From the TUC

Delivering public services: the mystique of the private sector

08 Feb 2013, by in Labour market

If there’s one doctrine that unites the current government and the last one, it’s the notion that the private sector always does things better than the public. Independent research, published this week, provides another example to show that this belief is based more on faith than evidence.

This “private is best” bias is exemplified by the Work Programme, delivered entirely by private and voluntary sector organisations on a payment-by-results basis, with the DWP’s own Jobcentre Plus excluded from taking part. But it was the last government that introduced a “right to bid” for private sector organisations that wanted to take over employment and welfare services, and the process of creating private-only reserves where public sector organisations were banned dates back to the early days of the New Deal.

But this preference, so easily assumed by politicians, has always been supported by a very weak evidence base. David Freud, now a Minister himself, admitted as much in his 2007 report for the last government, when he compared the cost per sustained job of the private sector-led Employment Zones (£5,110) and Jobcentre Plus’s New Deal 25+ (£5,130).

There was an even clearer comparison in Action Teams, a programme from a decade ago that provided one of the few instances when Jobcentre Plus was allowed to compete with private and voluntary sector providers on even terms. The independent evaluation of the programme is clear:

The 25 PSL teams as a whole only met 78 per cent of their job entry targets in year one of Phase 3 of Action Teams, compared to the 40 Jobcentre Plus teams, as a whole, who achieved 140 per cent of their job entry targets. PSL teams, as a whole, achieved 69 per cent of their outcomes from non-JSA customers, compared to Jobcentre Plus teams, as a whole, who achieved 76 per cent (again, exceeding the target of 70 per cent). PSL teams, as a whole, moved into work proportionately more clients who had only been out of work for a short time than Jobcentre Plus teams. They were also proportionately more likely to work with clients with just one of the target disadvantages than Jobcentre Plus teams, as a whole, were

Well, the DWP has just published the final evaluation of another programme from the time of the last government: Pathways to Work. Pathways to Work (PtW) was an attempt to get more people off Incapacity Benefit and into work, initially run by Jobcentre Plus, but, in its final phase, run on a ‘Provider-led’ model. In this phase, 2007 – 11, in 31 areas PtW was delivered by private, not-for-profit and voluntary organisations. ‘Provider-led’ Pathways also anticipated the Work Programme in its funding model, with providers paid a ‘service fee’ for taking people on to their caseloads, a job-outcome payment for getting someone a job and a sustained employment payment when they had been in work for 26 weeks. This evaluation looks at the ‘provider-led’ Pathways.

Now, overall, Pathways to Work was not a huge success. After some initial good results (and I was a strong supporter) it was a bit of a disappointment, so it wouldn’t be fair for me to quote the mediocre results for provider-led Pathways. But it is fair to see how these private and voluntary sector providers compared with Jobcentre Plus – especially as, coming late to the game, they were in a position to learn from JCP’s experience. The study measures success in moving people off benefits, with the authors finding “similar impacts for PL Pathways and Jobcentre Plus Pathways, all showing an impact of around four percentage points.” The authors emphasise the difficulties in comparing success rates at getting people into jobs, but again, the impact seems to have been “comparable in scale”, though patterns of receipt of services “differed distinctly” between provider-led and JCP Pathways and they quote other studies suggesting that this pattern reflects “parking” of customers who were harder to help. The study’s conclusion on this issue is that

The overall net impacts of PL Pathways appeared to be comparable in scale to those found for Jobcentre Plus Pathways.

Once again, the alleged superiority of the private sector is hard to find. Don’t expect the DWP spinners to go to any great lengths to publicise this finding.

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