The review, commissioned by chief executives body Acevo, looked into the Department for Work and Pensions’ Pathways to Work procurement process, which saw voluntary sector organisations miss out on the bulk of contracts to provide back-to-work services for people on incapacity benefit.
The inquiry, chaired by Dame Mavis McDonald, former permanent secretary to the Office of the Deputy Prime Minister, said that the exercise had been fair, but found that the Government should take a more consistent line on whether or not the Tupe regulations, which protect the employment conditions of public sector staff when transferred to new employers, should apply in procurement exercises.
During the bidding stage, the DWP told interested organisations that they needed to take their own legal advice on whether or not Tupe rules applied during the Pathways to Work contracting exercise.
However, the report says: “The panel believes there should be an agreed code of practice across government with regards to the application of Tupe to third-party providers of public services.”
It also said that the Office of the Third Sector should work with the Office of Government Commerce to develop a code of practice for government around Tupe.
The panel found that the DWP had not treated charities unfairly during the procurement process, but had made choices and had other objectives that meant voluntary organisations missed out.
In the first round of Pathways to Work contracts announced in September, just one of the providers selected to run any of the services in the 15 districts was from the voluntary sector – this was the Shaw Trust.
The report suggests that government rhetoric had raised expectations that the voluntary sector would be well placed to win contracts only for those hopes to be dashed because other priorities came first.
“The disappointment for the sector over the first round of Pathways to Work contracting highlights how much work still needs to be done if rhetoric is to become reality,” said Peter Kyle, director of strategy and enterprise at Acevo. “The report clearly shows that challenges remain for government departments if the stated goal of greater third sector involvement is to be achieved.”
A Cabinet Office spokesman said the department would take action based on the report. “This inquiry provides a useful examination of public service commissioning in relation to the third sector,” he said. “We will action all the recommendations for the Office of the Third Sector and will work with other government departments and agencies where recommendations apply to them.”
Peter Hain, the work and pensions secretary, said the voluntary sector had a vital role to play in getting people off benefits. “Staff at the DWP have fully assisted with this inquiry, and its findings will be taken into consideration for future welfare-to-work contracts,” he said. “I am interested in what works best and providing value for money for taxpayers.”