do.

I could not turn on the lap top the battery had run out so he told me to come back the next week.

Then i had a warning letter from a private company saying my benefits would be stopped unless i turned up at a meeting, it was a scam it was a company trying to scare the disabled to change providers, I went to a job fair in which provider s actually ended up with a fist fight because one provider was stealing clients from another.

I once went to a training provider who was going to show me how to meet people his training was how to shake hands, these were all six week courses and these people would get £1,000 it was money for nothing.

I then went back to the Job center who asked me did I enjoy that lot, and they told me sorry but the government want these people used, the money was cut and these providers disappeared.

Very interesting indeed – but hardly surprising, at least to me.

I wonder how long it will be until the prison system is privatised in this country as happened in Pennsylvania:

http://www.nytimes.com/2009/02/13/us/13judge.html?_r=1

“Judges Plead Guilty in Scheme to Jail Youths for Profit” – and this is the NY Times!

I find it hard to imagine how privatisation of services such as these benefits anyone other than the crooks who run the schemes. In fact, there is often a direct conflict of interest in the way “incentives” are structured – anyone who watched the horrific profile of A4E “helping” the unemployed can see this.

This is one of the little mentioned aspects of “welfare reform”; the introduction of private companies into the benefits system. There’s gold in them there claimants

It’s a racket.

ATOS Healthcare got a £500 million contract to carry out medical assessments for the DWP 2005-2010, it’s also thought ATOS asset stripped the DWP of some of its assets, but the DWP won’t reveal anything due to “commercial confidentiality”.

ATOS were reported (in 2006) as having deliberately altered and “corrected” questionnaires from applicants for Disabled Living Allowance so as to make them more capable than they actually are, and generally decrease their “disability” so as to lower their payments.

Numerous forums and threads across the net contain posts from people with disabilities who have been blatantly mistreated by ATOS “healthcare professionals” .

Next month, the government will start the four-year process of reassessing 1.5 million people receiving incapacity benefit (IB) or income support (IS) due to ill-health.

The scheme will be piloted in Aberdeen and Burnley before a national roll-out in April 2011, concluding in 2014.

It is reckoned once the scheme is under way the DWP will be doing 10,000 re-assessments a week and the medical aspects of all these re-assessments will be undertaken by ATOS, who stand to make a lot of money in a time of cuts.

It is predicted that about 23%-25% of those on IB or IS will be declared to be “capable of work”, and moved onto jobseeker’s allowance, meaning they could lose £40 a week or more (in addition to cuts in housing benefit).

And those who remain on IB or IS are likely to have their benefits frozen.

In the past ATOS has stated that a woman with terminal cancer, and a man who had quadruple heart by-pass surgery two weeks before the medical were “capable of work”.

And I haven’t even mentioned A4e a company which has made its founder, Emma Harrison a millionaire, has David Blunkett as an “adviser” and a company which last year were found by a DWP investigation to have undertaken “fraudulent activities”.

Completely agree Don.

Outsourcing public tasks to the private sector is always insidious- it cements the inherent corruption that exists in the collusion of government with big business. There are numerous examples and it always stinks.

So Blunkett is paid by A4e? I trust the coalition will ensure the supply of blood is cut off to that particular leech.

The thing is – why not stop at rewarding private companies for getting someone into work? Why not have a reward scheme for individuals who help their friends and family into work?

Suppose I help my girlfriend’s sister into work by suggesting she does voluntary work to add something to her CV, and 3 months later the charity concerned offer her a full time paid position. How much do you think I should claim as my fee?

Planeshift,

That seems a reasonable contention – that if you are prepared to invest time and effort into helping others then some of the budget that goes to doing that can be transferred to you as recompence for doing so if it is successful and accredited as such.

Much better than a non-market situation where government simply franchises out its operations to private operators and the actual customers (in this case those on benefits) get no actual choice. The current messes favour big (and often complacent) companies who can bid for work more effectively than others, but may not deliver properly. I suspect specialiced small companies and charities would actually be better at this on the ground, and Planeshift (inadvertently? I was not sure if this was sarcastic) has suggested a mechanism.

Well it raises the obvious question – how do you avoid fraud? In other words how do I demonstrate that it was me who helped her get a job?

On the other hand this idea could also be extended. How about if I help somebody quit smoking and thus save the NHS money? Or if I persuade a shoplifter that another career is better for them. What about if I care for a sick relative and thus save the local authority nursing home costs?

In fact I’ve decided I’m going to invoice the government every time I do an act that saves them money or contributes towards social good (things that used to be considered part of being a good citizen). What do you think of my current price list?

