Putting a price on the heads of the unemployed: Work Programme plans leak
How hard is it to find someone a job, and keep them in that job?
It depends who they are of course. Finding a job for someone who hasn't worked for years can be pretty tricky. Likewise someone who has a drug problem, or a health problem.
That's why the Government is going to pay private providers different amounts to get different sorts of people back to work. They are putting a different price on the heads of different sorts of unemployed people.
Courtesy of a leak on the Yes Minister website, we can now see how much the government is planning to pay. The differences are pretty big. The chart below shows the range of prices. If a company can get a young person on Jobseekers Allowance a sustained job they get £2,400 quid. If they can do the same for someone with health problems who used to claim incapacity benefit then they get a whopping £9,400. That's because it's harder, and will probably involve more costly support along the way.
The whole thing is an important example of way that government increasingly operates, and the new issues this way of working throws up.
Politicians are less keen to run services directly these days (because they haven't always been that good at it). So they increasingly opt for "payment by results": they pay private sector firms to deliver services – and only pay them if they succeed. That way their incentives to perform are nice and strong.
But payment by results can be open to gaming. If you paid private firms a flat rate to find people jobs, then they would just cream off the easy cases, and park the difficult people. Hence the range of prices above.
I'm no expert, so I don't know if the different prices set out above are the right ones. But as payment by results extends into new areas, these kinds of issues are going to come up more and more: be it payment by results for reducing re-offending (as the government is piloting in Peterborough) or future schemes to deal with problem families, drug addicts, or orphaned children.
What do you think of payment by results? Is it going to be a complicated disaster? Or is a better alternative to having the politicians in charge?
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