Recommendation 2

The Department has ended up paying more per Restart participant than for previous similar schemes, because it had to pay providers to rapidly build up capacity from a standing start and then did not need all that capacity. From 2010–11, when it was responding to the last economic crash, to 2020–21, the Department reduced expenditure on employment support from £2.9 billion a year to £300 million a year. So, when it announced details about Restart in November 2021, designed as a £2.9 billion scheme for 1.4 million people, it inevitably had to work with the market to build capacity and could not achieve as much competition on price as it otherwise might. However, the Department had significantly overestimated demand for Restart, partly because it expected there to be more eligible participants, and partly because it expected more of those eligible participants to be found suitable to start on the scheme. Providers had quickly built capacity for the high number of participants and now had costs they could not recover for things they did not need, such as leases on larger buildings than they would require given the reduced volumes. The Department did not plan for this scenario of lower demand, and it gave limited consideration to contractual mechanisms in the original Restart contracts to reduce costs or expand eligibility without renegotiations. As a result Restart is now expected to cost £2,429 per participant, making it significantly more expensive than the Work Programme, which cost the Department around £1,760 per participant. Recommendation 2: In its Treasury Minute response to this report, the Department should set out what lessons it has learnt from Restart about how it can better expand and reduce capacity for employment support as it is needed, at 6 The Restart Scheme for long-term unemployed people better value to the taxpayer. This should include an assessment of what standing capacity and capabilities it needs and whether it can better maintain the market be