The £5 billion initiative was under way in parts of the country from last Friday (10 June), but observers claim it will be difficult for private contractors to deliver the programme at a profit in certain parts of Scotland, Wales and London, thus disincentivising activity in these areas.
According to the Department for Work and Pensions, approximately 2.5 million people are expected to be supported through the Work Programme over the next five years, employment minister Chris Grayling said on Friday.
The Work Programme is the latest milestone in the delivery of the Government's radical welfare reforms. It is the biggest single payment-by-results employment programme ever introduced and replaces much of the existing back-to-work support on offer with a programme that is intended to be built around the needs of individual jobseekers.
Ministers are clear that the Work Programme will tackle the human consequences of endemic worklessness. Welfare-to-work providers around the country will now address the needs of the long-term unemployed claiming Jobseeker's Allowance and those on long-term sickness benefits, who may need more intensive support to help them into sustained employment.
Under the programme, providers are free to innovate and design support, based on the needs of jobseekers and local labour markets. The Government's priority is to get people into employment that lasts.
Neil Lee, senior economist at The Work Foundation, said: "The Work Programme is based on a national payment structure and does not take into account local and regional variations in labour demand. Economic growth is faltering and parts of the country - still dealing with the fallout from the recession - are facing significant public sector job losses.
"As the Work Programme is based on payment by results, contractors carry the initial risk. There is therefore the danger that private contractors will focus on investing in places where they are more likely to get people into work to secure a return on investment. The financial risk may also be passed down to small, local voluntary sector organisations, which could be knocked out of the market as a result.
"London presents a more complex picture. Although demand for labour is generally strong, other barriers pose a problem for getting people from certain areas into work, including such factors as cost of living, housing and childcare. There is also intense competition for the low-skilled jobs that are available.
"The programme's success is dependent on the speed of economic recovery and the availability of suitable job vacancies for participants. This could be difficult, as the programme's minimum success criteria are in most cases above that which have been achieved by other employment programmes during times of economic growth.
"The pattern of service delivery across areas should be monitored closely. If there are significant variations in performance across different areas, the Government should look again at the payment structure to reflect differences in labour demand and the associated additional cost of supporting people in these areas. Doing this will ensure people get the support they need, regardless of where they live."
