Minimum standards have a cost

One of the frustrations of working in the public policy space is that we tend not to learn from past experience. Instead we tend to lurch between extremes.

A good example of this is the current fashion for lobbying for ‘minimum standards’ in employment programmes.

10 years ago the welfare-to-work industry, think tanks and other interested parties were fairly united in calling for an abolition of minimum standards and the adoption of a ‘black box’ approach.

There were very good reasons for this. Minimum standards tended to be dreamt up in Whitehall by people who had never met a long-term unemployed person based on an a priori thought experiment about the sort of things that would probably help unemployed people into work.

A good example of this would be Private Sector Led New Deal with its mandatory 2 week motivation course and compulsory 26 week ‘Options’ period.

The motivation course was good for some people but for many it was a complete waste of time. Options was hideously expensive to deliver and got hardly anyone into employment. The flexible ‘Gateway’ and ‘Follow-Through’ periods were far more successful.

The lessons from Private Sector Led New Deal were very clear – take away central prescription and instead empower front-line Advisors to do what works.

Minimum standards are the antithesis of a personalised, flexible service. Instead of treating each unemployed person as an individual with their own needs and desires, minimum standards impose a path that may be completely unsuitable for the person in question. ‘Every jobseeker must attend an induction, have an in depth needs assessment conducted and must have a CV’ sounds like a sensible minimum standard. But what about someone who has a job lined up to start at the end of the month and just needs a pair of work boots? You might say there is no harm in doing all of the above but there is a genuine cost. The money spent writing a CV for someone who doesn’t need one is money that is not spent on, for example, buying them a pair of work boots!

So how did the welfare-to-work world end up abandoning the principles of flexibility and front-line empowerment that we struggled for in favour of ‘minimum standards’? I think that there are two main reasons for this.

First, the ‘Black Box’ approach was completely misinterpreted by commentators, journalists and politicians. ‘Black Box’ was supposed to mean ‘contractual shield’. It was supposed to enshrine the right of providers to deliver what worked best without interference from the centre. Given the payment-by-results environment, providers were incentivised to help as many people into work as possible. The contractual shield was supposed to ensure that bureaucracy wasn’t imposed that prevented them doing so.

Unfortunately ‘Black Box’ came to be synonymous with ‘unaccountable’ and ‘non-transparent’. The point of the Black Box was not to hide what was happening within Work Programme but that was how it started to be interpreted. There is nothing inconsistent between having a contractual shield alongside total transparency about what providers are doing within that shield. However, public perception came to see the Black Box as a bad thing – a way for service providers to hide what they were (or more likely were not) doing.

More importantly, and exacerbated by a perceived lack of transparency, Work Programme was guilty of ‘parking’ large numbers of jobseekers. ‘Parking’ is where a jobseeker on an employment programme is not seen and has no meaningful interventions. ‘Parking’ was seen as a consequence of not having minimum standards. After all, if a programme has compulsory minimum standards for all jobseekers then parking cannot happen.

I think that ‘Parking’ is a very real moral problem for employment programmes. I do not think that the problem is solved by the imposition of minimum standards.

First those minimum standards will probably be totally unsuitable for the very hardest to help who are the people most likely to be parked. A minimum standard of an appointment every two weeks? That is nowhere near enough to support someone very far from the labour market into a sustainable job.

Secondly, the minimum standards themselves will start to be gamed by unscrupulous providers. ‘Parking’ happens when Advisors and organisations have given up on getting a person a job. Unscrupulous providers will follow whatever ‘minimum standards’ are prescribed but will do the bare minimum to tick the box rather than actually trying to perform meaningful interventions. Every jobseeker must attend an interview practice session? Put 40 people in a room with a bored tutor at the front reading from a bad PowerPoint presentation. Box ticked? Yes. Good done? Zero.

Minimum standards address the symptoms of ‘parking’ not the causes. The causes of ‘parking’ are cultural and commercial. To address the former you need to create organisational cultures that view every jobseeker as a person capable of finding work and worthy of genuine sustained efforts to help them do so. To address the commercial causes we need to create payment systems that reward providers for helping more and more people into work and put sufficient resource in the system for that to be a realistic possibility for all job seekers.

Minimum standards will not prevent ‘parking’. They will not lead to a better service for the very hardest to help jobseekers.

Indeed minimum standards come with a cost that will actually see fewer people go into work.
Consider an employment programme with £6,000 to spend. There are 5 jobseekers on the programme: A, B, C, D and E. A can be helped into work for £1,500, B for £2,000, C for £2,500, D for £3,000 and E for £3,500.
To implement a minimum standard regime costs £100 per jobseeker.

There is a clear choice to be made here between minimum standards and people going into work.
A, B and C can be helped into work for the £6,000 but then D and E will not have minimum service standards applied.

Everyone can receive minimum standards but then only A and B will go into work and C will remain unemployed.

I do not want to make a moral judgement about which programme is better. I do want to point out that although jobseekers D and E might be better off under the second option as they receive a minimum standard service, C is much worse off as she would have a job and not be unemployed any more had the limited resources available been distributed differently.

To put this more generally: Minimum standards may benefit those furthest from the labour market but they will lead to unnecessary unemployment for those moderately far from the labour market.

I have already made the case that minimum standards in reality do not help those furthest from the labour market. Given that they increase unemployment amongst those moderately far from the labour market they are not a good idea. We will realise this again in another 10 years and have forgotten it again in another 20.

Sean Williams is a social entrepreneur and consultant. He advises companies and governments on how best to help unemployed people move from benefits into sustainable jobs