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London vol. groups miss out on Work Programme income

VCF groups and contracts under the Work Programme: an early study from London

An initial survey on the government's Work Programme (after the first two months of operations) suggests that in London VCF groups - especially those involved in specialised training - are getting nowhere near the benefits from the system that government statements promised.

The voluntary sector body for London (LVSC) has produced a report looking at how the programme is going - and suggesting a need to make changes if its promised impact on the voluntary sector is to be achieved.

The Work Programme started operations in June 2011, providing training for unemployed people. The contracts were put out to tender, and – because of the size of the tender and the system of payment by results involved - it was mostly private sector companies (for example 6 in London) who were awarded the tenders and became the ·“prime contractors”.

There was expectation that the actual delivery of much of the training would be done·by smaller organisations (including Voluntary Community and Faith (VCF) groups) acting as subcontractors. Government statements encouraged this, and even hinted at sanctions or penalties if it did not happen.

"In any number of statements over the last year, the government has strongly intimated that it expects Work Programme prime contractors to subcontract delivery to voluntary and community ... groups, because they have the specialist expertise to support the most disadvantaged unemployed people into work." (LVSC). For example,·DWP said·that involvement of VCF groups in the programme would give a “boost to the Big Society”.

There are two sorts of contracts that VCF groups could get from the prime contractors - "first tier" (regular contracts with steady flows of clients) and “tier 2” (ad hoc contracts, where the clients have specialist needs - such as·an impairment ·-·and a steady flow of work cannot be guaranteed).

The organisations throughout the country that have been awarded contracts with the prime contractors are listed (as at June 2011) on the DWP's website.

This early research report from London found that·

  • a number of VCF groups are well underway delivering ‘tier 1’ Work Programme subcontracts.·However, most tier 1 providers report that

    • prime contractors have passed on to their subcontractors much of the financial risk·(risk because payment is only made by results), regardless of size or financial capacity of subcontractors.

    • TUPE obligations - legal obligations to employ people previously doing activities within the public sector - have imposed a·big strain·terms of cost and resource. This happened just when these groups were gearing up for delivery of the work, and its·was not helped not helped by inflexibility and a lack of clarity from DWP on the subject

  • the vast majority of specialist "tier 2" providers had had no Work Programme customers referred to them at all in the first couple of months. Some groups surveyed thought that this was because of Job Centre Plus actions. They thought that Job Centres were deliberately not referring the most disadvantaged job seekers (such as disabled people) to the Work Programme, so that the prime contractors (who are paid by results) get the best chance of achieving early job outcomes and cash flow. This may help keep the Work Programme funded, but - if true - "raises serious concerns about both the level of specialist support available to vulnerable customers and the future viability of the specialist voluntary groups".

LVSC makes a number of recommendations and concludes that “we are still in the early stages of the Work Programme, and it is not too late to adjust aspects of its design to ensure it delivers fairly for the hardest to help, and that specialist VCF providers play the kind of role that the government wished for them".

LVSC, Fair Chance to Work: initial voluntary and community sector experiences of the Work Programme in London, LVSC, October 2011