Work Programme under fire as charities shut down by GlynnePowell


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Work Programme under fire as charities
shut down
Several charities that have closed in recent
months believe a government work scheme is
partly to blame for their demise, a BBC
investigation has found.

The Work Programme makes payments to
organisations which help the long-term unemployed
find a job.

But some charities said it had created severe cash flow problems for them.

The government said it was fair that charities were paid in full only after they had got
people into work and kept them there.

Under the programme, contractors get a small fee when someone joins the scheme but
they are only liable for larger fees once they have been in work for an extended period of
time - of up to two years.

Eco-Actif Services, a small social enterprise in Sutton, Surrey, spent a year helping long-
term unemployed people find work under the work programme.

When the organisation fell into financial difficulties, a High Street bank, a social enterprise
investor and another charity all considered providing aid but the organisation's Work
Programme contract discouraged any of them from investing.

"These organisations felt that the figures didn't add up in the longer term for the Work
Programme as a whole," said former director Anna Burke.
Eco-Actif Services is one of at least four organisations that have closed recently, citing
their Work Programme contracts as a major reason in their collapse. About 100 people
have lost their jobs.

The BBC understands that another charity has written to the government to inform it that
its Work Programme contract is causing it severe difficulties.

'Walking disaster'
In a survey released on Thursday by the National Council of Voluntary Organisations
(NCVO), almost three quarters of respondents said their Work Programme contract was
unsustainable. And nearly half said their contract could fail within six months.

"They think it's a walking disaster," said Sir Stuart Etherington, chief executive of the

"I've heard no positive feedback from voluntary organisations. Some
have gone bust, some have withdrawn from the programme. They
have a real problem with the way the contracts are structured."

The programme is run on behalf of the government by 18 prime
contractors, usually large private companies.

The charities are reliant on these companies to refer people to them.
But those referrals have varied greatly from month to month, making
financial planning impossible for some charities.

In addition, the BBC has discovered that those prime contractors are, in some cases,
keeping up to half of the initial referral fee for themselves despite doing little work and
passing the person - and the risk - on to the charities.

Liberal Democrat MP for North Devon Nick Harvey said: "It just isn't possible for small
charitable organisation to wait months and months to be paid for something they've had to
pay the costs for up front."

Mr Harvey was in government until last month's reshuffle and said that when he raised the
problems the Work Programme was creating for charities with a fellow minister, they were
not interested.
"They just said to me 'These small operators are naive to allow themselves to be stuck with
these contractual arrangements,'" he said.

"But these aren't big businessmen, they are not doing it for the money. If they are offered a
take-it-or-leave-it deal by some big PLC, frankly they haven't got much choice."

'Extraordinary situation'
It is not only charities that are struggling.

The local council in Barnsley is a Work Programme sub-contractor - but probably not for
much longer, said council leader Steve Houghton.

"We are simply not getting the numbers through on
the Work Programme to make our contract viable,
and it's getting to the point where we think we can no
longer maintain that contract," he said.

Other organisations have already decided to pull out
of the programme.

St Mungo's, the largest homelessness charity in
London, withdrew in April. Not a single person was referred to them by the main
contractors - a situation St Mungo's chief executive Charles Fraser finds incredible.

He said: "It's extraordinary. We have a well-respected track record in providing
employment and training services to homeless people. It's inconceivable there was no
demand for those services."

Mr Fraser said he believed the homeless were simply seen as being too difficult to help by
the Work Programme.

"It's not because of homelessness; it's because other attributes are associated with it, such
as long-term unemployment. I don't think the Work Programme has been very successful
with the long-term unemployed."

The Department of Work and Pensions said financial arrangements between providers and
their sub-contractors were a matter for them and no organisation should negotiate a deal
they could not afford.
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 the last government which paid out money to
schemes 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

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