Developing a DWP Economic Affairs

Productivity Measure
Phil Cook
Planning and Performance Management
Department for Work and Pensions
Outline

• Introduction
– DWP background
– Productivity measurement within DWP

• Development of an output measure

– Approach: Activities, outputs and outcomes
– Economic affairs activities in more detail
– Results

• Further work and conclusions

– Quality & effectiveness
– Summary
Department for Work and Pensions

• The biggest public service delivery department in the

UK
– Over 20 million customers
– Responsible for delivering over £100bn in benefit payments
each year

• The majority of DWP output contributes to

– Social Security Administration
– Economic Affairs
 General Government Final Consumption
Expenditure Weights by Service (2007)

DWP Economic Affairs

work is part of “Other” –
treated as
“outputs=inputs”
Source: Total public service output and productivity (ONS, June 2009)
Productivity Measurement in DWP

• Corporate Efficiency Team

• Within planning and performance management
• Develop and maintain productivity measure
– Published two departmental productivity reports

• Supply social security admin output data and unit costs to ONS

• How is productivity measurement used within DWP?

• External reporting: Departmental Report
• Used internally for performance reporting and planning
– Relating outputs to inputs
 Productivity Measurement in DWP (2007/08)
- Breakdown of Outputs

Labour Market Activity (34%) Other (9%)

• Measured through Job Outcome Target (JOT)
• JOT is calculated as a weighted sum of
movements of people off benefits and into
work
• Weighting is by customer group – e.g. lone
parents, long term unemployed
• Policy development, regulatory work,
work for other Government
departments
• Split between Economic Affairs and
Social Protection
• Treated as “Output = Input”

Social Security Activity (57%)

• Measured through load maintained and new
claims processed
• Working Age Benefits
• Pensioner Benefits and Forecasts
• Disability & Carers Benefits
• Child Maintenance Activity Source: DWP An analysis of the productivity of the Department for
Work and Pensions 2002/03 to 2007/08
 Issues with using JOT as an output measure

• JOT is an outcome measure

• Affected by factors outside DWP control, hard to forecast
• DWP influence difficult to measure

• Economic Downturn of 2008/09

• Increasing volumes for JSA claims and load
• Increasing number of labour market activities delivered by Jobcentre Plus
• Increasing staff productivity – interviews per advisor per day

• But also
• Fewer Job vacancies
• Fewer JOT points

Needed to develop an output measure that better represented real workloads

 Outcomes, Outputs and Activities

Source: ONS Productivity Handbook

Jobcentre Plus ƒ Labour and skill of ƒ Personal Adviser ƒ Employment ƒ Job Outcomes
Labour Market personal advisers Interviews Service – supply of
ƒ Higher
ƒ JCP offices / ƒ Maintaining Job skilled, motivated job
ready individuals
Employment Rate
infrastructure Vacancy database
ƒ Narrowing the
ƒExternal provider ƒ Training arranged employment rate gap
costs for disadvantaged
groups
 Activities – JCP Intervention Regime
Example – Schematic of Jobseekers Allowance support regime

Jobcentre Plus providers

Fast tracked
Customer customers
Diagnosis
and skills Escalating Conditionality
check

STAGE 3 STAGE 4
‘Supported
STAGE 2 Jobsearch’
The Flexible New Deal
‘Directed
STAGE 1 Jobsearch’
‘Self-managed
Jobsearch’
New
Customer

0 months 3 months 6 months 12 months 24 months

 Methodology and Data Sources
• Output measure is a cost weighted sum of activities
• Count those activities with direct customer interaction and at least
a potential link to generating job outcomes
• Volumes of activities depend on size and make up of benefit load

Apply Atkinson Activity Based Management Productivity calculations

methodology as already (ABM) system records volumes proceed as before using
developed for social of activities and calculates and new output measure
security outputs apportions costs
120

COSTS ACTIVITIES DEFINITIONS Total Factor

D Operational Delivery Staff Operational Delivery Staff The cost of the staff time that
Productivity
can be directly linked to such 112.2
I activities.
Operational Support Staff Operational Support Staff
R Local Management 110

E Operational ‘Non-
‘Non- Support Costs
Operational ‘Non-
‘Non-

Index (2004/05 = 100)

Productive’ Staff Productive’ Staff Direct staff time not available 105.7
C
to carry out direct activities.
T
Operational Non-
Non-Staff 100.0 101.8
Operational Non-
Non-Staff Goods and Services used in
Direct the direct delivery of an 100
Direct
operational service.

Business Support Goods and Services used in

Business Support
I the support delivery
of an operational service.
Output
N
Staff Time provided locally or
D centrally which does not 90
directly deliver the service
I
Sustaining the Business Staff Time: Corporate
Sustaining the Business
R Management & their support Recurrent
staff.
E Expenditure
Legal & necessary to ensure
C business continues. 80
T 02/03 03/04 04/05 05/06 06/07 07/08
 Results
120
Total Factor
Productivity

110
Index (2004/05 = 100)

100

Output

90
Estimate published in previous productivity paper
Inputs
New estimate using new Economic Affairs and
existing Social Security Administration measures
80
2002/03 2003/04 2004/05 2005/06 2006/07 2007/08
Quality and effectiveness
• Quality
– Timeliness of interviews
– Interview length

• Effectiveness
– Understanding the link between outputs and outcomes
– Adjusting for economic climate
Summary
Summary of new measure
• Improves on previous outcome based measure
• Treatment of outputs is consistent with operational view of workloads
• Measures outputs and performance – even in a recession
• Better alignment with Atkinson methodology – as already applied to social
security administration productivity measurement
• Next stage of the work is to understand effectiveness and quality adjustment

Contact Details
Graham Taylor Phil Cook
graham.taylor@dwp.gsi.gov.uk phillip.cook@dwp.gsi.gov.uk