Only 60 per cent of voluntary sector providers in the Work Programme say they intend to remain involved, according to a report published last week by the Department for Work and Pensions.
The report, Work Programme Evaluation: procurement, supply chains and implementation of the commissioning model, also says that 43 per would definitely seek to get involved in other DWP programmes.
The report was written by the Centre for Economic & Social Inclusion and says its findings are based on the first wave of "research forming part of the official evaluation of the Work Programme commissioning model".
It says that voluntary sector contractors had received low levels of referrals, that the Work Programme’s "differential pricing" system did not adequately reward contractors for working with hard-to-reach groups, and that more support was needed for sector bodies in the supply chain.
But it says there is little evidence that voluntary sector groups have been used as "bid candy" by prime contractors to make them look attractive.
"It has been widely reported in the media that [voluntary, community and social enterprise] sector organisations have not received the expected level of referrals from the Work Programme," the report says. "This evaluation has found little evidence to suggest this is because primes simply used VCSE organisations as ‘bid candy’ during procurement with little intention of passing on referrals.
"Subcontractors themselves expressed the view that the financial pressures facing providers and the lower than anticipated volume of Employment and Support Allowance claimants has led to fewer referrals being made to tier-two subcontractors."
Social Enterprise UK, the umbrella body for social enterprises, said in its response to the report that payment-by-results programmes were "good on paper" but were failing in practice.
"If the government wants to outsource public services, then it needs the expertise and values of social sector organisations to ensure delivery isn't dominated by a handful of private providers," said Peter Holbrook, chief executive of SEUK. "But social enterprises will be forced to walk away if the programmes and contracts are designed in a way that makes their involvement impossible."
He said that the government risked ending up with "complexity and dominance by a handful of too-big-to-fail providers", and history had shown such systems did not produce good results.