Charities fear Work Programme contracts will collapse
By Richard Johnstone | 4 October 2012
Almost half of the charities involved in the government’s flagship Work Programme fear their contracts under the scheme are not sustainable and could collapse in the next six months, a survey has revealed.
An additional 28% believe their contracts could fail before they expire.
The survey of 98 sub-contractors, carried out by the National Council for Voluntary Organisations, alsofound half the charities had received ‘significantly lower than expected referrals’ from prime contractors under the programme. A third of contractors – both in tier one, who deal with specific parts of the scheme, and in tier two, which work as needed – had not received any no referrals.
Almost half of respondents (49%) also revealed they were subsidising the scheme from their own reserves after referrals were made without funding attached.
The Work Programme, launched in June 2011, is the biggest back-to-work programme in Britain. It is intended to give tailored support to people at risk of long-term unemployment, with participating firms and charities paid according to how many people they help find work.
However, only 27% of the charities surveyed said that their contracts were ‘viable for the whole contract period’, which can be as long as five years.
NCVO chief executive Sir Stuart Etherington said the ‘sustainability of these contracts is a major cause for concern’ and could lead to charities withdrawing ‘as the situation will become untenable’.
He called for the government to investigate the problems. Charities could be left financially vulnerable by the programme, and the government should consider establishing a support programme to help voluntary organisations better manage their budgets, given the ‘payment lag’ in the system.
‘This programme is clearly not working for many charities involved in its delivery,’ Etherington added.
‘More worryingly, this will have a damaging knock-on effect to the many jobseekers who desperately need the specialist support that charities can deliver.
‘Despite concerns about contract viability, charities are still working hard to provide a quality service and are dipping into their own reserves rather than neglect people that need their help. It’s still early days and 2013 will prove critical to the overall success or failure of the Work Programme – we have a small window of opportunity to get this right and ensure that this scheme delivers for jobseekers.’
Responding to the report, a spokeswoman for Work and Pensions Secretary Iain Duncan Smith said: 'Payment by results is working. It is right and fair to the taxpayer that we only pay organisations that get people into work and keep them there, unlike previous schemes, which paid out money upfront regardless of results. There are hundreds of organisations playing a part in the Work Programme, all working closely with us with the aim of making this a success and getting people into long-term employment.'