Housing associations fear financial costs of latest pay-by-results job scheme
Job incentive deal ‘too risky’
Housing associations fear they will be left out of pocket by taking part in the government’s £1.2 billion pay-by-results scheme to cut unemployment.
Under the flexible New Deal scheme, social landlords would be able to opt to work for ‘prime contractors’, appointed by the Department for Work and Pensions to coordinate the initiative.
The contractors will be given 20 per cent upfront. They will receive the remaining 80 per cent once they get half of the people referred to them into work within 13 to 20 weeks.
But associations are worried about being exposed to this level of risk – especially as setting up additional back-to-work schemes could be costly.
Stephen Clayton, neighbourhood manager at Castle Vale Community Housing Association, said that associations would have to plough extra resources into hitting the DWP’s tough targets. ‘Getting that percentage of people back into work is very challenging. And that has a bearing on unit costs for each person you need to get back into work.’ He added: ‘It seems reasonable that prime contractors will want to share those risks with sub-contractors, providing the risks are shared in a fair and equitable way. But for landlords, putting in place additional infrastructure to deliver those [services] – there’s a risk associated with that.’
Andrew Church, community investment manager at Cambridge Housing Society, shared Mr Clayton’s concerns. ‘Sorting out the terms of the deal with the prime contractor and how risks are shared is a concern.’
Rebecca Pritchard, head of support and neighbourhoods at the National Housing Federation, said the government had indicated that contractors needed to manage the risk to associations. ‘Risk sharing is to be proportional and responsible [to the size of the organisation].’
For a briefing on the scheme see www.insidehousing.co.uk/resources