Outcome Incentive Payments Outline Proposals External Advisory Group

1. Outcome Incentive Payments Outline Proposals External Advisory Group

2. Background • Trailed in Skills Investment Strategy… • Ambition is to see more funding related to outcomes, rather than outputs, rewarding the economic impact of learning (people into jobs, career progression etc) • Will also embed new accountability framework – with colleges and providers more directly accountable to local stakeholders • Initial proposals are for Job Outcome Payments – introduced in 2011/12 – trialling the broader approach

3. Job Outcome Incentive Payment • c£80m identified for 2011/12 • Broad approach agreed with BIS and DWP – implementation to be developed by Agency, working with sector • Aim is to incentivise the whole sector to help the unemployed into jobs – focus on mainstream provision with end of specific programmes for unemployed • Needs to be integrated with JobCentre Plus processes / referrals

4. Job Outcome Incentive Payment (2) • Indicative allocations (December) included a potential Job OIP – equivalent to 2.5% of overall Adult Skills Budget allocation. • All colleges and providers offered an opportunity to engage - not just those with a history of working with the unemployed • As part of dialogue around allocations, we will ask colleges/providers/employers to confirm that they want to participate in this…..those that don’t will not receive OIP payment in final allocation • Committed to working up the details of the proposals with sector representatives • 4 broad options outlined……not intended to be final or exhaustive – but to generate discussion

5. Option 1- Stakeholder endorsement • College / provider agrees a volume (target) of job outcomes with JC+ and other stakeholders • Target agreed and published as part of the business cycle planning process • At the end of the year, stakeholders confirm with Agency that volumes have been achieved • Monies released

6. Option 2 – Administrative System • Flat rate set per job outcome eg £800 • Each college/training organisation could earn and claim up to the level of their 2.5% allocation • Assessed and paid, by actuals, on a quarterly or bi-annual basis • Where the OIP wasn’t earned it would be clawed back and re-allocated to those delivering more jobs

7. Option 3 - Hybrid • Agency publishes a range for OIP rate – eg from £600 to £1,000 – to ensure that volumes agreed are variable and reflect different labour market conditions • JC+ uses this information to help agree challenging / realistic targets with colleges/providers - as part of the business planning process • Multi-regional colleges / providers would work through Agency/JC+ national to get volume signed off • Targets shared with Agency • Colleges and training organisations delivering more than agreed target could be eligible for a share of any money returned

8. Option 4 – Jobcentre Plus Commission • Jobcentre Plus looks at colleges/providers delivering in its local area • Aggregates total of indicative Outcome Incentive Payments (2.5%) to form a local pot of money • Jobcentre Plus ‘commission’ this – across host colleges and providers wanting to deliver job outcomes – linking to their referral process etc • This could be through negotiation: agreeing challenging targets with each college/provider or through a ‘bidding’/tendering approach.

9. Technical Details • Outcome recorded on ILR • Evidence requirements simplified • Minimum of X weeks in a job • Need to have undertaken some form of training

10. Issues • Need to be clear about wider accountability agenda and new role for stakeholders to work directly with colleges/providers • Assumes an integrated approach with JC+ - dependent on their capacity / capability to engage • Need to think through payment options – in year? On actuals? On profile? Clawback?

11. Questions?