In January, charities and environmental organisations with contracts with local job centres received a shock announcement.
The organisations, which were hired to find work experience placements for unemployed young people under the New Deal, were told that from April their funding to run the scheme would be cut by 40 per cent.
They were also informed that the time spent by the young people on placements would be halved from 26 to 13 weeks. There had been no prior consultation on the cuts, which many groups felt undermined their ability to achieve lasting improvement in the lives of the young people they worked with.
The funding reduction also meant that the contracts were simply not viable for the charities anymore.
"Job Centre Plus told us 'here are the changes that are being introduced nationally - take them or leave them'", said Richard Jackson, partnership manager with Voluntary Action Leeds, one of the organisations affected. "There was no consultation, no offer of negotiation, nothing."
The NACVS, which represented many of the organisations affected, asked the Department for Work and Pensions why it had breached the Compact, which requires three months' consultation when charities are affected by major changes in government policy. The Compact Advocacy Service also became involved.
In March, NACVS chief executive Kevin Curley received a letter apologising for the "oversight" in failing to consult. It promised "a better understanding of provider costs and performance" and that risk would be shared in future - essentially, a commitment to introduce full-cost recovery.
"We were pleased to get that letter, but surprised that eight months later we have still not heard about any progress they have made with their commitments," says Curley.
Jackson says the episode reveals the limitations of the Compact. The changes to the contracts were never reversed and Voluntary Action Leeds has walked away from its New Deal contract.
"If there is a decision on financial grounds, it's doubtful that the Compact will change minds," he said. "It can give us a chance of negotiation, but won't stop the cut happening."