Picking up litter – £5 per item
Helping an old lady accross the road – £1 (you have to compete with child labour for that)
Reading to my child – £20 per book
Giving a disaproving look at underage drinkers – £1
Letting somebody out at a busy junction – £5
Performing first aid on somebody whilst waiting for an ambulance – £50
Being prepared to give evidence in court -£100.
Persuading my girlfriend not to pull a sickie when she is hungover – £250 (its a tough one)
Being an activist for a political party during an election – £4000


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    Evidence shows that privatising welfare actually wastes money http://bit.ly/8XxSjF

  2. unslugged

    Dogma trumps evidence, though > RT @libcon: Evidence shows that privatising welfare actually wastes money http://bit.ly/8XxSjF

  3. Kate B

    Very good stuff on welfare fron Don http://t.co/E0cptIG

  4. Paulo Coimbra

    cc @passoscoelho @JMF1957 e outros liberais > RT @libcon: Evidence shows that privatising welfare actually wastes money http://bit.ly/8XxSjF

  5. paulstpancras

    RT @hangbitch: Very good stuff on welfare fron Don http://t.co/E0cptIG

  6. peterdcox

    Private contractors fail to deliver Back to Work at £760M cost http://ow.ly/2Dq1B Worse even than Job Centre in spite of £24 cash advance.

  7. Malcolm Evison

    Evidence shows that privatising welfare actually wastes money | Liberal Conspiracy: http://bit.ly/cViIaO via @addthis

  8. earwicga

    RT @hangbitch: Very good stuff on welfare fron Don http://t.co/E0cptIG

  9. sunny hundal

    Evidence shows that privatising welfare actually wastes money, says @donpaskini http://bit.ly/8XxSjF

  10. sciamachy

    RT @sunny_hundal: Evidence shows that privatising welfare actually wastes money, says @donpaskini http://bit.ly/8XxSjF

  11. Hannah Nicklin

    RT @sunny_hundal: Evidence shows that privatising welfare actually wastes money, says @donpaskini http://bit.ly/8XxSjF

  12. Sean Court

    RT @sunny_hundal: Evidence shows that privatising welfare actually wastes money, says @donpaskini http://bit.ly/8XxSjF

  13. Paul Trembath

    RT @sunny_hundal: Evidence shows that privatising welfare actually wastes money, says @donpaskini http://bit.ly/8XxSjF

  14. Little Metamorphic O

    RT @libcon: Evidence shows that privatising welfare actually wastes money http://bit.ly/8XxSjF

  15. czol

    Privatising Welfare Actually Wastes Money. No fucking shit. http://is.gd/f8Qr6 #wellduh

  16. SMS PolicyWatch

    RT @libcon: Evidence shows that privatising welfare actually wastes money http://bit.ly/8XxSjF

  17. K Knight

    Evidence shows that privatising welfare actually wastes money …: Payment by results wasn't liked by the provider… http://bit.ly/cvu8hn

  18. Survey Money Income

    Evidence shows that privatising welfare actually wastes money … http://bit.ly/9uG86F

  19. I WANT HOT GIRLS

    Come take a look Evidence shows that privatising welfare actually wastes money … http://ow.ly/18ZRDX

  20. Marijuana

    Come take a look Evidence shows that privatising welfare actually wastes money … http://ow.ly/18ZRDY

  21. John Powers

    Come take a look Evidence shows that privatising welfare actually wastes money … http://ow.ly/18ZRDW

  22. chris

    Come take a look Evidence shows that privatising welfare actually wastes money … http://ow.ly/18ZRDQ

  23. chris

    Come take a look Evidence shows that privatising welfare actually wastes money … http://ow.ly/18ZRDS

  24. chris

    Come take a look Evidence shows that privatising welfare actually wastes money … http://ow.ly/18ZRDT

  25. Jenny Rowland

    Evidence shows that privatising welfare actually wastes money …: Payment by results wasn't liked by the provider… http://bit.ly/9yPFbA

  26. ralf man

    Evidence shows that privatising welfare actually wastes money …: Payment by results wasn't liked by the provider… http://bit.ly/azL7pW

  27. Andrea Moore

    Evidence shows that privatising welfare actually wastes money …: Payment by results wasn't liked by the provider… http://bit.ly/9FDTaR

  28. Nick H.

    http://liberalconspiracy.org/2010/09/13/evidence-shows-that-privatising-welfare-actually-wastes-money/

  29. Andrew Roche

    Just read: Evidence shows that privatising welfare actually wastes money http://dlvr.it/5N7wz





Sorry, the comment form is closed at this time.