The Policymaker's Dilemma: The Risks and Benefits of a ‘Black Box’ Approach to Commissioning Active Labour Market Programmes

Abstract

In September 2009, the British Government launched a new employment assistance model called Flexible New Deal. It was soon replaced by Work Programme in 2011. Both prioritized what is often called a 'black box' approach to public employment assistance, whereby the government purchaser focuses predominantly on outcomes and does not seek to direct agency operations. Using a study of the orientations and strategies of frontline employment services staff in 2008 and 2012, we seek to enhance understanding of the impact of so-called 'black box' commissioning on key aspects of service delivery. Black box advocates propose that it is a hands-off approach that allows agencies to be innovative and to improve efficiency. These effects are thought to be due to improved local service quality and greater flexibility to tailor services to individual clients. Critics argue that this increased discretion facilitates under-servicing of some jobseekers and agency profiteering. These practices are commonly referred to as 'parking' and 'creaming'. In this UK study, we provide evidence of both positive and negative activities associated with black box commissioning. We find some small improvements in flexibility at the frontline, but little to no evidence of increased efficiency as measured by the reported rates of jobseekers moving into work. We also observe an increase in practices associated with creaming and parking. We conclude that improving efficiency and maximizing innovation are not guaranteed by black box commissioning, and that the aim of facilitating increased frontline flexibility, while also minimizing risk, persists as a major policy design tension.

Co‐production as a route to employability: Lessons from services with lone parents

“…In this case, Brandsen and Pestoff's () vision of co‐governance was reflected in a high‐level planning and funding regime that emphasized collaboration and resource sharing based on flexible, locally responsive partnerships. While more market‐oriented forms of governance may have the potential to encourage personalization in specific circumstances, this has not been the experience under many of the UK's large‐scale employability programmes (Considine et al ). We suggest that specific co‐governance arrangements agreed by the funder and partners under MIW established distinctive mechanisms for shared planning and decision‐making that created the conditions for the design of collaborative, personalized street‐level services.…”

“…As noted above, part of this critique argues that contracting out employability services to for‐profit companies (which is central to the WP's governance model) reinforces standardization, rather than personalization, as contracted providers seek to minimize variability in services and therefore maximize efficiency (and potentially profits) under ‘payment‐by‐results’ contracting (Lindsay et al ). Considine et al’s () extensive survey work with WP advisers found little evidence of increasingly personalized services. Kozek and Kubisa's (, p. 121) EU‐level analysis concludes that under the UK government's approach to delivering employability for lone parents ‘personalization involves the identification of those closest to the labour market … issues of gaming, creaming and parking may be the outcomes of such systems, and service options are often limited, focusing predominantly on job search and application processes'.…”

“…Yet, policy‐makers who have followed an NPM approach to the management of employability services have argued that ‘black box’ contracting, where ‘service providers, contracted by the DWP, are able to design service provision as they see fit’ (Fuertes and McQuaid , p. 101), is also conducive to personalization. The problem is that a growing evidence base suggests that a target culture and emphasis on cost competition (both NPM norms that are also defining features of DWP programmes) can lead providers to favour standardized programme content rather than genuine personalization (Fuertes and Lindsay ; Considine et al ).…”

“…However, despite claims of personalization being near ubiquitous in policy‐makers' advocacy of extending the reach of compulsory activation, there is evidence that many mainstream employability programmes in fact offer standardized, ‘work‐first’ approaches, which seek to pressure people to find work quickly, irrespective of the quality of the job or the characteristics of the individual (Fuertes and Lindsay ). Such work‐first programmes—with the contracted‐out ‘Work Programme’ (WP), funded by the UK government Department for Work and Pensions (DWP), a typical example—have struggled to deliver sustainable job outcomes and have been criticized for ‘creaming and parking’, whereby individuals closest to the labour market are assisted while the most disadvantaged receive little support (Considine et al ).…”

“…parking', whereby individuals closest to the labour market are assisted while the most disadvantaged receive little support (Considine et al 2018).…”