When the prime contractors for the Work Programme were announced in April, there was disappointment in the voluntary sector: out of 40 prime contracts, only one was won by a voluntary sector organisation - the Careers Development Group in east London - and another two were won by a voluntary-private partnership, the Irish-based Rehab Group.
Some 508 of the 1,099 Work Programme subcontractors are from the sector, according to the Department for Work and Pensions. Charities make up just over 40 per cent of the larger 'tier one' contractors and just under 50 per cent of 'tier two' contractors.
But the figures do not reveal the proportion of overall income that the sector is expected to receive, nor the quality of the terms negotiated with the prime contractors.
THE VIEW FROM THE MINISTER'S OFFICE
Chris Grayling speaks in bold terms about the role of charities in delivering the government's Work Programme, which came into force earlier this month.
He says it provides big opportunities for the sector, but insists charities must not let themselves be pushed around by private sector providers that they collaborate with.
"Staff at one voluntary sector organisation told me it had been forced to operate at a loss to deliver the programme," he says. "Why would you sign up to a deal that forced you to operate at a loss?"
Such deals are an issue because the sector is mostly involved in the programme as subcontractors, negotiating terms with large organisations appointed by the government as prime contractors.
"If a prime contractor squeezes its margin in negotiations with a charitable group, that's something I can't do anything about," Grayling says. "My argument is that charities themselves need to be businesslike in return. If a charity reaches an agreement that it's not happy with, but decides to put up with it, well, that's their problem.
"If an organisation won its prime contractor role by saying it would work with certain charities, those charities have a strong hand when it comes to negotiating the terms because if the prime contractor can't come to an agreement with them, it will have to answer to the government about why that is."
Grayling acknowledges that some charities think the prime contractors have failed to give charities a good deal. "Somebody the other day used the phrase 'bid candy' to describe how some charities felt they had been treated by primes," he says.
"If a prime contractor behaves inappropriately to its subcontract chain and doesn't intend to reach sensible agreements with them, it would be in breach of contract.
"I will not hesitate to terminate a contract if there is clear evidence that a prime is effectively 'duffing up' its supply chain by making totally unreasonable requests of contracts for them."
Of 40 prime contracts, only one is held solely by a charity and a further two are held by a charity in partnership with a private firm. Grayling says he is happy with this level of voluntary sector involvement.
"There are about 500 voluntary sector subcontractors, big and small," he says. "We've got a good roll-call of voluntary sector organisations; it's a 'who's who' of the charitable sector in the UK. There is even a community walled garden in Yorkshire among them."
Grayling says between 40 and 50 per cent of the subcontractors on the Work Programme will be voluntary sector organisations, compared with 30 per cent on previous welfare-to-work schemes, but is unable to say whether this represents a larger proportion of the programme's value than it did in the past.
"The amounts of money the organisations make will depend on how successful they are," he says. "But our expectation is that the third sector will end up with more money coming in than was the case under previous programmes."
Grayling admits the scheme is a gamble with high targets: the providers are expected to get more people back into work than was the case under Labour welfare-to-work schemes before the recession.
"We're pushing the industry to achieve a level of performance that goes beyond anything it's done before," he says. "In a sense, it's calling the bluff of everyone in the welfare-to-work sector, from the largest to the smallest. Organisations have said they can get far more people back into work if we let them do things their way. Well, now they're going to have to do it."
Read two case studies and an interview with Pauline Kimantas of Navca about the dilemmas facing charities involved in the Work Programme