Steven Nuttall is 50 years old, but he's never learned to read and write. Unemployed for the last decade, he's picked up a range of odd-jobs during his life, like selling popcorn and working on the fairgrounds, but never enough to make ends meet. Filling in application forms is a nightmare for Steven, and he's had rejection letter after rejection letter. The year before last, he had fish fingers and chips for his Christmas dinner. He said he cried that day.
Helping people like Steven isn't easy, but it's not impossible. Sometimes it takes more specialised support, which is why the Work Programme is designed to include a variety of organisations, from the private, public and third sectors, which have the skills to help people into work. This year, Steven had a proper Christmas dinner because he finally got a job, and one that he loves. And this is because of the specialist support he received through Bootstrap, a charity based in Lancashire who have been delivering social inclusion programmes for over 20 years - just like A4e.
Bootstrap is just one of the 96 Third Sector partners A4e works with under the Work Programme - more than 51% of all our partners. We have worked with partner suppliers for over 10 years delivering services like these. But a recent report by the National Council of Voluntary Organisations (NCVO) indicated a more general worry - a sense of concern experienced by a number of charities who have been sub-contracted to deliver the Work Programme, particularly with regard to what they see as exposure to financial risk which is unshielded by the prime provider they are contracted with.
Being exposed to financial risk is something A4e is well versed in managing. We first started pioneering this approach in 1992. By delivering the Work Programme under a Payment by Results (PBR) framework - something we actively championed - we are absorbing risk on behalf of Government and taxpayers, and taking it on ourselves. We do this because we combine commercial skills with social values. I have learned from more than two decades of building a business that tackles challenging - and often new - public services with outcome funding commercial models how to plan for the risk and cash requirements of these types of contracts. It is difficult to model and fully evidence the finance you need to run a 'new' programme, particularly on the scale of the Work Programme, but that's the nature of PBR markets. It is the direction we are going in - our public finances means there is not an option - so we have to learn and learn quickly.
As a 'Prime contractor', we take very significant headline financial risk, but this is different to 'shielding suppliers from risk', which the NCVO asserts is lacking. When we talk about suppliers, the picture is more complex than simply 'third sector' and 'other'. We have some suppliers who provide the full range of services required to help get someone into work (what we call an 'End to End' partner).
These make up 17% of our supply chain. We have other suppliers who have specialist skills to support someone with a specific problem, like drug addiction, homelessness or a criminal conviction, either through short interventions or during their entire journey into work (what we called 'Specialist Intervention' and 'Specialist End to End' partners). These make up 83% of our supply chain. Some suppliers are local to an area, and some have a national footprint, some are third sector, some are public and some are private. In some areas, A4e is sub-contracted to another Prime provider. Between us all we support hugely diverse groups of people, such as particular ethnic groups, older people, lone parents, under 25s, people with health difficulties, very long term unemployed people, graduates, executives, ex-offenders, faith based programmes and so on. Very few suppliers have dealt with such a diverse range of customer groups and we have actively sought to develop these skills over the last 20 years. Public, private and third sector organisations all bring a rich diversity of talent and experience and we need all parties to make Work Programme successful. No one group has a monopoly on expertise.
The common thread is that all of us have had to build complex models to assess the finance we require to deliver our programmes effectively. We have done this on historical UK welfare programmes and in international markets in France, Israel and India. What many people fail to see is that we directly protect our Specialist Intervention partners by removing PBR requirements. These partners are brilliant at support on specific and challenging issues but they are not 'back to work' suppliers. We do not create contract models which link their payment to employment - that is our job. They help customers with particular barriers preventing their progress into work. It is hard to predict how many customers will need their services until we receive referrals from JCP but they do not have to manage 'outcome payment risk'. Out of these service partners, 54% are from the third sector - the largest single partner group we have.
When we consider financial risk, the nub of the issue is why some partners on the Work Programme are not receiving the referrals - and therefore the payment potential - they anticipated. It is a concern A4e shares, and it is a risk we have to take too. For a national programme of this magnitude, referral systems are working better than I have seen in many programmes in the past. At the last count, our partners are now receiving 33% of the total overall referrals to A4e. We expect that to continue to rise as long as we all hit our performance targets. There isn't a single third sector End to End or Specialist End to End partner on our books who isn't receiving referrals, and we work closely with them to manage fluctuations and variations. We also ensure partners get referrals that reflect their expertise and location - we do not send 'harder to help' to suppliers and 'deal with the easier customers' ourselves.
In five and half months of the Work Programme running, a lot has happened. JCP and Primes are working hard to get referrals working across all customer groups. Already thousands of people have moved into work - the focus is on making sure this is sustained. We continue to move referrals to our supply chain - voluntary, charitable, public sector and private. Very large sums of capital have been raised with banks to ensure the finance is available for the programme and massive investment is going to fund the services for the harder to help. We communicate openly and honestly with our partners and we listen when they have ideas and suggestions. We feed all of this back to the DWP, helping, where we can, smaller charities and suppliers get their message directly to Government.
We always knew it would be tough. I would be surprised if anyone who bid for a Work Programme contract would say otherwise. As early as 2010, we spent a considerable amount of time consulting with more than 1,000 third and public sector organisations ahead of the Work Programme, to prepare for the anticipated impact and to develop business plans accordingly. No one should have gone into this with their eyes shut and we worked hard with our partners to capacity build. To suggest that all charities are suddenly concerned about the level of financial risk they have been exposed to does a huge disservice to the business planning I know countless numbers of them have done.
Tenacity, determination and iteration will be needed to make the Work Programme effective. I know A4e and our supplier partners are doing everything we can to make the Work Programme work for the people who need it the most. At the end of the day, it's about the people who come to our branches and those of our partners looking for help. It's about people just like Steven.