Work Programme puts subcontracted charities at financial risk, says NCVO

Sir Stuart Etherington says the prime contractor model is falling short of expectations

Sir Stuart Etherington
Sir Stuart Etherington

The National Council for Voluntary Organisations has warned that the Work Programme could threaten the sustainability of many of the charities involved.

The umbrella body has today published research that indicates that more than half of the charities delivering the welfare-to-work programme said their prime contractor had not protected them from financial risk, as they are required to do.

The research shows that 39 of 72 charities surveyed by the NCVO said their prime contractor had not shielded them from financial risk and a further 14 said their prime has only done so to a small extent. Twelve said their prime contractor had shielded them to some extent and just two said they had been protected "extensively".

According to the Merlin Standard, the supply chain agreement between the Department for Work and Pensions and welfare-to-work providers, every prime contractor should be able to demonstrate "how its funding arrangements support and provide equitable risk transfer, including financial risk for small, specialist and third sector providers".

The NCVO’s research also shows 26 of 45 tier one providers – subcontractors high up the supply chain – and 35 of 49 tier two providers – those lower in the chain – said they were "not at all" satisfied with the number of people that had been referred to them by their prime. Some charities fall into both categories because they are delivering tier one and tier two contracts.

Just three of the tier two providers and seven of the tier one providers said they were "very much" happy with the level of referrals they had received.

Under the programme, groups delivering services must fund the work themselves and are only paid by the DWP once a person from their programme has completed six months’ employment.

The NCVO has arranged a meeting this morning to discuss these issues with Chris Grayling, the employment minister, and a group of charities.

Sir Stuart Etherington, chief executive of the 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."

A statement from the NCVO said:"Members of the special interest group for Work Programme subcontractors are voicing concerns that the welfare to work initiative in its current form could threaten the sustainability of many voluntary sector providers."

The DWP issued a statement that said: "The department requires all prime contractors to treat their subcontractors fairly and meet certain behavioural standards. It is down to commercial negotiations between subcontractors and their primes to set the terms that define what is an acceptable sharing of risk.

"Once those deals have been struck, the department's minimum standards require primes to honour those promises."

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Follow us on:
  • Facebook
  • LinkedIn
  • Twitter
  • Google +

Latest Jobs

Forthcoming Events

Social Media Exchange

  • Mon 8 Feb 2016
  • Resource for London, 356 Holloway Rd, London N7 6PA

CHASE 2016

  • Tue 16 Feb 2016 - Wed 17 Feb 2016
  • Business Design Centre, London, N1 0QH

Fundraising Week 2016

  • Tue 19 Apr 2016 - Thu 21 Apr 2016
  • London, South Bank
RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners


Expert Hub

Insurance advice from Markel

Is your charity doing enough to protect itself against disasters?

Wendy Cotton of charity insurance specialist Markel explains the importance of a disaster recovery plan, to keep your organisation in operation should the worst happen.


Expert Hub

Fundraising advice from BT MyDonate

Five low cost tips for creating compelling video content that thrives

No matter what size your budget, there are some simple tips that can help keep costs down