Scotland’s new devolved employment support service

Scotland’s new devolved employment service, Fair Start Scotland (FSS), was launched in April. It is too early to say whether it’s been successful or not; but we can have an initial look at how the Scottish Government aims to measure success, and explore the wider question of how FSS is different to previous UK Government programmes.

The Parliament’s Economy, Energy and Fair Work Committee recently looked at FSS as part of its pre-budget scrutiny.

What is Fair Start Scotland?

Powers over certain employment support services were devolved to the Scottish Parliament under Section 31 of the Scotland Act 2016. Specifically, it devolves responsibility for client groups previously served by the UK Government’s Work Programme and Work Choice schemes:

  • people entitled to reserved benefits (for example Universal Credit) and at risk of long-term unemployment; and,
  • disabled people (as defined by the Equality Act 2010).

The Scottish Government launched two transitional programmes in April 2017: Work First Scotland (replacing Work Choice) and Work Able Scotland (replacing the Work Programme for claimants with a health condition or disability).

These transitional programmes were then replaced by the current FSS programme in April 2018. The first round of contracts covers three years – 2018/19 to 2020/21, with the Government committing £96 million over the period.

FSS provides support for disabled people and others claiming reserved benefits who are at risk of long-term unemployment. They are given up to 12 months pre-work support and up to 12 months in-work support. Services include help with job seeking and applications, mentoring, coaching and training.

Although funded by the Scottish Government, FSS is actually delivered by various private, third sector and local authority organisations who compete for Government contracts.

Why is this important?

At a cost of £30 million per year this is a relatively small programme, representing less than 0.1% of the Scottish Government’s total annual budget. So why is it important?

Perhaps most obviously, it is important to those service users requiring support to get into employment. The Scottish Government aims to help around 40,000 people through its FSS programme over the next three years. Moving from long-term unemployment or inactivity into sustained employment has the potential to transform tens of thousands of lives.

Politically, FSS is also significant because it is one of the first policies to arise from the extension of devolved powers as agreed by the Smith Commission/Scotland Act 2016.

Furthermore, the UK Government was criticised by many, not least the SNP, for the mandatory nature of its Work Programme. For more information on the Work Programme, see the House of Commons Library 2016 briefing. It will be interesting to see how the Scottish Government develops its own “distinctly Scottish” approach to employment support.

All carrot, no stick

An obvious way the Government has distanced FSS from the Work Programme is by making participation entirely voluntary; people do not face benefit sanctions if they choose not to engage. This development has been welcomed by groups such as Citizens Advice Scotland, the STUC and various local authorities.

Last year’s transitional programmes were also voluntary. Statistics for 2017/18 show that these programmes received 9,000 referrals over the year, primarily from Job Centre Plus advisers. Of this figure, 5,527 people, around 60% of all referrals, chose to participate. After receiving pre-employment support, around 1,800 clients started work (33% of starters), and of these people, around 600 were still in a job after 26 weeks (11% of all starters). These figures may seem a bit underwhelming; but it is worth remembering that clients have a range of significant barriers to overcome, for example living with disabilities or a long-term mental health condition.

Payment by result

One of the more controversial features of FSS is the Scottish Government’s use of payment-by-result (PbR), an approach used extensively in the previous Work Programme. As already mentioned, external organisations are paid by the Scottish Government to deliver services, and part of this is a job outcome fee. This is meant to incentivise providers to deliver “real, sustained job outcomes”, with payments made at 13 weeks, 26 weeks and 52 weeks of employment.

Progression into sustained employment is relatively easy to measure, and is, after-all, what the whole FSS programme is about. However, some organisations have recorded concerns about payment-by-result, and also what they consider to be its narrow definition of a “successful outcome”.  With the considerable challenges facing FSS participants, some argue that progression towards employment should also be considered when assessing outcomes. If someone is closer to employment than they were before they started the programme, surely this is a successful outcome. But how can this ever be measured?

Parking and creaming

Of concern to various organisations is the view that PbR could encourage providers to “park and cream”, i.e. focus efforts on the most job-ready clients and disregard everyone else. This was a major criticism of the Work Programme which was almost entirely funded through a PbR model. In written evidence to the Parliament’s Economy, Energy and Fair Work Committee, North Ayrshire Council state that the only way to avoid this behaviour is to “avoid payment by outcomes completely and pay the actual costs of supporting each customer”.

In response, the Scottish Government argue that the job outcome fee is just one part of the FSS payment model. There is also a service fee attached to every client starting on the programme, introduced to ensure some certainty of income for providers. With risk shared between Government and external organisation, the hope is providers will view all clients as equally important.

Time will tell

The Government believes FSS embodies a “whole person” approach to employment support, delivering services that are sensitive to the unique life circumstances of every client. Yet we know that personalised public services such as these are expensive. Whether sufficient budget is available to meet the Government’s aspirations will become clear over time. The Government calculates a maximum cost per client of around £9,000 (for those people needing intensive support). Kirsty McHugh of the Employment Related Services Association believes around £20,000 per client could be more appropriate in order to provide the most effective type of “individual placement support” services.

Needless to say, various evaluations and statistics will appear over the next few years identifying strengths and weaknesses of the current approach, and FSS will evolve in response. It is also certain that the Parliament will continue to scrutinise the programme’s performance in relation to the Government’s original aspirations.

Greig Liddell, Senior Researcher, Financial Scrutiny Unit.