Recommendation 21

HM Government Accepted

2. PAC conclusion: 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. 2a. PAC recommendation: 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 better value to the taxpayer. 2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 Restart was designed in a very uncertain economic outlook. The economic downturn and sudden unemployment increase in 2020 required a rapid response. A significant expansion of support was put in place at pace, scale, and within a value for money assessment, using market knowledge and the full range of mechanisms available, including expanding existing contracts and letting new ones. 2.3 The department’s contract mechanisms enabled a rapid and effective response to significant changes in volume expectation without compromising service quality or delivery. The department retained value for money and negotiated cost reductions above that which would have otherwise accrued. 2.4 The department learned however that the level of uncertainty should drive consideration of a broader range of scenarios, and how provision can adapt. It learned its assumptions regarding proportions of people that can be suitable for programmes can be inaccurate, and it needed to better understand the basis of its assumptions to inform future provision capacity. The department will do this by implementing the actions set out throughout this Treasury Minute to improve its capabilities, as well as ensuring the department assesses systematically the risks and opportunities associated with contingency planning for future exceptional economic events, for example, the advantages of additional flexibility in contracts and the trade-off with extra costs. 2.5 The department recognises that a responsive model is important because levels of contracted provision vary over time to reflect the level of need linked to the economic cycle and government priorities. That is also true of numbers of work coaches providing support in jobcentres. 2b. PAC recommendation: This should include an assessment of what standing capacity and capabilities it needs and whether it can better maintain the market between economic shocks. 2.6 The government agrees with the Committee’s recommendation. Recommendation implemented 2.7 The department agrees it is important to have a mix of provision available in order to ensure it can effectively pivot to tackle emerging issues. 2.8 The department’s assessment is that the present level of contracted employment support represents an appropriate response to the current labour market challenges and offers value for money with a good balance of market engagement and provider capacity. 2.9 The government will further assess the standing capacity and capability of the market in line with government priorities and its commitment to achieving value for money as part of future Spending Review decisions and as part of regular fiscal event updates in the event of significant forecast economic change. Such assessment will also recognise the impact on the market of other organisations such as Devolved Administrations, Local Authorities and Mayoral Combined Authorities.