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Iain Duncan Smith to set up review as £​5bn scheme fails to help those most in need.

Iain Duncan Smith’​s pledge to “​make work pay”​ is a laudable aim that no-one would argue with. The reality, however, has been somewhat more difficult, and The Times reports today that Duncan Smith is setting up a review into the Work Programme, after the £​5bn programme failed to get enough long-term sick and disabled people into work.

Under the scheme, the Department for Work and Pensions (DWP) pays private companies to help get the long-term unemployed into sustainable jobs. Launched in June 2011, it replaced virtually all welfare-to-work programmes run by the department and was expected to help up to 3.3 million people back into work over five years. The contracts were “​payment by results”​, which transfers the financial risk away from government and onto providers.

The downside of this is that, according to the Times report, the numbers are not adding up for the 18 prime contractors involved in the scheme. Duncan Smith originally told the companies that around 30 per cent of referrals would be people claiming incapacity benefit or its replacement, employment support allowance. Companies stand to gain up to £​13,800 for each person in this category who they place in a job. However, in the nine months since the programme launched, just seven per cent have actually been in this category, while the rest have been on jobseeker’​s allowance. Finding employment for people on jobseeker’​s allowance is worth only £​3,800 to the companies. Some companies are losing hundreds of thousands of pounds because of this miscalculation.

Full story in the New Statesman