Employment minister says welfare-to-work providers must accept financial risk

Finance | Vibeka Mair | 4 Feb 2011

Employment minister Chris Grayling has said the welfare-to-work industry should not be afraid of a new funding environment where they take on big financial risk through the payment-by-results model.

Grayling was speaking at Good Ideas, an event hosted by CCLA and London Funders, where he outlined the government’s plans for getting people on benefits back into the workplace through the new Work Programme.

The Work Programme, which starts in June, will pay providers incrementally based on their success in getting people back into employment instead of a fixed level of funding in advance.

Grayling said this would transfer financial risk from government to contractors, but insisted that it was how business worked: “Business raises funds to get going,” he said. “They take this risk and then make enough money to cover the costs. That’s business.

“The Work Programme will be no different. But this should not be seen as a scary model. It is a well-worn path for entrepreneurs in this country. And it’s the way government will do business in the future.

“If you don’t get people into work, we won’t pay the bill. If you succeed you’ll make money.”

The payment-by-result model is being steamrolled through Whitehall, with a number of government departments introducing pilots to test the model, including the Department of Health which will pilot payment-by-results for drug recovery this year

However, the UK Drug Policy Commission has warned this week that the model could undermine drug treatment services if it is introduced too quickly.

Alan Maynard, professor of health economics at York University and a Commissioner of UKDPC said: “Recovery from drug problems can be hugely complex, with users often needing services in healthcare, housing, social services, skills training and employment.

“To get the system right takes a lot of work, and the changes will need to be introduced carefully, using the evidence from the pilots to shape the wider system. Without this, public funds may be wasted and treatment denied to vulnerable in need of care.”

Comments

[Cancel] | Reply to:

Name *

Email *

Organisation

Job Title

Comments *

Verification *

* Please read our Community Standards

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

Robust but respectful debate
Strongly held opinions
Intelligent relevant discussion
The sharing of relevant experiences
New participants

We will not publish:

Rude, threatening, offensive, obscene or abusive language, or links to such material
Links to commercial organisations or spam postings. The comments board is not an advertising platform
The posting of contact details for yourself or others
Comments intended for malicious purpose or mindless abuse
Comments purporting to be from another person or organisation under false pretences
Gratuitous criticism, commentary or self-promotion
Any material which breaches copyright or privacy laws, or could be considered libellous
The use of the comments board for the pursuit or extension of personal disputes

Be aware:

Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
Comments left by others may not be accurate, do not rely on them as fact
You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

Enjoy the opportunity to express your opinion and respect the right of others to express theirs
Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.