§ Mr. Spellar
To ask the Secretary of State for Employment if he will make a statement on the workings of the payment by results contract for job clubs.
§ Mr. Michael Forsyth
Responsibility for the subject of the question has been delegated to the Employment Service agency under its chief executive. I have asked him to arrange for a reply to be given.
Letter from M. E. G. Fogden to Mr. John Spellar, dated 3 May 1994:The Secretary of State has asked me to reply to your question about Jobclub payment by results contracts.The payment by results approach to Jobclub contracting has shown that it represents good value for money. It encourages our contractors to think more about the results to be achieved and to improve their effectiveness at helping members to find jobs.Payment by results contracts are divided into two parts. There is a fixed payment element which usually represents 75% of the total contract price. The bonus element, which represents the remaining 25% of the contract price, is divided between the number of job placings agreed in the contract. Payment of both the fixed and bonus element of the contract is made monthly in arrears.It is explained to contractors that a bonus payment will only be made where a member has left to take up work and we have satisfactory written confirmation of their placing. Payments can be made in cases where a member leaves the Jobclub to take up temporary work. However, we will not pay a bonus for the same person more than twice during their membership. Part of our role in monitoring the programme is to check a percentage of all claims for bonus payments to ensure there is no abuse of the system.At the end of 1993/94 there were 782 payment by results Jobclub contracts in operation. This represents 54% of the total number of Jobclubs. Payment by results contracts are one way of making our programme contracting as efficient and effective as possible. We plan to introduce further measures into our programmes with the aim of ensuring the unemployed people who join them receive the best possible help.I hope this is helpful.