Charities delivering on the Work Programme may face financial risk
The National Council for Voluntary Organisations (NCVO) has published research warning that charities delivering on the government’s welfare-to-work programme may be exposed to financial risk.
The research shows that more than half of charities delivering said their prime contractors had not protected them from financial risk; 39 of 72 charities surveyed said they have not been shielded by their prime contractor from risk and a further 14 said their prime had only done so to a small extent. Just 2 reported being protected “extensively”.
Under the Work Programme, charities are required to fund the work themselves and are only paid by the Department for Work and Pensions once a person placed in work has completed six months.
Sir Stuart Etherington, chief executive of NCVO, said: “The prime contractor model is supposed to safeguard small providers from financial risk, but these findings suggest it is currently falling far short of expectations. The Government must take these concerns on board and ensure that no bad practice is allowed to slip through the net.”
Read the full NCVO Work Programme Special Interest Group Survey
Amanda Frewin
Research & Project Support
The National Council for Voluntary Organisations (NCVO) has published research warning that charities delivering on the government’s welfare-to-work programme may be exposed to financial risk.
That is precisely the problem, the third sector and other smaller organizations will suffer from this decisions and pay the concequences, and hopefully there will be someone in DWP who will do something about it.
This survey is spot on. It clearly spells out what it is like for a small organisation to be on the ‘doing’ end of a DWP contract. This is a far more realistic account of the difficulties likely to be encountered by the third sector and other smaller organisations involved in the current round of ‘Payment by results’ (PBR). Provided any commentary avoids the PRB whinging that normally goes with this analysis, it provides a far more powerful and eloquent testimonial to the realities of the 3rd Sector trying to stay involved and the very real challenges that face the sector of being forced out of this activity. I hope someone in the DWP takes note.
Disappointingly, in my view, there wasn’t a question on whether compliance with the DWP’s contractual processes are unnecessarily onerous and their implementation are too inflexible for small businesses. It is here where I do think there is an uneven playing field. The rigid requirement for compliance with all the bureaucratic aspects of the DWP contract is being passed down to small organisations, many I would guess in the 3rd sector. This taken together with low margins will result in many being squeezed out of this market. This is because they don’t have sufficient size to achieve economies of scale nor cope with the deluge of regulatory standards that get imposed in these sort of contracts.
Whilst I accept we all have choices as to whether or not to take part, wouldn’t it make a refreshing change if government contracts included a proportionality clause based on ‘market share’ to allow some flexibility in compliance with the array of procedures and protocols that would otherwise have to be complied with. A simple ‘best endeavours’ clause could be used.
So in keeping with the spirit of the season, DWP please include a ‘best endeavours’ contract provision for small businesses at the top of your New Year Resolutions! Making it retrospective would be even better!