Almost half of charities in Work Programme say contracts are at risk of failure, with some warning they may go bust as a result.
Patrick Butler
Seven out of 10 charities hired to help long-term unemployed people into jobs under the government's "big society" Work Programme have warned they may have to pull out of the scheme because it is not financially viable.
Almost half of the charities said their contracts were "at risk of failure" in the next six months, with some warning they may go bust as a result. Nearly 50% of the charities surveyed said they had dipped into their financial reserves to subsidise delivery of the scheme.
The findings of the survey, carried out by the National Council for Voluntary Organisations (NCVO), is the latest in a series of blows for the Work Programme, which was designed by the coalition to help get people who have been workless for long periods off benefits and into work.
Sir Stuart Etherington, chief executive of NCVO, said: "The sustainability of these contracts is a major cause for concern. This programme is clearly not working for many charities involved in its delivery. More worryingly, this will have a damaging knock-on effect to the many jobseekers who desperately need the specialist support that charities can deliver.
"We are calling on the government to investigate the current funding arrangements to determine why so many contracts under the Work Programme are at risk of failure and why some charities are subsidising this work."
Ministers awarded huge Work Programme contracts last year to big private companies such as Ingeus Deloitte and A4E. These prime contractors in turn promised to refer clients to specialist charity subcontractors who would help prepare so-called "hard to reach" clients for the job market, such as disabled people, ex-prisoners, and homeless people.
The former employment minister Chris Grayling launched the Work Programme in April 2011 as a "massive boost for the big society", because of the key role the scheme supposedly envisaged for small, community-based employment charities and social enterprises.
But the NCVO survey confirms that many charity providers, which in some cases have invested large sums preparing for the Work Programme, feel their involvement is financially unsustainable, with 47% saying they thought the contract would fail within six months and a further 26% reporting that the contract would collapse before it was due to end.
The survey of nearly 100 charities found that a third had not received a single referral from a prime contractor to date. Of those that had received referrals, half said they had received fewer than anticipated, and several said they had not been adequately paid. Asked to rate their relationship with their prime contractors on a scale of one to 10, a third of charities gave it the lowest possible score, defined as "not at all satisfied".
The report says the lower-than-expected level of referrals might be explained in part by the low "flow" of clients currently on sickness benefit, in turn caused by the high number of these clients conducting appeals against their Atos-administered "fit for work" test.
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